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Exit Counselling

Complete an Exit Counseling Interview here before you complete your course or graduate. You will be counseled on your obligations, rights and options under the terms of your loan.

This session will cover repayment options, deferments and other important information you may need during your repayment term. During this session, you will need to provide the following information:

  • Name and address of closest living relative;
  • Two references (not the same as closest living relative) and with different addresses.

Exit Counselling may be completed via 


Federal Direct Student Loans 2014-15 Interest Rates

The following table displays interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans and Direct PLUS Loans first disbursed on or after July 1, 2014 and before July 1, 2015.

Loan Type
Borrower Type Fixed Interest Rate
Direct Subsidized Loan Undergraduate Students 4.66%
Direct Unsubsidized Loan Undergraduate Students 4.66%
Direct Unsubsidized Loans Graduate Students 6.21%
Direct PLUS Loans Parents of Dependent Undergraduate Students and Graduate Students 7.21%

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Repayment Plans

As soon as a student leaves university or drops below half-time enrollment, the clock starts ticking. The US Department of Education gives you up to six months before the bills start arriving and you must start making monthly principal and interest payments on your loans.

If you re-enter university at least half time during your grace period, it is renewed for another six months. So you have the full grace period available when you leave university again.

If you have taken out Grad PLUS loans whilst at Otago, then repayment commences immediately after your last exam, unless you qualify for another deferment or forbearance! Make sure that you keep good records of which loan enters repayment and when.

Before repayment starts, you will be provided with repayment options and a Repayment Schedule from your lender or servicer for each type of loan you have.

If you do not receive these schedules toward the end of your grace period, contact your lender because repayment begins whether or not you are aware of it. Also, all of the borrower benefits will only apply if you make your first payment on time.

If you plan ahead, the repayment process will go smoothly. Start by knowing all your options.


The smartest loan repayment strategy

All federally guaranteed education loans can be pre-paid without any penalty. This means that by paying just a little more than your monthly payment each month, you can pay down the loan much faster than you thought possible and save yourself payments.

If you are going to do this, then make sure that you pre-pay the loans with the highest interest rate first.


The more common options

You will have a choice to make regarding the type of repayment plan you would like to use:

Standard Repayment

Under this plan, your monthly payment will remain the same over the entire repayment period.

This repayment plan is the most economical. The term is for a maximum of 10 years.

Graduated Repayment

As the name suggests, this plan typically begins with smaller payments, followed by a gradual increase in payments at specified intervals. Under this plan you will probably pay more interest over the term of the loan.

The term is for a maximum of 10 years.

Income-Sensitive Repayment

This plan ties the size of your payment to your income level, with adjustments to your payment made annually. The monthly payment must be large enough to cover accrued interest charges. This plan also may increase the amount of interest you pay over the term of your loan.

The term is up to 10 years. However, your lender can use forbearance to lengthen the term for up to five additional years (15 years total).

Extended Repayment

This option is available for those who first borrowed on or after October 7, 1998, and who then accumulated loans that totalled more than $30,000.

If you're one of these borrowers, you may extend your Standard or Graduated Repayment plan for up to a total of 25 years.

Download your repayment options information sheet, also see Studentaid website for more details.

So how much could you be expected to repay on your loan?

A typical repayment plan assumes the loan principal plus interest, spread out over 10 years.


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Student Debt on Graduation

Students attending the University of Otago have a variety of differing educational expenses as a result of their courses, and the debt levels of each student reflects individual choices and knowledge about the usage of the loan program options.

We are committed to ensuring that students leave this institution with the lowest amount of debt possible and we will actively work with you to ensure this. Through your life cycle as a student utilizing US Federal funds, we will be actively tracking your debt and benchmarking it with others who have studied in the same method and course that you are enrolled in.

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Loan Consolidation

By the time you finish university, you may have a number of loans. These loans may be with more than one servicer and may have different terms. Repayment can become fairly complicated if you have to make different payments at different times of the month. Consolidation is a way to make repayment of multiple loans less complicated.

