Loan Repayment and Loan Forgivness Programs

Loan Repayment Plans

There are various loan repayment plans available for students who have borrowed through the Federal Student Loan program. You may choose the plan that best meets your needs based on your financial goals and what you can afford to pay each month. Students will automatically be placed into the Standard Repayment plan, unless you select an alternative plan. Students may change their repayment plan if necessary. Vermont Law School will meet with students, typically during their last semester, to discuss repayment plan options, consolidation, and loan forgivness programs.

Options	Payment Structure	Maximum Payment Period	Additional Features
Standard*	Fixed	10 years	-Highest initial payment - Lowest total interest
Graduated*	Tiered	10 years	- Interest only payments initially - Payments increase incrementally
Extended*	Fixed or tiered	25 years	- Lowest initial payment without considering income - Federal loan debt must be greater than $30,000
Income Sensitive**	Adjusted annually based on total gross income	15 years	- Payments must at least cover monthly accruing interest - You determine the percentage of your monthly payment: between 4% and 25% of your monthly gross income
Income Based (IBR)* (more info)	Adjust annually based on: - Household AGI - Household size - Poverty guideline - State residence	25 years	- Payment is 15% of disposable income (portion of AGI that is 150% of HHS poverty guideline) - Monthly payment can be less than accrued interest - Any outstanding eligible loan balance is cancelled after 25 years of being “economically challenged”

* Federal Family Educational Loan Program or Federal Direct Loan Program

**Federal Family Educational Loan Program only

***Federal Direct Loan Program only

Loan Forgiveness

We have great news for graduate/professional students who may incur large student loan debt to pay for their degree. Congress recently passed a loan forgiveness program for federal student loan debt for graduates who go into public service employment. This program is available to borrowers who are employed full-time in certain public service jobs. To qualify for loan forgiveness, borrowers must make 120 monthly payments in one of the qualifing repayment plans. After having made the qualifying payments, a borrower's remaining loan balance will be forgiven.

Examples of public service jobs are public interest law, including prosecution for public defense or legal advocacy in low-income communities at a nonprofit organization. Also, qualifying employment includes any non-profit organization that that qualifies for 501(c)(3) status by the Internal Revenue Code and is exempt from taxation. For more information about the Public Service Loan Forgivness program visit www.studeentaid.ed.gov/publicservice

Federal Loan Consolidation

The Federal Loan Consolidation Program was designed to simplify loan repayment for borrowers by combining several types of federal educational loans into a single new loan. The new Consolidated loan will have a new fixed interest rate, which is the weighted average of all of the loans you are consolidating. You may choose to consolidate all or some of your federal loans. Qualifying Federal educaltional loans include Subsidized and Unsubsidized Stafford or Direct Student Loans, Grad PLUS, and Perkins loans. If you are considering consolidating your federal student loans, it is strongly encouraged that you talk to your lender, or the VLS Financial Aid Office prior to consolidating. Details on loan consolidation are provide on the Department of Education's website www.loanconsolidation.ed.gov