Repaying your federal student loans
Many borrowers don’t worry about their student
loans until they graduate or leave school. But you should
immediately notify your loan servicer and school in
writing if you:
• Change your address or telephone number. (Filing
an address change with the post office isn’t
enough.)
• Change your name.
• Transfer to a new school.
• Drop below half-time enrollment, withdraw or
graduate.
• Change your anticipated graduation date.
You should check with your servicer about
repayment, deferment, forbearance, cancellation and
consolidation options.
Things to know about repayment
Loan repayment plans are available to meet the
needs of almost every borrower. Your options may
vary depending on whether you borrowed federal loans
directly from the U.S. Department of Education (Direct
Loans) or federal loans from a state agency or other
lender (FFELP loans). How much you pay each month
and how long it takes you to repay your loans will depend
on the plan you choose. Generally, you’ll have from 10 to
25 years to repay your loan, depending on the repayment
plan.
family size and state of residence.
Loans must have been made after September
30, 2007, and you must have received a loan
disbursement after September 30, 2011.
• Your loan repayment term is 20 years.
Parent Direct PLUS Loans are not eligible for Pay As
You Earn.
•
Standard Repayment
• You pay a fixed amount each month until your
loans are paid in full.
• Payment amounts will change each year if you
have a variable interest rate on your loan.
• You must pay at least $50 per month.
• You have up to 10 years to repay your loans.
• Your monthly payment may be higher than under
other plans.
Revised Pay As You Earn (Direct Loans only)
• Your monthly payment is 10% of your
discretionary income, which is the difference
between your adjusted gross income and 150%
of the poverty guideline for your family size and
state of residence.
• Your loan repayment term is 20 or 25 years.
Parent PLUS Loans are not eligible for Revised Pay
As You Earn.
Extended Repayment
• You can’t owe on a federal student loan taken
out before October 7, 1998.
• You must owe more than $30,000 in federal
student loans.
• Your payments are fixed or graduated.
• You have up to 25 years to repay your loans.
Income-Sensitive Repayment (FFELP loans only)
• You must have FFELP loans made before July
1, 2010.
• Your payment amount is based on your expected
total gross monthly income.
• You must provide income information each year.
Income-Based Repayment (IBR)
• Your monthly payment is capped based on your
income and family size.
• Your monthly payment amount must be less than
the monthly standard repayment amount.
• You have up to 25 years to repay your federal
student loans.
• If you make 25 years of on-time payments, the
balance of the loan is cancelled.
Graduated Repayment
• Payments start small and increase over time.
• No installment can be more than three times
greater than any other installment.
Pay As You Earn (Direct Loans only)
• Your monthly payment is calculated on the
basis of your discretionary income, which is the
difference between your adjusted gross income
and 150% of the poverty guideline for your
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Parent PLUS or Consolidation Loans that repaid
a parent PLUS Loan are not eligible for IBR. The U.S.
Department of Education provides an IBR Fact Sheet in
PDF format.
Income-Contingent Repayment (ICR)
(Direct Loans only)
• Your monthly payment is calculated on the basis
of adjusted gross income, family size and the
total amount of Direct Loans.
• Your monthly payment is the lesser of (1) the
amount you would pay if you repaid the loan in
12 years, multiplied by a percentage based on
your annual income or (2) 20% of your monthly
discretionary income.
• The unpaid interest will be capitalized once each
year (no more than 10% of the total you owed
when you entered repayment).
• You have up to 25 years to repay your federal
student loans.
• If you make 25 years of on-time payments, the
balance of the loan is cancelled (less deferment
or forbearance time).
Parent Direct PLUS Loans are not eligible for ICR.
Under certain circumstances, your servicer can
automatically grant you a forbearance — for instance,
while processing a deferment, forbearance, cancellation,
change in repayment plan or consolidation, or if you are
mobilized for active duty or a local or national emergency.
Loan cancellation
Under certain circumstances, all or part of your
federal student loans may be cancelled.
