US Financial Aid: disbursement & repayment

Disbursement

Loans will not be disbursed to your nominated bank account until you arrive and enrol in your courses at ANU, the precise date of your disbursement will be conveyed to you through a disbursement letter. ANU endeavours to set the disbursement dates as the first Friday in each semester, however, this is dependent upon paperwork being completed and the access to the required systems as there can be periods where the systems are closed for maintenance during these times. We recommend you be prepared to incur expenses (such as tuition fee deposit, housing deposits etc.) before your loan funds become available.

ANU has two disbursement dates based on two semesters in one academic year; each disbursement will be exactly half of your yearly award. Therefore, you will receive the total fund in two instalments after the whole process is completed. Please note that disbursement dates are the dates your loan money will be applied to your ANU student account. The total amount for the first and second disbursements is cashed based on the exchange rate on the day that the money is deposited in the ANU bank account, this date will be a couple (no more than three) days earlier than your actual disbursement date.

After your tuition fee in Australian dollars is taken out, the rest of the money (credit balance) will be refunded to you in the method you indicate on your refund form. The most common method is that the money will be deposited to your Australian bank account provided on the refund form.  Therefore, we recommend you open an Australian bank account shortly after you arrive in Canberra. Please note that the University is bound by US Federal Regulations to action the refund of your credit balance within 14 days of your disbursement date. For this reason, we will not disburse your loan funds until we have received your completed refund form and signed disbursement letter.

Your exact tuition fee will be calculated after you have enrolled in your courses. The ANU fees office will be notified that you are participating in the Direct Loan program and will be aware that your tuition fees will be paid once your loan has been disbursed. If you receive notices about your tuition fees from the fees office, please do not be concerned as sometimes these will be a generic email sent to all students.

Origination fees

In addition to interest, Federal Direct Subsidised and Unsubsidised Loans have a 1.059% origination fee for 2019. This is deducted from the loan at the time of disbursement. Direct PLUS loans are charged a 4.236% origination fee. This is also deducted from the loan at the time of disbursement. For example, if you borrow $3,500 in unsubsidised loans for the academic year, a total of $37.07 will be deducted from your loan amount and paid directly to the U.S. Department of Education. Thus, the annual net amount of the loan that would credit or disburse to your account is approximately $3,462.93.

You should take the origination fee into account when you request a Direct Loan. To do this, you should first estimate how much money you require to cover your costs. Once you have estimated this, you can include the origination fee into the balance to be requested for an award by using the following formulas:

• Direct Unsubsidized/Subsidized Loan award amount to request = Loan amount you want / 0.98941
• PLUS loans award amount to request = Loan amount you want / 0.95764

Note that, in most cases, the ANU Cost of Attendance includes the origination fee into the maximum award amount that you can borrow.

Repayment plans

As soon as you leave school or drop below half-time enrolment, you have a six-month grace period (for Subsidized and Unsubsidized loans) before you must commence monthly principal and interest repayments on your loan. The national student loan data system provides data on all your federal student loans to assist you keep track of the amounts borrowed. To get an idea of your monthly loan payments after you graduate, take a look at the Federal Student Aid repayment calculator.

You'll have the choice of several types of repayment plans, and the loan servicer will notify you of the date your first payment is due. If you do not receive notification from your server - it is your responsibility to contact them and enquire about the status of your loan. You are still required to make repayments on the due date even if you have not received correspondence or an invoice. If you do not choose a repayment plan, you will be placed on the standard repayment plan. Most direct loan borrowers choose to stay with the standard repayment plan, but there are other options for borrowers who may need more time to repay or who need to make lower payments at the beginning of the repayment period.

Standard repayment

With the standard plan, you'll pay a fixed amount each month until your loans are paid in full. Your monthly payments will be at least $50, and you'll have up to 10 years to repay your loans. The standard plan is good for you if you can handle higher monthly payments because you'll repay your loans more quickly. Your monthly payment under the standard plan may be higher than it would be under the other plans because your loans will be repaid in the shortest time. This means you may also pay less interest.

Extended repayment

To be eligible for the extended plan, you must have more than $30,000 in Direct loan debt and you must not have an outstanding balance on a Direct loan as of October 7, 1998. Under the extended plan you have 25 years for repayment and two payment options: fixed or graduated. Fixed payments are the same amount each month, as with the standard plan, while graduated payments start low and increase every two years, as with the graduated plan below. This is a good plan if you will need to make smaller monthly payments. Because the repayment period will be 25 years, your monthly payments will be less than the standard plan. However, you may pay more in interest because you're taking longer to repay the loans.

Remember that the longer your loans are in repayment, the more interest you will pay.

Graduated repayment

With this plan your payments start out low and increase every two years. The length of your repayment period will be up to ten years. If you expect your income to increase steadily over time, this plan may be right for you. Your monthly payment will never be less than the amount of interest that accrues between payments. Although your monthly payment will gradually increase, no single payment under this plan will be more than three times greater than any other payment.

Income contingent repayment (not available for parent PLUS loans)

This plan gives you the flexibility to meet your Direct loan obligations without causing undue financial hardship. Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct loans.

Under the ICR plan you will pay each month the lesser of:

• the amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or
• 20% of your monthly discretionary income*.

If your payments are not large enough to cover the interest that has accumulated on your loans, the unpaid amount will be capitalised once each year. However, capitalisation will not exceed 10 percent of the original amount you owed when you entered repayment. Interest will continue to accumulate but will no longer be capitalised. The maximum repayment period is 25 years. If you haven't fully repaid your loans after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged. You may, however, have to pay taxes on the amount that is discharged.

Income-based repayment

Under this plan the required monthly payment will be based on your income during any period when you have a partial financial hardship. Your monthly payment may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If you meet certain requirements over a specified period of time, you may qualify for cancellation of any outstanding balance of your loans.

Consolidation

If you have multiple federal education loans, you can consolidate them into a single Direct Consolidation loan. This may simplify repayment if you are currently making separate loan payments to different loan holders, as you'll only have one monthly payment to make. There may be tradeoffs, however, so you'll want to learn about the advantages and possible disadvantages of consolidation before you consolidate. To learn more, visit the Direct Consolidation Loan website.