You can consolidate all your federal student loans into one loan with a fixed rate and a single, lower monthly payment.

You pay no additional fees to consolidate your loans. More importantly, you may reduce the amount of each monthly payment by extending your repayment term. But remember that a longer repayment term increases the amount of interest you pay over the term of your loan.

Consolidation loans offer terms ranging from 10 to 30 years. Repayment options on consolidation loans include: Standard, Graduated and Income Sensitive repayment plans.

To be eligible for a consolidation loan, you must be in a grace period, repayment, deferment, or forbearance.

It is important to research loan consolidation very carefully as you may lose some borrower-benefits offered by your original servicer. If you are uncertain of your loan amounts (principle and interest) and who owns your loans, you can track down your loans online by visiting NSLDS website.  

The interest rate on a consolidated loan is determined by taking the weighted average of your current loan's interest rates and rounding up to the nearest 1/8% (this means that the interest rate on a $10,000 loan 'counts' more towards the bottom line than a $5,000 loan's interest rate). This interest rate is fixed, which means it will not change throughout the life of the loan, whereas your current loans are variable and can either increase or decrease on an annual basis.

You should first discuss consolidation with your existing servicers. If your servicer does not consolidate, they will most likely be able to recommend another servicer.

While interest rates and length of repayment will not vary between servicers, some may offer incentives (such as interest rate reductions for on-time repayments) to their customers that others do not.

It is highly recommended that you shop around for those incentives before deciding on a consolidating servicer.

As of July 1, 2006 students are not allowed to consolidate whilst they are in-school.

For an example of repayment periods please visit

See also Special Direct Consolidation Loans and Federal Stafford PLUS, SLS and Consolidation Interest Rates Calculations July 1, 2011 – June 30, 2012

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One major advantage of borrowing through the Direct Loans is the option you have to postpone repayment for a period of time under certain conditions.

However, it is important to note how interest must be paid or not paid on various loans:

Subsidized (Direct) Loans: interest is paid by the federal government during in-university, grace, and authorized deferment periods.

See also Interest Rates for Stafford and PLUS loans effective July 1, 2011

Termination of Direct Loan Borrower Repayment Incentives

With one exception as noted below, the Budget Control Act terminates the authority of the Department of Education (the Department) to offer any repayment incentives to Direct Loan borrowers to encourage on-time repayment of loans, including any reduction in the interest rate or origination fee, effective for loans first disbursed on or after July 1, 2012. As a result of this change, the up-front interest rebate that has been provided to Direct Loan borrowers at the time of their loan disbursement will no longer be offered on any Direct Loan Program loan with a first disbursement date that is on or after July 1, 2012.

The law continues to authorize the Department to offer interest rate reductions to Direct Loan borrowers who agree to have payments automatically electronically debited from a bank account.

Unsubsidized (Direct) Loans: the borrower is responsible for paying the interest that accrues during in-university, grace, and authorized deferment periods.

Some common deferment options (for borrowers whose first loan was disbursed on or after July 1, 1993)


Type of Deferment Deferment Period Loans Eligible Application Forms
In-university at least half time No time limit (however you must still be progressing toward a degree) Subsidized Direct, Unsubsidized Direct, SLS, PLUS, Perkins, and Consolidation loans Download Application form (PDF format)
Temporary Total Disability Deferment Request Subsidized Direct, Unsubsidized Direct, PLUS, Consolidation loans Download Application form (PDF format)
Parental Leave / Working Mother Deferment Request Subsidized Direct, Unsubsidized Direct, PLUS, Consolidation loans Download Application form (PDF format)
Public Service Deferment Subsidized Direct, Unsubsidized Direct, PLUS, Consolidation loans Download Application form (PDF format)
Unemployment 3-year limit (granted for 6 months at a time to a maximum of 36 months) Subsidized Direct, Unsubsidized Direct, SLS, PLUS, Perkins, and Consolidation loans Download Application form (PDF format)
Economic Hardship 3-year limit (granted for no more than one year at a time) Subsidized Direct, Unsubsidized Direct, SLS, PLUS, Perkins, and Consolidation loans Download Application form (PDF format)

If you feel you may have difficulty making payments please visit Studentaid.ed.govt

More information about postponing repayments visit American Student Assistance website and US Department of Education.

