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Contact your Loan Servicer
The first step to resolving a dispute is to contact your school or Loan Service Representative and explain your dispute. Generally, issues can be worked out immediately and no further action is needed. It is important that you clearly identify your dispute and have all supporting documentation available so that your Loan Service Representative can assist you.

If you have made a diligent effort with your Loan Service Representative to resolve your dispute, but cannot resolve the problem, you may file for assistance from the Department of Education's Ombudsman's office.

Contact The Office of the Ombudsman
The Office of the Ombudsman was established to mediate between borrowers and loan holders.
The Ombudsman will collect information about your dispute, and ask you to provide documentation. You will be asked to complete a dispute form which clearly states your problem.
After receipt of your completed dispute form and all supporting documentation, the Ombudsman will review the facts by looking at loan regulations, your documentation, your loan servicers documentation, your loan history and any other information necessary to obtain a full understanding of the dispute.
The Ombudsman will contact you and your loan holder, acting as a liason to work out a resolution.
To start a dispute claim with the Office of Ombudsman, you may access their site at: https://studentaid.ed.gov/sa/repay-loans/disputes/prepare/contact-ombudsman.

Under the new tax laws, interest paid on student loans is deductible and there is no longer a limitation on the number of years that the deduction can be taken.. Student loan interest paid is treated as an adjustment to gross income and is not part of the itemization schedule.

If your student loan was taken out solely to pay for qualified educational expenses you may be eligible to reduce your taxable income by up to $2500.00. The amount of interest that you may deduct is dependent on your income level. A worksheet to determine your deductable amount can be found in your 1040 instructions

Addtional information on student loan interest deductions can be found in the IRS Publication 970 "Tax Benefits for Education". This publication can be accessed at: https://www.irs.gov/.

Cancellation benefits allow you to cancel a portion of your principal balance for each complete year of service in an eligible shortage area. These areas include teaching, nursing, medical technology, law enforcement, social services, Peace Corp and the military. Partial cancellation of your loan is made for each complete year of employment for up to 100% of your loan for most cancellation types.

The cancellation process works in conjunction with the deferment process. Your employer certifies on a deferment form that you are expected to work for an eligible employer in an eligible capacity for the upcoming year. Your loan is placed into a deferment while you complete the year of employment service. During the deferment period no interest accrues and no payments are required. At the end of the year, your employer certifies that you did complete the year of service on a cancellation form and a partial cancellation is processed on your loan based upon how many years of cancellation service you have performed.

Cancellation Eligibility Criteria
Teaching in Elementary or Secondary Schools servicing Low-Income Students (5 years of service for 100% cancellation)

