Loan Repayment

My loans are due for repayment, now what?

The Department of Education has an array of different options to help students repay student loans without breaking the bank, but first let’s talk about what to do if you cannot make your payment.

What are my options if I can’t make my payment?

There are options if you absolutely cannot make a payment. In any case, the best option is to communicate with your loan servicer. They are going the have the best picture of what is available to help you and keep you out of default.

Deferment- A deferment is postponing the due date of your loan until a later date. Deferments can be granted in the event of an economic hardship, attending another institution, unemployment as well as other options.

Forbearance- If you can't make your scheduled loan payments, but don't qualify for a deferment, your loan servicer may be able to grant you a forbearance. With forbearance, you may be able to stop making payments or reduce your monthly payment for up to 12 months. Interest will continue to accrue on your subsidized and unsubsidized loans (including all PLUS loans).

When can my federal student loans be forgiven, canceled, or discharged?

You must repay your loans even if you don’t complete your education, can’t find a job related to your program of study, or are unhappy with the education you paid for with your loan. However, certain circumstances might lead to your loans being forgiven, canceled, or discharged.

The list below is a quick view of the types of forgiveness, cancellation, and discharge.

Type of Forgiveness, Cancellation, or Discharge Direct Loans FFEL* Perkins Loans
Closed School Discharge X X X
Total and Permanent Disability Discharge X X X
Death Discharge X X X
Discharge in Bankruptcy (in rare cases) X X X
False Certification of Student Eligibility or Unauthorized Payment Discharge X X  
Unpaid Refund Discharge X X  
Teacher Loan Forgiveness X X  
Public Service Loans Forgiveness X    
Perkins Loan Cancellation and Discharge (includes Teacher Cancellation)     X
Borrower Defense Discharge X X1  

* - Federal Family Education Load Program Loans

1 - Borrowers may submit borrower defense claims with regard to FFEL Program loans against the holder of the loan only under the circumstances described in 34 CFR 682.209(g).

Who is my loan servicer?

Your loan servicer is a company that serves as a liaison between your school and Federal Student loans. They get the money from the government and then send it to the school to cover your tuition, fees, and books. When it’s time to repay your loans, instead of paying the school you repay your loan servicer. They will work with you on choosing the best repayment plan, loan consolidation and other tasks related to your Federal Student loans.

To look up who is servicing your Federal Student loans visit: www.nslds.ed.gov

  • Click Financial Aid Review
  • Accept terms and conditions
  • Enter your FSA ID
  • Same one you used to complete the FAFSA
  • Enter Password
  • Same as FAFSA password
  • Click on number next to loan

  • Note Servicer information

  • Check all loans, as some servicers may be different

Repayment plans available

Overview of Direct Loan and FFEL Program Repayment Plans
Repayment Plan Eligible Loans Monthly Payment and Time Frame Eligibility and Other Information

Standard Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans
  • all Consolidation Loans (Direct or FFEL)

Payments are a fixed amount.

Up to 10 years (up to 30 years for Consolidation Loans).

All borrowers are eligible for this plan

You’ll pay less over time than under other plans.

Graduated Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans
  • all Consolidation Loans (Direct or FFEL)

Payments are lower at first and then increase, usually every two years.

Up to 10 years (up to 30 years for Consolidation Loans).

All borrowers are eligible for this plan.

You’ll pay more over time than under the 10-year Standard Plan.

Extended Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans
  • all Consolidation Loans (Direct or FFEL)

Payments may be fixed or graduated.

Up to 25 years.

  • If you're a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans.
  • If you're a FFEL borrower, you must have more than $30,000 in outstanding FFEL Program loans.
  • Your monthly payments will be lower than under the 10-year Standard Plan or the Graduated Repayment Plan.
  • You’ll pay more over time than under the 10-year Standard Plan.

Revised Pay As You Earn Repayment  Plan (REPAYE)

  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS loans made to students
  • Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents
  • Your monthly payments will be 10 percent of discretionary income.
  • Payments are recalculated each year and are based on your updated income and family size.
  • If you're married, both your and your spouse’s income or loan debt will be considered, whether taxes are filed jointly or separately (with limited exceptions).
  • Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 or 25 years.
  • Any Direct Loan borrower with an eligible loan type may choose this plan.
  • Your monthly payment can be more than the 10-year Standard Plan amount.
  • You may have to pay income tax on any amount that is forgiven.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF).

Pay As You Earn Repayment Plan (PAYE)

  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS loans made to students
  • Direct Consolidation Loans that do not include (Direct or FFEL) PLUS loans made to parents
  • Your maximum monthly payments will be 10 percent of discretionary income.
  • Payments are recalculated each year and are based on your updated income and family size.
  • If you're married, your spouse's income or loan debt will be considered only if you file a joint tax return.
  • Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 years.

 

  • You must be a new borrower on or after Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011.
  • You must have a high debt relative to your income.
  • Your monthly payment will never be more than the 10-year Standard Plan amount.
  • You’ll pay more over time than under the 10-year Standard Plan.
  • You may have to pay income tax on any amount that is forgiven.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF).

Income-Based Repayment Plan (IBR)

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans made to students
  • Consolidation Loans  (Direct or FFEL) that do not include  Direct or FFEL PLUS loans made to parents
  • Your monthly payments will be 10 or 15 percent of discretionary income.
  • Payments are recalculated each year and are based on your updated income and family size.
  • If you're married, your spouse's income or loan debt will be considered only if you file a joint tax return.
  • Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 or 25 years.
  • You may have to pay income tax on any amount that is forgiven.
  • You must have a high debt relative to your income.
  • Your monthly payment will never be more than the 10-year Standard Plan amount.
  • You’ll pay more over time than under the 10-year Standard Plan.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF).

Income-Contingent Repayment Plan (ICR)

  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS Loans made to students
  • Direct Consolidation Loans
  • Your monthly payment will be the lesser of:
    •  20 percent of discretionary income, or;
    • the amount you would pay on a repayment plan with a fixed payment over 12 years, adjusted according to your income.
  • Payments are recalculated each year and are based on your updated income, family size, and the total amount of your Direct Loans.
  • If you're married, your spouse's income or loan debt will be considered only if you file a joint tax return or you choose to repay your Direct Loans jointly with your spouse.
  • Any outstanding balance will be forgiven if you haven't repaid your loan in full after 25 years.
  • Any Direct Loan borrower with an eligible loan type may choose this plan.
  • Your monthly payment can be more than the 10-year Standard Plan amount.
  • You may have to pay income tax on the amount that is forgiven.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF).
  • Parent borrowers can access this plan by consolidating their Parent PLUS Loans into a Direct Consolidation Loan.

 

Income-Sensitive Repayment Plan

  • Subsidized and Unsubsidized Federal Stafford Loans
  • FFEL PLUS Loans
  • FFEL Consolidation Loans

Your monthly payment is based on annual income.

Up to 15 years.

  • You’ll pay more over time than under the 10-year Standard Plan.
  • The formula for determining the monthly payment amount can vary from lender to lender.

 

Resources

Federal Student Aid website