What repayment options are available?
Two in-school repayment options allow the borrower to defer full principal + interest payments until six months after separating from the school:
- Interest-Only Repayment: the borrower is immediately responsible for making full monthly interest payments on the loan while enrolled in school. Six months after separating from the school or ceasing to be enrolled at least-half time in a degree granting program, the borrower enters repayment status and is responsible for making full interest and principal payments.
- Proactive Payment: while enrolled at least half-time in a degree granting program, the borrower is only required to make monthly $25 Proactive Payments during the in-school period. Any unpaid accrued interest is capitalized (or added) to the outstanding loan amount once at the end of the in-school period. Six months after separating from the school or ceasing to be enrolled at least-half time in a degree granting program, the borrower enters repayment status and is responsible for making full interest and principal payments.
What is the In-School Repayment period?
The in-school period lasts while the borrower is enrolled at least half-time and includes a 6-month Grace Period once the borrower leaves school. During this time, the borrower is required to either make full interest payments or a monthly $25 Proactive Payment. Any unpaid interest continues to accrue during the in-school period.
[TOP]What is a Grace Period?
The Grace Period is a 6-month period of time that begins once a borrower graduates or is no longer enrolled at least half-time in a degree granting program. After the Grace Period, the borrower must begin making regular principal and interest payments. Borrowers are required to either make full interest payments or a monthly $25 Proactive Payment during the Grace Period.
[TOP]What is a Proactive Payment?
A Proactive Payment is a $25 monthly payment the borrower must make while they are in school. The borrower will begin making full principal + interest payments once they have separated from the school or dropped below half-time status. The Proactive Payment helps the borrower demonstrate financial discipline and saves the borrower interest expenses over the life of the loan.
[TOP]How are payments made?
All monthly loan payments are made to the servicer, LendKey, using either an electronic transfer from a financial institution account designated during the application process or mailed in by check. Borrowers can set up automatic monthly ACH payments directly from their account by logging into their account, clicking the Payments tab, and Manage Payments. Please have the following information available: Financial Institution Name, Account Type, Account Holder Name, Routing Number, and Account Number.
Borrowers can submit payments via paper check to the following loan payment address:
LendKey P.O. Box 824575 Philadelphia, PA 19182-4575
Please write your Loan ID and the payment date in the memo line. For example, if your payment is for your March 1st invoice, please put 03/01/12 next to your Loan ID.
[TOP]When do borrowers enter full repayment status?
Borrowers are given a six month Grace Period once they graduate or separate from school before they enter repayment status. Once a borrower enters repayment status they are responsible for making full principal and interest payments.
Some students may not yet have found employment six months after leaving school; therefore, borrowers may request to pay just the interest expense on the loan for the first two years while in repayment status, this is referred to as the "Initial Interest Only" option.
[TOP]Can a borrower prepay the loan at any time?
Yes, a borrower may prepay the loan either partially or in full at anytime without incurring any fees or penalties. Please submit prepayments via paper check and ensure to write your Loan ID and Toward Principal in the memo line.
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