  • You must be a full-time teacher, directly employed by the school system, in a public or other nonprofit elementary or secondary school that the U.S. Department of Education has designated as a low-income school. The directory can be found at: https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/charts#perkins-loan-cancellation
  • You must teach for a complete academic year or its equivalent
  • A teacher is a person who provides to students, direct classroom teaching, or educational services directly related to clasroom teaching such as a school librarian or guidance counselor
  • A supervisor, administrator, researcher, or curriculum specialist is not a teacher
  • All Bureau of Indian Affairs (BIA) elementary and secondar schools qualify.
Teaching Special Education (5 years of service for 100% cancellation)
  • You must be employed as a full-time special education teacher of infants and toddlers from birth to age 2, children or youth from ages 3 through 21 with disabilities who require special education and related services because they have disabilities as defined in section 602(a)(1) of the Individuals with Disabilities Education Act.
Teaching in Fields of Expertise (5 years of service for 100% cancellation)
  • You must be employed full-time teaching in mathematics, science, foreign languages, bilingual education or any other field of expertise where the state education agency determines that there is a shortage of qualified teachers
  • The majority of classes taught must be in the area of expertise.
Head Start Pre-School Program (15% of the original loan for each year of service)
  • You must be employed as a full-time staff member in a position that is required to carry out the educational part of the Head Start pre-school program under section 222(a)(I) of the Economic Opportunity Act of 1964-5.
  • You must complete an academic year or its equivalent.
  • Your salary cannot exceed the salary of a comparable employee working in the local school district
Nurse or Medical Technician (5 years for 100% cancellation)
  • You must be employed as a full-time nurse or medical technician who provides health care services.
  • Medical technicians must be allied health professionals working in a field such as therapy, dental hygiene, medical technology, or nutrition, who are certified, registered or licensed by an appropriate state agency
  • An allied health professional is someone who assists, facilitates, or compliments the work of physicians and other specialist in the health care system.
  • A nurse is a licensed practical nurse, a registered nurse, or other individual who is licensed by an appropriate state agency.
Law Enforcement (5 years for 100% cancellation)
  • You must be employed in full-time service as a sworn law enforcement officer or corrections officer or a person whose principal responsibilities are unique to the criminal justice system in a local, state or federal law enforcement or correction agency.
  • Eligible agencies are publicly funded units where the principal activities pertain to crime prevention, control, reduction, or the enforcement of the criminal law.
  • The activities include but are not limited to police efforts, activities of the courts having criminal jurisdiction and related agencies, activities of corrections, probation or parole authorities, and problems relating to the prevention, control or reduction of juvenile delinquency or narcotic addition.
  • Employment as a public defender does not qualify for cancellation as well as agencies that are primarily responsible for enforcement of civil, regulatory, or administrative laws are ineligible.
Peace Corps Volunteer or Volunteer under the Domestic Volunteer Service Act (4 years of service for 70% cancellation)
  • You must be a Peace Corp volunteer or volunteer under the Domestic Volunteer Service Act of 1973 (ACTION).
  • You must not, as part of your duties, give religious instruction, conduct worship service, engage in religious proselytizing, or engage in fundraising to support religious activities.
Child or Family Service Agency (5 years for 100% cancellation)
  • You must be a full-time employee in a public or private nonprofit child or family service agency, providing, or supervising the provision of services to only high-risk children and their families who are from low-income communities.
  • High-risk children are individuals under the age of 21 who are low-income or at risk of abuse or neglect, have been abused or neglected, have serious emotional, mental, or behavioral disturbances, reside in placements outside of their homes, or are involved in the juvenile justice system.
  • Low-income communities are communities in which there is a high concentration of children between the ages of 5 and 17 who are eligible to be counted under Title I of the Elementary and Secondary Education Act of 1964, as amended.
  • Elementary or secondary school systems or hospitals are not eligible employing agencies.
Early Intervention (5 years for 100% cancellation)
  • You must be employed as a full-time qualified professional provider of early intervention services as defined in section 672(2) of the Individuals with Disabilities Education act, in a public or non-profit program under public supervision.
  • You must provide service to infants and toddlers from birth to age 2, inclusive, who need early intervention services for specified reasons, as defined in section 672(1) of the Individuals with Disabilities Education Act, and who require special education and related services because of their disability.
Military Service (4 years for 50% cancellation)
  • You must be serving a period of full-time active duty in the armed forces (U.S. Army, Navy, Air Force, Marine Corps, or Coast Guard, National Guard, Reserves) in an area of hostility or an area of imminent danger that qualifies for special pay under Section 310 of Title 37 of the U.S. Code.
  • An "area of hostility” does not include special pay for such things as flight pay or service overseas in areas where additional pay is given for dependent's living allowances

A deferment is a period of time in which you are not required to make loan payments and interest does not accrue. To qualify for a deferment you must meet certain requirements. At the end of the deferment period you may be eligible for a post-deferment grace period of six consecutive months. For a complete description of the deferments that are available for your loan, you should refer to your original promissory note.

Deferment Eligibility Criteria
Student Deferment - Must be enrolled at least halftime at an eligible post-secondary school.

  • If you return to school at least halftime your loan may be deferred for each certified period of enrollment. To obtain a student deferment, you must contact the office responsible for managing your loan. If your enrollment can be verified through various approved databases, your service representative will process your deferment with no paperwork required. However, if your enrollment information is not available, you will need to complete a deferment form and return it to your service representative.
The appropriate certifying official for a student deferment is the Registrar's office at your school.

