Commonly Asked Questions
Student Loans

In an effort to assist you, we have provided below the most frequently asked questions about student loans.

Q. I don't know where my student loan is or who my lender or servicer is. Where can I get this information?
A. It is now possible to track your student loans using the National Student Loan Data System (NSLDS). This is the U.S. Department of Education's central database for student aid records. For each loan, the NSLDS website provides the following information:

• The date you took out the loan


• How much you borrowed originally


• The interest rate


• How much you owe now


• How much interest has accumulated


• The status of each loan (such as whether the loan is in repayment, paid in full, or in default)

Q. I am eligible for an Unsubsidized Federal Stafford Loan and I understand that I will be responsible for the interest while I am in school and during periods of deferment. What if I cannot make the interest payments? Can I have the interest added to the principal balance of my loan? Will it cost significantly more to have the interest capitalized or should I try to pay the interest each month?
A. Adding interest accruals to the principal balance of a loan is called capitalization and always results in higher interest costs! You will be in a better financial situation when you graduate or leave school if you can manage to pay the interest accruals on your unsubsidized loan while you are in school.

Q. How will I receive my money?
A. Methods of distributing awarded financial aid vary from school to school. However, federal regulations governing the Federal Stafford Student Loan Program require your lender to send your student loan funds to your school for disbursement. The school is responsible for delivery of funds to eligible students.

Q. How will my poor credit history affect my chances of getting a student loan?
A. The only student loan program based on credit is the Parent Loans for Undergraduate Students (PLUS) Program. A poor credit history will not affect your chances of getting a Federal Subsidized or Unsubsidized Stafford Student Loan since these programs are not based on credit.

Q. Do I have to make payments on my student loans while I'm in school?
A. Federal Stafford loans do not enter repayment until six months after you withdraw, drop below half-time enrollment status or graduate.

Q. When should I apply for a student loan?
A. You should exhaust all other sources of gift/free aid before you apply for student loans. Once you have determined your need for a student loan, check with the financial aid office at the school you will be attending. It is best that you apply for a student loan 4-6 weeks prior to the start of college classes.

Q. When will my first payment on my student loan be due?
A. Federal Stafford student loans have a six-month grace period, and Federal Perkins loans have a nine-month grace period. Your grace period begins the day after you graduate, withdraw, or drop below half-time enrollment status. Your first monthly payment should be due approximately 30 days after your grace period expires.

Q. Will I use my grace period if I am out of school for two summer terms?
A. The purpose behind the grace period is to give you time, once you complete your education, to find a job and get settled before you begin repaying your student loan. To use your grace period you must be out of school six consecutive months. In other words, not being enrolled for two summer terms would not constitute the use of your grace period but a summer term followed by the fall term would. Once your grace period is used, you will not be eligible for an additional grace period on your loan.

Q. What if I go back to school?
A. If you enroll at least half time before your grace period expires you are considered not to have used the grace period and your loan status returns to its former in-school status. If you are out of school six consecutive months or more and your loan has entered repayment, going back to school will not reverse your repayment status. However, you may qualify for an in-school deferment.

Q. What will my payment be on my student loan?
A. Your Federal Stafford Loan must be repaid within ten years, and the minimum monthly payment required on your Federal Stafford Loan is $50.00. Your actual payment amount will be based on the total amount you borrowed, your interest rate and the repayment term, and will also be affected by the type of repayment plan you choose.

Q. How will I know when to start repaying my student loan?
A. You are responsible for beginning repayment on time. If you don't hear from your lender, you should contact them. It is possible that your lender may not have a correct or current address for you. Your Federal Stafford student loan will enter repayment six months after you graduate, withdraw or drop below half-time enrollment status. Your lender should send you a disclosure statement listing your:

• Monthly Payment Amount


• Payment Due Dates


• Length of Repayment Term


• Current Interest Rate

Q. What happens if I have difficulty making a scheduled payment?
A. Contact your lender immediately. It is easier to keep a loan in good standing if you contact your lender before a payment is due. The worst thing you can do is ignore calls or correspondence from your lender. If you have difficulty making a scheduled payment, your lender will be able to assist you with options that can keep your student loan in good standing and prevent a bad credit report.

Q. Can I pay off my loan early?
A. You can prepay all or part of your loan at any time, without penalty. The advantage for you is that any extra payment to principal will reduce the interest costs and pay off your loan quicker.

Q. Can my student loan be canceled?
A. Federal Stafford Student Loans are insured against death, permanent disability, closed school, false certification and unauthorized payment. These are circumstances under which a Federal Stafford Loan may be canceled. Contact your lender for more information on loan cancellation.

Q. Who do I contact if I have any more questions?
A. No matter where you are in the student loan process, New Mexico Student Loans is a resource. We will always know how and where to direct you for all your financial aid concerns. You can reach us by e-mail, or phone at 345-3371 Ext.1472 in Albuquerque or 1-800-279-5063 outside the Albuquerque area.