Navigating Edfinancial Student Loan Payment Options

Managing student loan debt can feel overwhelming. Edfinancial Services is a federal student loan servicer that can help borrowers understand their repayment options. This article provides an overview of Edfinancial's student loan payment options, repayment plans, and other important considerations for effectively managing your student loan debt.

Understanding Your Edfinancial Account

Edfinancial does not originate federal student loans but services existing ones. To manage your loans, you'll need to create an online account at Edfinancial.StudentAid.gov/MyAccount. If you receive error messages during registration, it may be because you have not yet created an account. Through your online account, you can view loan information, make payments, and explore repayment options. If you’ve forgotten your login credentials, you can navigate to Edfinancial.StudentAid.gov/MyAccount and select “Forgot Password” or “Forgot User ID” and follow the on-screen prompts.

Federal vs. Private Loans

It's crucial to understand the type of student loan you have. Federal student loans are guaranteed by the federal government through the Direct Loan, FFELP, or Perkins Loan program. Private loans, on the other hand, are not guaranteed by the federal government and are similar to bank loans. Their interest rates may be based on a variable index, such as Prime or LIBOR, and will depend on the borrower’s (and sometimes the co-borrower’s) credit history.

Repayment Plans Overview

Edfinancial offers a variety of repayment plans to suit different financial situations. In general, the lower your monthly payment, the more interest you will pay over the life of your loan(s). Student loans accrue interest daily, so the longer you take to pay it back, the more interest you will accrue.

Standard Repayment Plan

Under a standard repayment plan, borrowers typically have up to ten years to repay their federal student loans. This plan involves fixed monthly payments and is designed to pay off the loan within the specified timeframe.

Extended Repayment Plan

The extended repayment plan allows borrowers to extend their repayment term up to 25 years. While this lowers monthly payments, it significantly increases the total interest paid over the life of the loan.

Income-Driven Repayment (IDR) Plans

Income-Driven Repayment (IDR) plans, including the new Saving on a Valuable Education (SAVE) plan (formerly the REPAYE plan), offer lower monthly payments based on your income and family size rather than your loan balance. You can apply for IDR plans online at StudentAid.gov/IDR. These plans must be renewed annually, and if your financial situation changes, you can have your plan recalculated at StudentAid.gov/IDR.

Key Considerations for IDR Plans

Eligibility: IDR plans are available for eligible federal student loan borrowers.
Income and Family Size: Payments are calculated based on your adjusted gross income (AGI) and family size.
Annual Renewal: You must renew your IDR plan each year to continue receiving income-driven payments.
Loan Forgiveness: After a certain number of years (typically 20 or 25 years), the remaining loan balance may be forgiven. However, the forgiven amount may be subject to income tax.

Specific IDR Plans

Income-Based Repayment (IBR) Plan: For the IBR Plan, you’re considered a new borrower on or after July 1, 2014, if you had no outstanding balance on a William D. Ford Federal Direct Loan (Direct Loan) Program loan or a FFELP loan on July 1, 2014, or you had no outstanding balance on a Direct Loan or FFELP loan when you received a new loan on or after July 1, 2014.
Saving on a Valuable Education (SAVE) plan: often provide a lower monthly payment compared to other plans as they are based on your income and family size rather than your loan balance.

Income-Contingent Repayment (ICR) Plan

This is the only IDR plan available for parent PLUS borrowers.

Deferment and Forbearance

If you're struggling to make payments, you may be eligible for a deferment or forbearance, which can temporarily suspend your payments. You may be eligible if you’re unable to make payments while you’re in school, unemployed, experiencing economic hardship, or serving active duty in the military. For eligible subsidized federal loans, you may not be responsible for interest that accrues during the deferment.