Graduate Fellowship Deferment - A borrower may defer repayment if he or she is enrolled and in attendance as a regular student in a course of study that is part of a graduate fellowship program approved by the Department, including graduate or postgraduate fellowship-supported study ( such as a Fulbright grant) outside of the United States.

To receive deferment for enrollment in a graduate fellowship program, the borrower must provide certification that he or she is engaged in full-time study in an approved graduate fellowship program (or has been accepted by the program).

Rehabilitation Training Deferment - Must be enrolled in a course of study that is part of a Department approved rehabilitation training program for disabled individuals. To receive this deferment you must provide the school with certification that:
  • You are receiving or scheduled to receive rehabilitation from the agency.
  • The agency is licensed, approved, certified or otherwise recognized by a state agency responsible for programs in vocational rehabilitation, drug abuse treatment, mental health-services, or alcohol abuse treatment; or by the Department of Veterans Affairs.
  • The agency provides or will provide the borrower rehabilitation services under a written plan that (1) is individualized to meet the borrower's needs; (2) specifies the date that service will end; (3) is structured in a way that requires substantial commitment from the borrower. This is a commitment of time and effort that would normally prevent you from holding a full-time job either because of the number of hours that must be devoted to rehabilitation or because of the nature of the rehabilitation.

The appropriate certifying official for a Rehabilitation Training Deferment is the Agency Administrator for your program.

Unemployment Deferment - Must be actively seeking employment.
  • If you are registered with an unemployment agency and actively seeking employment you may apply for an unemployment deferment. This deferment is granted for 6 months at a time for up to 3 years of lifetime eligibility.

The Unemployment Deferment is certified by the borrower making application. Additional support documentation may be required.

Economic Hardship Deferment - Must be working full-time or part-time and meet eligibility requirements.
  • If you are working at least part-time and your income does not exceed minimum wage, or you have a student loan debt ratio that is 20% or more of your monthly gross income or you are receiving public assistance you may apply for an economic hardship deferment. To accurately determine your eligibility, please complete the economic hardship deferment worksheet that is found with the Economic Hardship Deferment Form. This deferment is granted for 1 year at a time for up to 3 years of total lifetime eligibility.

The Economic Harship Deferment is certified by the borrower making application. Support documentation such as wage stubs, proof of outstanding educational debt etc is required.

Delinquency on your loan occurs if you do not make a payment on time or make application for a deferment on time. All delinquency is reported to the credit bureau and therefore, it is wise to contact your school or Servicer if a scheduled payment cannot be made. There are many options available to avoid delinquency such as deferments, forbearance or low-income extensions.

Forbearance A forbearance is a temporary reduction in your monthly payments based upon your financial situation. You may receive up to 36 months of forbearance over the life of your loan. A forbearance is negotiated between you and your school or Loan Servicer based upon your unique situation. To apply for a forbearance, you must contact your service representative.

A 1098E statement is an informational form that is sent to you by your lending school to assist you in completing the Student Loan Interest Deduction Worksheet found in your 1040 Federal Tax Form.

Student Loan Interest paid during the tax years is filed as an adjustment to your gross income which affects your adjusted gross income.

You must complete the Federal Student Loan Interest Deduction Worksheet to determine how much of the interest you paid will be deductable.

Institutions are only required to provide a 1098E Student Loan Interest Statement to borrowers who paid $600.00 or more in student loan interest during a tax year. However, when figuring out your deduction, you may include any interst paid in your worksheet regardless of whether you received a 1098E statement or not.

You may at any time during the tax filing period request a 1098E Student Loan Interest Statement for your records.

A consolidation loan is a new loan that pays off your current federal education loan balances. With a consolidation loan you will only have one lender and one monthly payment. Married couples are allowed to consolidate their federal loans together into one new consolidation loan. To be eligible for a consolidation loan you must have at least 1 outstanding Federal Family Educational or Federal Direct Student Loan.

