Borrower Benefits Legal Disclosure

UHEAA Borrower Benefits are subject to change without notice.

The Federal Family Education Loan Program Borrower Benefits

Automatic Payment Benefit

UHEAA will reduce the interest rate charged to borrowers on Federal Stafford and Federal Parent and Graduate/Professional PLUS loans as determined by the date of first disbursement:

  • for loans first disbursed on or after July 1, 2008, by 0.25%.
  • for loans first disbursed on or after January 1, 2008 and before July 1, 2008, by 0.50%.
  • for loans first disbursed on or before December 31, 2007, by 1.25%.

UHEAA will reduce the interest rate charged to borrowers on Federal Consolidation loans as determined by the date of first disbursement: (please note that UHEAA indefinitely suspended originating Federal Consolidation loans effective September 1, 2008):

  • for loans disbursed on or after January 1, 2008 and before April 30, 2008, UHEAA will reduce the interest rate by 0.25%.
  • for loans first disbursed on or after May 1, 2006 and before December 31, 2007, UHEAA will reduce the interest rate by 0.50%.
  • for loans disbursed on or before April 30, 2006, UHEAA will reduce the interest rate by 1.25%.

The Automatic Payment Benefit interest rate reduction will remain in effect as long as the loan(s) is paid by automated payments and UHEAA determines it can provide the benefit. The benefit may be reduced or eliminated at UHEAA's discretion and is subject to the following:

  • In order to qualify for the Automatic Payment Benefit, all of a borrower's loans serviced by UHEAA must be set up for automated payments.
  • Loans that are in repayment status qualify for the Automatic Payment Benefit after the account is set up for automatic payments from a checking or savings account. Loans in deferment, forbearance or grace status are not eligible for the Automatic Payment Benefit. An Automatic Payment Benefit application received for a loan in deferment, forbearance or grace status will be processed once the loan enters repayment.
  • The Automatic Payment Benefit interest rate reduction remains in effect as long as the loan(s) is paid by automated payments.
  • The Automatic Payment Benefit may be canceled if the loan has a returned transaction for any reason (NSF, Account Closed, Incorrect Transit/Routing number, etc.).
  • Loans accrue interest at the federal statutory rate, not the reduced rate, during periods of deferment and forbearance. During periods of deferment, the U.S. Department of Education will pay the accrued interest on subsidized loans at the statutory rate.
  • The automatic payment withdrawals and Automatic Payment Benefit automatically resume upon expiration of a deferment or forbearance.

Origination Fee Credit Benefit

  • For Federal Stafford loans guaranteed by UHEAA between May 1, 2000 and June 30, 2009, UHEAA will credit to the borrower's principal loan balance, upon purchase of the loans by LPP, an amount equal to the Origination Fee originally deducted from the borrower's loan proceeds.
  • Federal Parent and Graduate/Professional PLUS guaranteed by UHEAA between May 1, 2000 and June 30, 2009, and on or before December 31, 2007, UHEAA will credit to the borrower's principal loan balance, upon purchase of the loans by LPP, an amount equal to the Origination Fee originally deducted from the borrower's loan proceeds.
Subject to the following:

  • Federal Stafford or Federal Parent and Graduate/Professional PLUS loans purchased by LPP, then immediately paid by a Federal Consolidation loan, are eligible for this credit. Federal Stafford or Federal Parent and Graduate/Professional PLUS loans paid by a Federal Consolidation loan prior to LPP purchasing the Federal Stafford or Federal Parent and Graduate/Professional PLUS loan are not eligible for this credit.
  • The Origination Fee Credit Benefit is applied to the account balance within 30-60 days of loan purchase by LPP.
  • The Origination Fee Credit Benefit can only be applied as a credit to the loan principal. The borrower may not receive a direct refund. In the case of a payment in full prior to receipt of the credit, the credit is posted to the principal loan balance and any overpaid amount is refunded to the borrower by check.

Timely Payment Origination Fee Credit Benefit

For Federal Stafford or Federal PLUS loans guaranteed by UHEAA prior to May 1, 2000 and first disbursed on or after January 1, 1995, UHEAA will credit to the borrower’s principal balance an amount equal to the Origination Fees paid by the borrower in excess of $240 after the borrower pays the first 24 monthly payments on time, subject to the following:

  • The Timely Payment Origination Fee Credit Benefit will apply as long as LPP continues to hold the loan.
  • The borrower is allowed to make three late payments between 15 and 30 days after the due date without losing eligibility for the Timely Payment Origination Fee Credit Benefit.
  • The borrower is immediately disqualified from the Timely Payment Origination Fee Credit Benefit if a payment is 31 days or more delinquent.
  • The Timely Payment Origination Fee Credit Benefit is the net amount of origination fees charged to the borrower in excess of $240. To qualify for this benefit the total indebtedness of a borrower’s loans held by LPP must exceed $8,000.
  • Periods of time when a loan is in deferment or forbearance are not used to calculate the 24-month time period.
  • Lump-sum payments count as eligible monthly payments if the due date is advanced. If the borrower instructs UHEAA to post a lump sum payment as a principal reduction and advises UHEAA not to advance the due date, the lump sum amount will count as one monthly payment.

