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Repaying Student Loans

After you graduate, leave school, or drop below half-time enrollment, you have a period of time before you have to begin repayment. Your “grace period” may vary depending on the loan you have.

  • Federal (FFEL) or Direct Stafford Loan – Six months
  • Federal Perkins Loans – Nine months
  • Parent loans such as FFEL or Direct PLUS Loan don't have a grace period. Repayment generally must begin within 60 days after the loan is fully disbursed.

Get Your Loan Information

As a borrower, the best thing you can do for yourself is to remain informed about every debt you have. The U.S. Department of Education's National Student Loan Data System (NSLDS) allows you to access information on all federal loans and/or grants that you have received. The website provides the loans and grant amounts, your loan status (including outstanding balances), and all disbursements made. Go to

Repaying Back Your Loan

Repayment plans offered for Direct Stafford Loans are generally the same as those offered for FFEL Stafford Loans. However, the Direct Loan program will continue to offer an income contingent repayment plan and the FFEL program will continue to offer an income-sensitive repayment plan. The repayment periods for Stafford Loans vary from 10 to 25 years. When it comes time to repay, you can pick a repayment plan that’s best-suited to your financial situation. The following repayment plans will be available to Direct Loan borrowers who started repaying their loans on or after July 1, 2006:

  • A standard plan with a fixed annual repayment amount paid over a fixed period of time not to exceed 10 years.
  • A graduated plan paid over a fixed period of time not to exceed 10 years. With this plan, your payments start with a relatively low amount and then increase, generally every two years.
  • An extended plan (for new borrowers on or after Oct. 7, 1998, with more than $30,000 in outstanding loans accumulated on or after that date) with a fixed annual or graduated repayment amount to be paid over a period not to exceed 25 years.
  • A plan that bases the monthly payment amount on how much money you make. For Direct Stafford Loans, this plan is called the Income Contingent Repayment Plan (Direct PLUS Loans may not be repaid under the Income-Contingent Repayment Plan). For FFEL Stafford Loans and FFEL PLUS Loans, this plan is called the Income-Sensitive Repayment Plan. The terms of these plans vary.
  • For Direct Loans, the U.S. Department of Education may offer alternative repayment plans to a borrower who demonstrates that other available repayment plans are not adequate and cannot accommodate the borrower’s exceptional circumstances.

For a Perkins Loan, your school is the lender. Your school or its agent will provide you with the exact repayment amounts. The chart below is just an example of what a Perkins Loan repayment plan might be.

Total Loan Amount / Number of Payments / Approximate Monthly Payment / Total Interest Charges / Total Repaid
$4,000 / 120 / $42.43 / $1,091.01 / $5,091.01
$5,000 / 120 / $53.03 / $1,364.03 / $6,364.03
$15,000 / 120 / $159.10 / $4,091.73 / $19,091.73

Other Facts:

  • Electronic Payment

In some cases, you might be able to reduce your interest rate if you sign up for electronic debiting.

  • Difficulty Repaying

If you don't repay your student loans on time, or according to the terms of your promissory note, you might go into default, which will affect your credit rating. There is assistance for borrowers having difficulty repaying their education loans, including deferment and forbearance.

  • Cancellation and Deferment Options for Teachers

If you're a teacher serving in a low-income or subject-matter shortage area, you may be eligible for cancellation or deferment of your student loans.

  • Loan Consolidation

A Consolidation Loan allows you tocombine all the federal student loans you received to finance your college education into a single loan.

Default

If you default it means you have failed to make payments on your student loan according to the terms of your promissory note, the binding legal document you signed at the time you accepted your loan. In other words, you failed to make your loan payments as scheduled. Your school, the financial institution that made or owns your loan, your loan guarantor, and the federal government all can take action to recover the money you owe. Here are some consequences of default:

  • National credit bureaus can be notified of your default, which will harm your credit rating and make it hard to buy a car or a house.
  • You would be ineligible for additional federal student aid if you decided to return to school.
  • Loan payments can be deducted from your paycheck.
  • State and federal income tax refunds can be withheld and applied toward the amount you owe.
  • You will have to pay late fees and collection costs on top of what you already owe.
  • You can be sued.

If your loan goes into default, contact your lender as soon as possible.

Note: This paper was written by representatives at the University of North Texas Student Money Management Center and is being used by permission of the University of North Texas Student Money Management Center.

Student Money Management Center | 237 Nebraska Union | Lincoln, NE | 68588-0461

| | 402-472-9093

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