Advantages

  • Consolidation loans may have a longer payout period that your current loans, thus your monthly payments may be less.
  • By consolidating all your federal educational loans together you only have one lender to work with
  • Consolidation loan provisions have several different repayment plans such as income-sensitive, graduated payments or standard fixed payment amounts.
Disadvantage
  • Consolidation loans may have a higher interest rate than your current federal education loans
  • Consolidation loans do not have cancellation for service provisions
  • Consolidation loans may not have all the deferments benefits that your current loans have and your loan may accrue interest while in a deferment.
  • If you consolidate with your spouse, you both must be eligible for deferment at the same time for your loan to be put into deferment.
  • If you extend the payout time of your educational debt, you will pay more interest over the life of the loan
Eligible Loans for Consolidation
  • Federal Perkins Loan
  • Federal Family Educational Loans (Stafford, PLUS, SLS and Consolidation)
  • Federal Direct Loans (Stafford, PLUS and Consolidation)
  • Health Professional Student Loans
  • Nursing Student Loans
  • Health Education Assistance Loans (HEAL)
Consolidation Process
  • Choose an eligible consolidation lender
  • Contact the lender for the initial application
  • Include all loans that you wish to consolidate on the application
  • Contact each school, lender or Loan Servicer where you have an outstanding oan to inform them that you have applied for a consolidation loan
  • The consolidating lender will send a loan verification form to each of the holders you listed on your application
  • Each holder will complete and return the loan verification form to the consolidating lender
  • The consolidating lender will complete your loan process and send out a proceed check to each of your holding lenders to payoff your prior federal loan(s).

A forbearance is a temporary period of time in which no payments or reduced payments are required because of a financial situation. There are basically three types of arrangements that can be made under the forbearance provision. During a forbearance, interest continues to accrue. You may only receive up to 36 months of forbearance over the life of your loan.

Reduced Payment Forbearance A reduced payment forbearance is negotiated for a temporary monthly payment, that is generally greater than the monthly accuring interest, but less than the regular payment amount.

Interest Only Forbearance An interest only forbearance is negotiated for a temporary monthly payment of interest only.

No Payment Forbearance A no payment forbearance is negotiated for a temporary period in which no payments are required. Interest continues to accrue and become due at the end of the forbearance period. This type of a forbearance results in a balloon type payment of the interest that accrued during the forbearance period plus a regular payment.

A loan is considered in default if you do not resolve delinquency, and that delinquency persists for at least 90 days. Your school or Loan Servicer may exercise their right to accelerate your loan balance. Your school or Loan Servicer will give you notice of their intent to accelerate your loan balance. When a loan is accelerated, the entire unpaid principal balance plus interest and fees become immediately due and payable. All provisions for deferments and cancellation are lost. At this point your school or Loan Servicer may;

  • Assign the loan to a collection department or agency in which additional collection charges up to 40% of your accelerated balance will be added to your loan
  • Assign the loan to the Department of Education for further collection action which may include the interception of your federal tax refund
  • Report the default to the credit bureau
  • Report the default to the Federal Nation Student Loan Database, thus preventing you from obtaining any new federal financial aid


Resolving a Default The Federal Perkins Loan Program has a provision that allows a borrower to rehabilitate a defaulted loan. This Loan Rehabilitation program requires a diligent effort on the borrower's part. To rehabilitate a defaulted loan, the borrower must negotiate a payment arrangement with the school, Servicer or Collection agency. The borrower must then make the agreed upon payment each month on-time for 12 consecutive months. At the end of the 12 months, if all payments were made on time, the loan is rehabilitated and:

  • Credit Bureau history is cleared
  • Outstanding collection fees are reduced to 24%
  • Eligibility for future federal financial aid is re-establised
  • A new payout period for the balance is computed

All overpayments of due amounts will post directly to remaining principal balance and the loan will continue to bill on schedule. If you would like an overpayment to be considered a prepayment of a future billing period (we allow you to prepay up to one period—month, quarter, etc.) then you will need to call, email, or mail that information to us at the time of payment remittance.