Deferments
Teacher service
If you teach full-time in an elementary or secondary
school in a low-income area for five consecutive years,
you may be able to have up to $17,500 in Federal
Stafford Loans forgiven. You may have to pay taxes
on the amount that is discharged. This does not apply
to Federal PLUS Loans. You must not have had an
outstanding balance on a Stafford Loan as of October 1,
1998, or when you received a Stafford Loan after that
date. For more information, contact your servicer.
A deferment lets you temporarily postpone payment.
Interest may not accrue during a deferment if the loan is
subsidized.
You may qualify for a deferment while you are:
• Enrolled at least half-time in an eligible
postsecondary school or studying full-time in
a graduate fellowship program or an approved
disability rehabilitation program.
• Unemployed or meet the rules for economic
hardship (limited to three years).
You may also be eligible for a deferment based on
service in the Armed Forces or National Guard. Refer to
your MPN or contact your servicer for more information
about a deferment based on military service.
In most cases, you must request a deferment and
document your eligibility.
If you’ve gone back to school and your 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.
Public service (Direct Loans only)
If work in certain public service jobs and make 120
payments on your Direct Loans after October 1, 2007, the
remaining balance may be forgiven. Only payments made
under certain repayment plans count toward the required
120 payments. You must not be in default on the loans that
are forgiven. You may have to pay taxes on the amount
that is discharged.
School-related discharges
In certain cases, you may be able to have all or a part
of your loan cancelled because:
• Your school closed before you completed your
program.
• Your school falsely certified you were eligible for a
loan.
• Your loan was falsely certified because of identity
theft (additional requirements apply).
• You withdrew from school, but the school didn’t
pay a refund it owed under its written policy or
federal regulations. Check with the school to see
how refund policies apply to federal aid.
Forbearances
If you can’t make your payments but don’t qualify
for a deferment, you may be eligible for a forbearance.
Forbearance lets you temporarily stop making payments
on your loan, temporarily make smaller payments or
extend the time for making payments. Some common
reasons for getting forbearance are illness, financial
hardship or serving in a medical or dental internship or
residency.
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In general, you must repay your loan even if you
don’t graduate, can’t find work in your field of study or
are dissatisfied with the education you receive.
Disability, bankruptcy or death
Your loan may be discharged if you’re totally and
permanently disabled and you meet certain requirements
during a three-year conditional discharge period. To
apply for this discharge, you must provide a physician’s
statement that you became totally and permanently
disabled after the loan was made.
Your loan may be cancelled if it is discharged in
bankruptcy. This is not an automatic process — you must
prove to the court that repaying the loan would cause
undue hardship. Few student loans are discharged in
bankruptcy.
If you die, your loan will be cancelled if a family
member or other representative provides an original,
a copy of the original or a certified copy of your death
certificate to your servicer.
Loan default
When a loan defaults, it will be assigned for
collection. Any or all of the following may occur:
• The full balance of the loan becomes due and
payable immediately.
• A collection fee of 24.34% is added to the account.
• The default is reported to consumer reporting
agencies.
• Requests for future federal student aid may be
denied.
• Forbearance and deferment eligibility is lost.
• Income tax refunds or monies owed to you may be
taken.
• You may be sued to garnish your wages and/
or place a lien on property and other financial
accounts.
• Loans may be reassigned back to the Department
of Education for further collection activity.
Loan Consolidation
Consolidation generally extends the repayment
period, resulting in a lower monthly payment. This may
make it easier for you to repay your loans. However,
you’ll pay more interest since you’ll be making
payments for a longer period of time. Contact the
Direct Loan Consolidation Center for more information
at 1.800.557.7392, TTY for the hearing-impaired at
1.800.557.7395.
Amount Consolidated
Maximum
Repayment Term
Up to $7,499
10 years
$7,500–9,999
12 years
$10,000–19,999
15 years
$20,000–39,999
20 years
$40,000–59,999
25 years
$60,000 or more
30 years
Protecting your credit score
Student loans are reported to national consumer
reporting agencies every month. Some important points to
remember to maintain a healthy credit score include:
• Making loan payments on time.
• Maintaining accurate payment records.
