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Repaying Your Student Loans

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Student Loan Repayment

Repayment of your Federal Direct Loans begins six months after you graduate, leave school or drop below half-time enrollment. This period of time is called a grace period. Students are granted one grace period. Students may have a grace period longer than six months if they are on active duty in the military.

Before you enter repayment, your loan servicer will contact you about the date your repayment will begin and the monthly amount of each payment.  A loan servicer is a company that is assigned by the U.S. Department of Education to handle the billing and other services on your Federal Direct Loan on their behalf. Your loan servicer will work with you on repayment options (such as selecting a repayment plan or loan consolidation) and will assist you with other tasks related to your Federal Direct Loans.

Keep your contact information up-to-date so your loan servicer can help you stay on track with repaying your loans. If your circumstances change at any time during your repayment period, your loan servicer will be able to help.

Find the Name and Contact Information for Your Loan Servicer

Repayment Options

There are a number of different repayment plan available to you.  Once you enter repayment, you have the option of selecting one of the plans listed below.  By default, all loans enter the Standard Repayment Plan when entering repayment.  Switching from the Standard Repayment Plan to one of the income-driven repayment plans can make your student loan payments more affordable.

Eligible Borrowers:
All Federal Direct Loan borrowers

Monthly Payment and Time Frame:
Payments are a fixed monthly amount that ensures the loans are paid off within 10 years.

Learn More:
https://studentaid.gov/manage-loans/repayment/plans/standard

Eligible Borrowers:
All Federal Direct Loan borrowers

Monthly Payment and Time Frame:
Payments are lower at first and then increase, usually every two years, and are for an amount that will ensure the loans are paid off within 10 years.

Learn More:
https://studentaid.gov/manage-loans/repayment/plans/graduated

Eligible Borrowers:
Borrowers with more than $30,000 in outstanding Federal Direct Loans

Monthly Payment and Time Frame:
Payments may be fixed or graduated and will ensure that your loans are paid off within 25 years.

Learn More:
https://studentaid.gov/manage-loans/repayment/plans/extended

Eligible Borrowers:
All Federal Direct Loan borrowers

Monthly Payment and Time Frame:

  • Monthly payments will be 10 percent of discretionary income.
  • Payments are recalculated each year and are based on your updated income and family size.
  • You must update your income and family size each year, even if they haven’t changed.
  • If you’re married, both you and your spouse’s income or loan debt will be considered, whether taxes are filed jointly or separately.
  • Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 years.

Learn More:
https://studentaid.gov/manage-loans/repayment/plans/income-driven

Eligible Borrowers:
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

Monthly Payment and Time Frame:

Your monthly payments will be 10 percent of discretionary income, but never more than you would have paid under the 10-year Standard Repayment Plan. Payments are recalculated each year and are based on your updated income and family size.

You must update your income and family size each year, even if they haven’t changed.

Learn More:
https://studentaid.gov/manage-loans/repayment/plans/income-driven

Eligible Borrowers:
Borrowers must have a high debt relative to their income

Monthly Payment and Time Frame:

  • Your monthly payments will be either 10 or 15 percent of discretionary income (depending on when you received your first loans), but never more than you would have paid under the 10-year Standard Repayment Plan.
  • Payments are recalculated each year and are based on your updated income and family size.
  • You must update your income and family size each year, even if they haven’t changed.
  • 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 or 25 years, depending on when you received your first loan.
  • You may have to pay income tax on any amount that is forgiven.

Learn More:
https://studentaid.gov/manage-loans/repayment/plans/income-driven

Eligible Borrowers:
All Federal Direct Loan borrowers

Monthly Payment and Time Frame:

  • 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.
  • You must update your income and family size each year, even if they haven’t changed.
  • 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.

Learn More:
https://studentaid.gov/manage-loans/repayment/plans/income-driven

Eligible Borrowers:
Available only to those who borrowed a Federal Stafford Loan from a private lender; these federal student loans were not part of the William D. Ford Federal Direct Loan program.

Monthly Payment and Time Frame:
Your monthly payment is based on annual income, but your loan will be paid in full within 15 years.

Learn More:
https://studentaid.gov/manage-loans/repayment/plans/income-sensitive

What to Do If You Experience Financial Difficulty

If you ever experience financial difficulty while repaying your student loan, you can ask for help.  You will want to contact your loan servicer as soon as possible.  They may be able to switch you to a more affordable repayment plan or grant you deferment or forbearance.  You can also discuss consolidating your student loans.  Please don’t hesitate to reach out to your loan servicer.  The last thing you want to happen is to default on your Federal Direct Loans.

Federal Direct Loan Default

You’re considered to be in default if you don’t make your scheduled student loan payments for at least 270 days.  Defaulting on your Federal Direct Loans has serious consequences.  These consequences can include:

  • The entire unpaid balance of your loan and any interest you owe becomes immediately due (this is called “acceleration”)
  • You can no longer receive loan deferment or forbearance, and you lose eligibility for other benefits, such as the ability to choose a repayment plan
  • You lose eligibility for additional federal student aid
  • The default is reported to credit bureaus, damaging your credit rating and affecting your ability to buy a car or house or to get a credit card.
  • It may take years to reestablish a good credit record
  • You may not be able to purchase or sell assets such as real estate
  • Your tax refunds and federal benefit payments may be withheld and applied toward repayment of your defaulted loan (this is called a “Treasury offset”)
  • Your wages may be garnished. This means your employer may be required to withhold a portion of your pay and send it to your loan holder to repay your defaulted loan
  • Your loan servicer can take you to court.
  • You may be charged court costs, collection fees, attorney’s fees, and other costs associated with the collection process.

If you ever find yourself in the unfortunate circumstance of defaulting on your student loans, there are options available to you.  Get more information or contact your loan servicer.

Loan Cancellation, Discharge, and Forgiveness Programs

Depending on your circumstances, you may be able to have a portion or all of your Federal Direct Student Loans cancelled, discharged, or forgiven.  There are a number of different programs available.  Click on a program below for more information.