Federal student loan programs have been around for decades. Many new programs have been added over the years that created different types of federal loans. For example, these programs have created Direct Loans, FFEL Loans and Perkins Loans. There are many different types of federal loans, so do not feel bad if you do not know which loans you carry. However, it is vital to know this information. If you do not know which types of loans you carry, then you may miss out on helpful income-driven repayment, loan forgiveness and loan rehabilitation programs.
The Department of Education operates the National Student Loan Data System (NSLDS), which compiles personal information on all federal student loan borrowers. You can use this tool to discover which types of federal student loans you carry.
Step 1: How to Access the NSLDS
There are several aspects to NSLDS. For the purposes of this article, select the “Financial Aid Review” tab on the website. You will need your email address and password before you can access the NSLDS. If you have logged in before but it has been a while, the NSLDS may prompt you to change your password. The website will not allow you to use the same password as before.
Be very careful when entering your email address and password. If you input the wrong email address and password three times, the NSLDS will lock you out of your account for 30 minutes. Getting locked out can make this process very annoying. Make sure you have your email address and password correct beforehand.
You can also click the “forgot my password” or “forgot my username” tabs. Clicking these tabs will prompt you to send the password to the email address or phone number on file with the Department of Education. You will then need to type in a confirmation code and reset your password. If you are confident in your ability to remember details about yourself, then you can also answer security questions.
Once you log on, the website should display a list of your student loans. For example, it will show the type of federal loan and whether it is subsidized or unsubsidized. The NSLDS will also show the loan amount, principal balance and outstanding interest. In addition, NSLDS will display the date you received the loans (this is important).
Step 2: What Can I Do with This Information?
When our student loan attorneys Neil S. Sader and Michael J. Wambolt penned an article for Primerus Paradigm Magazine, they emphasized that knowledge of your student loans is more important that what you owe. Different types of student loans have different rules for repayment, rehabilitation and loan forgiveness. If you do not know what types of loans you carry, then you cannot formulate repayment strategies that could help resolve difficult situations.
Let us say for example that you were demoted at work and dropped to part-time. Suddenly, you can no longer afford your monthly payments. Enrolling in an income-driven program would make monthly payments easier. However, you would need to know which types of loans you carry to determine your eligibility for these programs.
If you have Direct Subsidized Loans, then you may be eligible for multiple income-driven repayment programs (IBR and REPAYE). These are plans that allow you to cap monthly payments to a percentage of your income. However, if you had eligible FFEL loans, then you may only qualify for the IBR program.
The date you received the loans is also important for income-driven plans. Depending on the date, you will have to pay more or less each month. For example, if you were enrolled in the IBR program and received Direct Loans after July 1, 2014, then you would only have to pay 10 percent of your discretionary income towards your student loans each month. If you received the loans before this date, then you would have to pay 15 percent.
Income-driven plans also allow for loan forgiveness after a certain number of consecutive payments. The date you received your loans will affect when the remaining amount is forgiven. For borrowers who received Direct Loans after July 1, 2014, the remaining balance is forgiven after 20 years of consecutive payments. Borrowers who received Direct Loans before this date receive loan forgiveness after 25 years. Keep in mind, that this example only covers the rules that generally apply to the IBR program. Other income-driven plans have different rules for loan forgiveness.
Starting to see why the information from the NSLDS is so important? You cannot create a successful student loan repayment strategy if you do not know when you received your loans or which types of loans you carry. There are also different rules for loans that were used to fund graduate studies. This is another important factor to consider.
What Else Should I Know About NSLDS?
To be honest, this article could span for dozens of pages. The various rules for the different types of federal loans are exhaustive and we only scratched the surface. We discussed how this information helps while enrolling in one of several income-driven plans during financial hardship.
It cannot be emphasized enough important the NSLDS is for researching and solving student loan problems. However, you can also follow our weekly blog and monthly newsletter updates for more details on what you can do with your student loan information.
The Kansas City student loan lawyers at The Sader Law Firm can also help borrowers with these types of problems.