• Retaining important documents, such as
• Responding immediately to any errors on billing
• Ensuring contact information is kept up to date.
You should:
Contact your lender in writing when you
change your name, address, enrollment
status or school.
Always keep copies of all correspondence
relating to your loans for future reference.
Avoid unexpected early repayment by
informing your lender if you transfer
schools or change the date you expect to
complete your studies.
promissory notes and disclosure statements.
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Deferment Eligibility Chart
1
“New Borrower” 7/1/87 to 6/30/93:
A borrower whose first loan was
made on or after July 1, 1987, and
before July 1, 1993, or who had
an outstanding balance on a loan
obtained on or after July 1, 1987,
and before July 1, 1993, when he or
she obtained a loan on or after July
1,1993, or who had no outstanding
balance on a Federal Consolidation
Loan made before July 1, 1993, that
repaid a loan first disbursed before
July 1, 1987.
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“New Borrower” 7/1/93: A borrower
whose outstanding loans were all
made on or after July 1, 1993, and
when his or her first loan was made
on or after July 1, 1993, had no
outstanding loans that were made
before July 1, 1993.
3
Deferment for parent borrower who
received a loan between July 1,
1987, and June 30, 1993, during
which the student for whom the
parent obtained the PLUS Loan
45
meets the conditions required
for an in-school deferment. Upon
request, a parent borrower may
defer repayment on a parent PLUS
Loan that was first disbursed on or
after July 1, 2008, during the period
in which the student for whom the
parent obtained the PLUS Loan
meets the conditions required for an
in-school deferment.
(Footnotes continued on next page)
Adults Returning to School 2017
4
A deferment may be granted during periods when the
borrower is temporarily totally disabled or during which
the borrower is unable to secure employment because
the borrower is caring for a spouse or dependent who is
temporarily totally disabled.
5
Borrowers are eligible for a combined maximum of
3 years of deferment for service in NOAA, PHS, and
Armed Forces.
6
A parental leave deferment may be granted to a
borrower in periods of no more than 6 months each
time the borrower qualifies.
7
A Grad PLUS borrower whose loan was first disbursed
on or after July 1, 2008, may receive a 6-month postenrollment deferment beginning on the day after he
or she no longer meets the conditions required for an
in-school deferment. Upon request, a parent PLUS
borrower may defer repayment on a parent PLUS Loan
that was first disbursed on or after July 1, 2008, for a
6-month period that begins on the day after the parent
or the student for whom the parent obtained the PLUS
Loan no longer meets the conditions required for an inschool deferment.
8
9
A borrower who received a Federal Consolidation Loan
before July 1, 1993, that repaid a loan made before
July 1, 1987, or who had an outstanding balance on a
loan obtained before July 1, 1987, when the Federal
Consolidation Loan was obtained, is eligible for inschool deferment only if the borrower attends school
full-time.
A borrower with a Federal Consolidation Loan made
before July 1, 1993, or a borrower who receives a
Consolidation Loan on or after July 1, 1993, who has
any outstanding loan at the time of consolidation that
was first disbursed before July 1, 1993.
10
A borrower who receives a Federal Consolidation Loan
made on or after July 1, 1993, who has no outstanding
FFELP loans at the time of consolidation that were
made on or before July 1, 1993.
11
A deferment may be granted to a borrower who is
serving on active duty during a war or other military
operation or national emergency (including qualifying
National Guard duty). The borrower’s military service
must begin on or after October 1, 2007, or include that
date.
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12
A deferment may be granted to a borrower called to
active national or state duty who is a member of the
National Guard or Reserves (including retired members)
and who was enrolled at least half-time at an eligible
school at the time of, or within 6 months prior to, being
activated. The borrower’s military service must begin on
or after October 1, 2007, or include that date.
13
A post-active duty student deferment may be granted to
a borrower for a period of no more than 13 months each
time the borrower qualifies. There is no limit to how many
deferments of this type a borrower may receive. If a
borrower is also eligible for a military service deferment,
the 13-month period must run concurrently with the 180day post-military mobilization period.
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