Key Differences Between Deferment and Forbearance

Deferment: A deferment is a temporary postponement of loan payments that is typically granted for specific situations, such as enrollment in school, unemployment, or economic hardship. For eligible subsidized federal loans, you may not be responsible for interest that accrues during the deferment.
Forbearance: A forbearance is a temporary postponement or reduction of loan payments granted due to financial difficulties. Keep in mind that interest will continue to accrue while in forbearance, which could affect your repayment plan installment amount in the future.

We encourage you to make any payments you can during a deferment or forbearance. You can send us a payment via your preferred method of payment. Auto Pay payments cannot be made while your loan is in deferment or forbearance.

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Auto Pay

Consider registering for Auto Pay, Edfinancial’s automatic-debit payment program, in your online account. With Auto Pay, your student loan payments are automatically debited from your checking or savings account each month. To register for Auto Pay, access your online account. You may need to create an account if you have not already done so. In the left navigation, select “Auto Pay”. By default, Auto Pay will be set to pay the minimum payment on each of your loans. Your payment will continue to be debited every month on your due date.

Benefits of Auto Pay

Convenience: Payments are automatically deducted each month.
Interest Rate Reduction: Some lenders offer a slight interest rate reduction for enrolling in Auto Pay.

Managing Auto Pay

You can make changes to your Auto Pay by signing in to your online account and selecting Auto Pay from the navigation menu. To cancel Auto Pay, go to your Account Profile. Under the Bank section, you will see the option to “Cancel Auto Pay”. To make changes to Auto Pay, click on Auto Pay in the left navigation and update your Auto Pay enrollment. NOTE: You may not change Auto Pay to pay less than a loan’s minimum monthly payment amount, and you may only change Auto Pay to pay more than a loan’s minimum monthly payment if the loan is not currently on an Income-Driven Repayment (IDR) plan.

NOTE: You may only set up Auto Pay to pay more than a loan’s minimum monthly payment if the loan is not currently on an Income-Driven Repayment (IDR) plan.

If your account was past due at the time you requested Auto Pay, and it was not brought current with a forbearance, you may need to make a manual payment to bring your account current. Your bank may also reject a payment for non-sufficient funds or for an invalid account number which may cause your account to become past due. You can edit your bank account information for Auto Pay by clicking Auto Pay in the left navigation, updating the bank information in the top left and submitting your updated Auto Pay enrollment.

Making Payments

There are multiple ways to make a payment. You can send us a payment via your preferred method of payment.

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Payment Application

All payments are applied first to outstanding interest, unless late fees are assessed, and the remainder of the payment is applied to the principal balance. If you make a payment greater than the minimum amount due, the additional amount will be applied to your principal balance after all outstanding interest and fees, if applicable, are satisfied.

During IBR and PAYE, your payments would first be applied to interest, then to fees, then to principal. If you send in a payment greater than the minimum amount due, the additional amount will be applied to your principal balance on your loan after all outstanding fees and interest is satisfied on the loan.

Interest Accrual

Interest accrues daily on your loan(s), and the interest accrues separately from your principal balance.

To calculate the approximate 30-day interest accrual: [(20,000 x .045) ÷ 365.25] x 30 = $73.92.

Any payment you make will, per regulation, be applied first to outstanding interest, unless late fees* are assessed, then your principal balance. Interest accrues daily; therefore, the amount of unpaid accrued interest changes daily.

To determine the amount of unpaid interest, log in to your online account and view your loan details.

Late Fees

Some lenders charge a late fee if you do not make your payment on time. Usually, these fees are charged as a percentage of your monthly payment. Many lenders provide for a grace period before they charge a late fee.

These payments will be posted effective as of the due date and no late fees will be assessed.

Loan Consolidation

If you have multiple student loans, you may consider a Direct Consolidation Loan to combine the loans into one loan and have one single monthly payment. There are pros and cons of consolidation to be considered.

Loan Forgiveness and Discharge

Depending on your circumstances, you may be eligible to have your loan forgiven or discharged.