Timely Payment Benefit

  • Federal Stafford or Federal Parent and Graduate/Professional PLUS loans that first entered repayment on or after January 1, 2008 and before April 30, 2008, UHEAA will reduce the outstanding balance by 2% if the borrower pays the first 48 monthly payments on time.
  • Federal Stafford or Federal Parent and Graduate/Professional PLUS loans that first entered repayment on or after January 1, 1993 and before December 31, 2007, UHEAA will reduce the interest rate 2% if the borrower pays the first 48 monthly payments on time.
  • Federal Consolidation loans originated on or after May 1, 2006 and for Federal Consolidation applications received prior to October 8, 2007, UHEAA will reduce the interest rate 1% if the borrower pays the first 36 monthly payments on time.
  • Federal Consolidation loans originated on or after January 1, 1993 and before April 30, 2006, UHEAA will reduce the interest rate 1% if the borrower pays the first 48 monthly payments on time.

    Eligibility for this interest rate discount is subject to the following additional terms and conditions:

    • The interest rate reduction will apply as long as LPP continues to hold the loan.
    • The borrower’s loan is immediately disqualified from the Timely Payment Benefit if a payment is made 15 days or more after its due date.
    • The Timely Payment Benefit can be earned only during the first 48 or 36 months of repayment (depending on the type of loan and the origination date).
    • Periods of time when an account is in deferment or forbearance are not counted in the 48- or 36-month time period.
    • Lump-sum payments count as eligible monthly payments if the due date is advanced. If the borrower instructs UHEAA to post a lump sum payment as a principal reduction and advises UHEAA not to advance the due date, the lump sum amount will count as one monthly payment. A borrower must make 36 or 48 timely payments on all open loans in order to qualify. A borrower may not pay a single open loan or a subset of open loans ahead of other loans in order to accelerate eligibility.
    • Federal Stafford or Federal PLUS loans entering repayment, or Consolidation Loans originated, prior to January 1, 1993 do not qualify for this benefit.
    • If a borrower consolidates Federal Stafford or Federal Parent and Graduate/Professional PLUS loans held by LPP on which this benefit has been earned, the borrower must re-qualify for the Timely Payment Benefit.
    • If a borrower consolidates Federal Stafford or Federal Parent and Graduate/Professional PLUS loans, the statutory rate, not the reduced rate, will be used to calculate the weighted average of the Federal Consolidation loan.

    Federal PLUS Loan Interest Credit Benefit

    For Federal PLUS loans held by LPP with a first disbursement date on or after July 1, 1999 and before July 1, 2006, UHEAA applies a credit to your Federal PLUS loan principal balance equal to the amount of interest paid by you during the first 12 months of repayment, subject to the following:

    • The PLUS Loan Interest Credit Benefit is calculated using the actual amount of interest paid on the account during the first 12 months of repayment. Capitalized interest does not count toward the credit.
    • Periods of deferment or forbearance do not extend the 12-month repayment period.
    • The Federal PLUS Loan Interest Credit Benefit is calculated and applied to the loan principal balance within 60 days after the end of the first 12 months of repayment.
    • If a borrower pays a Federal PLUS loan in full during the first 12 months of repayment, the credit will be applied to the account and then refunded as an overpayment within 60 days of payoff. Overpayments are refunded to the borrower by check. If the loan is paid in full, the interest credit is equal to the actual amount of interest paid on the account, including accrued interest paid by consolidation.
    • If the loan is paid in full by consolidation and the consolidation loan is held by LPP, the credit is applied to the consolidation loan.
    • Lump-sum payments cannot accelerate Federal PLUS Loan Interest Credit Benefit eligibility. The loan does not become eligible for this benefit until the first 12 months of repayment have elapsed or the loan is paid in full, whichever comes first.

    Loans that are rehabilitated and repurchased are not eligible for the Federal PLUS Loan Interest Credit Benefit. This UHEAA Borrower Benefits Legal Disclosure was last updated on December 1, 2009.