You may need to complete and submit separate deferment forms for different types of loans. With Direct Loans, one deferment form is usually all that is necessary.

You should continue making loan payments until you have been notified that the deferment is granted.

Keep copies of all forms and correspondence related to your deferment.

More information about deferment

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If you are in temporary financial difficulty and there no deferment options available, you can request forbearance from your servicer.

Forbearance is granted at the servicer’s discretion and allows you to have months added to the term of your loan, temporarily reduce the amount of your monthly payment or temporarily suspend monthly payments.

There are several forbearance options available.

The two most common types of forbearance are:

Economic Hardship Forbearance
If your student loan payments exceed 20% of your total monthly income you can apply for this type of forbearance. It is given in 12 month increments for a maximum of three years.

Administrative Forbearance
May be granted by your servicer if you are delinquent on payments prior to entering a period of deferment.

Note that interest continues to accrue on your loan during forbearance. That interest must be repaid, which can result in higher monthly payments once the forbearance has ended. The federal government does not pay the interest on Subsidized Direct loans while your loans are in forbearance.

More information about forbearance options

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Delinquency and Default

When all the loans come due, and a personal crisis looms, it's all too common to submit to the urge to shove the bills in a draw, and get to them later. This is the worst thing that you can do!

When your monthly payment is 30 days or more overdue, you are considered to be delinquent on your loan. Most servicers will contact you directly about delinquent payments and begin collection activity. Your delinquency may be reported to a credit bureau which could damage your credit rating.

When people get into economic trouble, they tend to get uncommunicative and often don't ask for help. If you expect to have a problem making a monthly payment, contact your servicer immediately. It is always easier to discuss alternatives before the due date rather than after a payment is late.

If you fall 270 days behind on a scheduled payment, you are legally in default on your loan agreement. The servicer can assume that you are not going to repay and may declare the entire amount you owe, including interest, as immediately due and payable.

Defaults are reported to credit bureaus and stay on your credit record, whether or not you eventually pay off the loan.

The consequences of default are severe.

  •  You are liable for late charges which can be added to the principal of your loan, and on which you will then pay interest.
  • When your loan is in default, your US federal income tax refunds can be withheld to repay the loan.
  • Your wages may be garnisheed (a portion withheld for repayment).
  • You may have to pay attorney's fees and court costs.
  • You lose eligibility for all federal and state financial aid until you have made satisfactory repayment arrangements on the defaulted loan.
  • In a profession that requires a license to practice, that license can be denied renewal until you make satisfactory payment arrangements on your student loan.

More information about Delinquency

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Financial Literacy

The following websites provide useful information on financial literacy and US Financial Aid.

Budgeting Resources

Loan obligation and general financial literacy, financial aid history, Direct Loan Consolidation

A resource for general finance information and news

Information specific to federal student loans

Online money management and budgeting software


Credit Management Resources

For a free copy of your credit report once a year from each credit bureau, visit

To find out your FICO® score for a fee, visit

The three major Credit Bureaus:


Smart Borrowing Resources

Student loan calculator that will figure interest capitalization costs

General information about student loan borrowing and sound money management

Information on managing repayment


For information on budgeting, student loan payment calculators, credit card debt, and other financial literacy topics, visit the following websites:

The Consumer Financial Protection Bureau (CFPB)

Calculate My Future Employment Salary

For those of you who want an idea of what salary your future job may need to provide in order to help you determine your loan and repayment amounts, you can access a few calculators at:

Cost of Living (USA) Calculator Wizard

Contact Us

For all enquires about US Financial Aid at the University of Otago, please email