Repayment

After you graduate, leave school, or drop below half-time enrollment, you must begin repayment of your federal loans (Direct Loan Program). For a Federal Stafford Loan, there is a "grace period" of six months before you have to begin repayment. The repayment period for a Direct PLUS Loan begins at the time the PLUS loan is fully disbursed, and the first payment is due within 60 days after the final disbursement.

You have the choice of several repayment plans, and your loan service will notify you of the date your first payment is due. 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.

 

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.

 

Income-Based Repayment Plan
 
An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size. The U.S. Department of Education offers three income-driven repayment plans:

  1. Income-Based Repayment Plan (IBR Plan)
  2. Pay As You Earn Repayment Plan (Pay As You Earn Plan)
  3. Income-Contingent Repayment Plan (ICR Plan)

Most federal student loans are eligible for at least one income-driven repayment plan. For those who qualify, some advantages of the income-driven repayment plans include:

  • Your monthly payment may decrease. While your monthly payment may fluctuate during repayment, it will never exceed the amount under the standard 10-year plan, and is often less.
  • If you’re paying under an income-driven repayment plan and are eligible for Public Service Loan Forgiveness, you may qualify for forgiveness of any remaining Direct Loan balance after you have made 10 years of qualifying payments.

 
For more information and to see if an income-driven repayment plan is right for you, visit studentaid.ed.gov/idr.

 

 

Deferment

A deferment is a postponement of payment on a loan, during which interest does not accrue if the loan is subsidized. In most cases, you need to submit a deferment request to your loan servicer along with documentation of your eligibility for the deferment.

If you've gone back to school and your loan servicer receives enrollment information that shows you're enrolled at least half time, it will automatically put your loans into deferment and notify you. You have the option of cancelling the deferment and continuing to make payments on your loan. If you are in default on your loan, you are not eligible for a deferment.

 

Forbearance

If you can't make your scheduled loan payments, but don't qualify for a deferment, you may be able to get a forbearance. A forbearance allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments. You can get more information by contacting your loan servicer. If you are in default on your loan, you are not eligible for a forbearance.

 

Cancellation

In certain circumstances, your loan can be cancelled/discharged. Contact your loan servicer for more information or to get a cancellation form. You can also find more information in your copy of the Borrower's Rights and Responsibilities Statement.

For more information, please refer to the Federal Student Aid website or contact the Financial Aid Office.