Borrower Defense to Repayment

Borrower Defense to Repayment (Borrower Defense) is a discharge program for Federal Direct Loan borrowers who believe their school misled them or lied to them about something that was central to their decision to enroll. If you are seeking more information regarding this discharge program, such as your eligibility, you may visit the Borrower Defense page at StudentAid.gov.

Addressing Issues with Edfinancial

If you believe information has been incorrectly reported by Edfinancial to a consumer reporting agency (CRA), you may dispute your credit reporting. Important: We are unable to accommodate requests for goodwill adjustments to remove accurate negative credit reporting. According to the Fair Credit Reporting Act (FCRA), Edfinancial is obligated to report true and accurate information to the CRAs and is unable to remove negative credit reporting if the account was past due and reported accurately.

You have the ability to request an immediate review of the response you receive from a customer service representative, which will be completed by a senior staff member.

Additional Considerations

Grace Period

If your loans have a standard, six-month grace period, your first payment will be due approximately six months after you graduate or drop to below half-time enrollment.

Parent PLUS Loans

A Parent PLUS Loan is made directly to the parent, not the student, so responsibility for repayment rests with the parent.

If you have a Parent PLUS loan and the student you took the loan out for is enrolled at an eligible school at least half-time, you may qualify for a Parent PLUS Borrower Deferment. You can download or print the Parent PLUS Borrower Deferment Request form from the Loan Deferment and Forbearance section at the StudentAid.gov forms library.

Repayment Options PLUS Loans made to graduate and professional student borrowers (GradPLUS) may be deferred during the six-month period that begins the day after the end date of a deferment during which the borrower was enrolled at least half time.

Impact of Natural Disasters

If you are a federal student loan borrower who has been impacted by a federally declared natural disaster, you may be eligible for assistance such as temporarily postponing your payments.

Credit Reporting

Each loan that you take out has its own “tradeline” (indicating an account or line of credit) that is reported to the nationwide consumer reporting agencies. Depending on the number of loans you received, you may see several tradelines that will each display separately on your credit report. Note: The numbers associated with the tradelines are not the same as your account number.

Certain eligible events, like being on an in-school deferment, receiving unemployment benefits/government assistance, or other select qualifications will clear any previous negative reporting if the qualifying period for the event occurred at the same time as the negative reporting period.

Making timely payments will help you establish a good credit history and demonstrate to other creditors that you are a responsible borrower, a quality that can benefit you for many years into the future.

Interest Deduction

You may be able to deduct an amount lower than $600. The amount of interest paid on your student loan account is provided to you by the end of January the following year. Your reported tax information can also be accessed through your online account.

E-Correspondence

E-correspondence is an additional process that allows us to electronically send you communications that may include payment confirmations, information about your repayment options, and required annual privacy policy notices. We are required by law to provide certain information to you in writing; this means you have a right to receive that information on paper. We may provide this information to you electronically after you have reviewed the Disclosure and given consent to receive this information electronically.

Maintaining Accurate Information

Address change? New phone number? Newly married? Transferred to a different school? Your servicer needs to know. And it’s your responsibility to keep your servicer in the loop. Please upload a written request to change the name on your account and a copy of your name change documentation through your online account. Naturalization.

Keep good financial records. As long as your servicer has your current contact information, you will receive periodic updates detailing your outstanding balance, payment due dates, etc.

Strategies for Managing Student Loan Debt

Determine Affordability

Determine how much you can afford to pay each month. If you’ve already been hired for your first job, you already know your starting salary. If you’re still job-hunting, check with the placement office at your school about salary ranges in your chosen field. It’s a good rule of thumb to keep student loan payments at 8-10% of your monthly income or less.

Making Payments While in School

Federal student loans in the student’s name generally have an automatic initial in-school period while the student is enrolled at least half-time, followed by a grace period. Even if you aren’t required to, making payments while you’re in school can help you in the long run.

Loan Simulator

To explore different repayment options and to see if you qualify for a reduced payment, you can use the Loan Simulator as studentaid.gov.

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