Utah Higher Education Assistance Authority - FFELP Long-Term Volunteer Service

CONGRATULATIONS FOR CHOOSING TO SERVE!

You’re preparing to serve on a religious mission or otherwise participate in an unpaid, volunteer service experience? We honor you for your willingness to serve others!

We want to help you take the necessary steps to ensure your student loans remain in good standing while you are away. Since you probably won’t be able to concern yourself with these kinds of things after you leave, we will provide you with all the information you need right here on this site.

Please don’t be overwhelmed by this process – we’ll guide you through every step! And please, please don’t just ignore your loans and hope the whole thing will be okay without your attention – inattention now will cause you problems later.

WHAT TO DO ABOUT LOAN PAYMENTS WHILE YOU’RE GONE

Since you will be receiving no income while you are serving you have a couple of choices for keeping your loans in good standing: Income-Based Repayment or Forbearance. Both have pros and cons so we’ve prepared a brief comparison to help you.

WHAT ELSE YOU’LL NEED AND WHY. . .

While you’re away you need someone “back home” who can watch over your student loans. It’s not a time-consuming responsibility for them, but there is some paperwork involved. We need to know the name of the person you authorize to have access to your account information. To designate that person use the Third Party Authorization Form.

WHAT ACTIONS YOU NEED TO TAKE

First, read the “IBR vs. Forbearance during Volunteer Service” sheet and decide which option is right for you. Then come back here and we’ll guide you through every step!

Apply for forbearance

Apply for IBR

IBR vs. FORBEARANCE
DURING VOLUNTEER SERVICE

Forbearance

Forbearance is a period of time when you are temporarily allowed to stop making payments. It can be granted for a period of 12 months at a time so the person handling your finances while you are away will need to send in a new forbearance request form when the first 12-month period is almost up.

Pro:

Very little paperwork. You submit one forbearance request form right before you leave for your service and one form before the first 12-month period is up. A copy of your “mission call” and a “Third Party Authorization Form” is also required.

Cons:

Cost. Interest will accrue on your loans and will be capitalized when the forbearance period is over. For example, interest on a loan of $3500 at 6.8% is approximately $238 per year. If the interest is not paid during the forbearance period, that amount is added to the principal balance, which means you will pay interest on interest. (You or the person you designated to help with your finances can pay the interest as it accrues to avoid the consequences of capitalization.) There is a calculator at www.uheaa.org under “Parents & Students” to help you estimate the interest your own loans would accrue. (You may pay the interest on your loans during the forbearance period.)

Limited Forbearance Time Available. Currently UHEAA allows borrowers a maximum of 36 months of forbearance per loan over the course of the entire loan period (usually 10 years). Using this option while you are away will leave you with only 12 months when you return. If at any time in the remaining loan period you have financial difficulties, you will have a limited amount of forbearance time available to help you through.

Income Based Repayment

IBR is a repayment plan and the required monthly payment is based on your income and family size. Since your voluntary service is completely unpaid, your family size (1) and income will result in a monthly payment amount of $0.

Pro:

Interest subsidy on subsidized loan. If you have subsidized loans, the Department of Education will pay the interest that accrues on your loans during the first three years you are in the IBR program. For example, a subsidized loan of $3500 at 6.8% will accrue interest of $238 in the first year; $476 over two years. In this example, without the subsidy you would either be responsible to pay the interest or it would be capitalized (added to the principal balance) and you will pay interest on interest. Capitalization occurs when you change to a different repayment plan.

Cons:

Documentation needed. Like forbearance, there is a form to request IBR and a Third Party Authorization Form. To document earnings you must also submit proof of your income which can be copies of tax forms or a self-certification of income on a form we provide. These documents are needed once when you leave, and then once when the first 12-month period is almost up. (Except for the Third Party Authorization Form which is needed only once.)

Pro/Con:

Monthly statements. Since IBR is a repayment plan, we are required to provide you with a monthly statement of your account, even if the total amount due is $0. To save document preparation and mailing costs we strongly recommend that you call us to sign up for electronic statements while you’re gone and have them sent to the person you designated to access your student loan account.

WHAT DOCUMENTS ARE NEEDED FOR FORBEARANCE

Third Party Authorization Form (1 copy). This is the form that gives us authorization to talk about your student loans with the person you designate.
Forbearance Request Form (2 copies). Important: You (the missionary) must complete and sign BOTH of these forms before you leave, but don’t put a date on one of them. Send one now with items #1 and #3 from this list; the other signed form will need to be sent later. The person you designated to help you with your student loans must send us the second signed form when the first 12-month period is almost up. That person can date the form before it’s sent.
Your “Mission Call” letter (1 copy). This provides us documentation of your service.

WHAT DOCUMENTS ARE NEEDED FOR INCOME-BASED REPAYMENT

Third Party Authorization form (1 copy). This is the form that gives us authorization to talk about your student loans with the person you designate. Once you authorize this person to have access, he or she will continue to have access until you tell us otherwise. In other words, you don't need to re-authorize them every year you are away.
Application for Income-Based Repayment (1 copy).
Documentation of Income.
1. IRS Form 1040A or 1040 EZ. If you filed income taxes for the last tax year, you are required send us a signed copy of one of these forms (front and back).
  Important note: If your Adjusted Gross Income (AGI) on your tax form was more than $16,240 you must also send in the two documents listed in 3b.
2. Alternative Documentation of Income Form and Income Based Repayment Statement of Income Form. These are required if you did not file incomes taxes for the previous year.
Your “Mission Call” letter (1 copy). This provides us documentation of your unpaid service.

WHERE TO MAIL THE DOCUMENTS

Please mail, or deliver the appropriate documents (depending on your choice of Income Based repayment or Forbearance) to:

UHEAA
P O Box 145110
Salt Lake City, UT 84114-5110

UHEAA
60 S 400 W
Salt Lake City, UT 84101

How to complete the Application for Income Based Repayment Form:

Section 1: Complete your name, address, telephone number, etc. We recommend you use the address of the person you designated.
Section 2: Read the instructions.
Section 3: Enter “1” in the “Family Size” field.
Section 4: We will complete this section for you.
Section 5: Read, sign, and date the form.
Sections 6 – 9: Review for additional information.

How to complete the Alternative Documentation of Income Form:

Section 1: Complete your name, address, telephone number, etc. We recommend you use the address of the person you authorized.
Section 2: Read the instructions.
Section 3: Leave blank.
Section 4: Write “0” (zero) in the amount of income row and check the “yearly” box.
Section 5: Read, complete, sign, and date the form. (Mark the check box if it applies to you.)

How to complete the Income Based Repayment Statement of Income Form:

Item 1: Fill in the name of your organization (e.g., Church of Jesus Christ of Latter-Day Saints)
Item 2: Circle the description that best describes your financial income during the period you will be serving.
Signature area: Print your name and account number and then sign and date the form.

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