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Student Loan Repayment


      As a student borrower, you are entitled to:

      • Repayment period of at least ten years as long as the $50 minimum monthly payment is met;
      • A copy of your repayment schedule and disclosure statement from your lender or guarantee agency;
      • Have any questions about your Federal Loan answered by your lender or guarantor.

      As a student borrower, you have the right to:

      • Prepay all or any part of your loan at any time without penalty;
      • Be notified in writing by your lender if your loans are sold or transferred for servicing;
      • Have your loan obligation canceled if you die or be­come totally and permanently disabled;
      • Defer payment for a specified period of time, if qualified.

      Acceptance of an educational loan requires:
      1. That you use the loan for educational expenses and repay your loan debt in full even if you:

      • Do not graduate or complete your program of study;
      • Are unable to obtain employment on ending or completing your program;
      • Are dissatisfied with the school or did not receive the education or other services you purchased from the school.

      2. You must make payments on your student loan at the end of your grace period whether or not you have received a repayment schedule. If your first payment due date is nearing and you have not received a repayment schedule, contact your loan service provider.

      3. You must notify your lender if you change:

      • Schools;
      • Name or address;
      • Enrollment status (e.g., withdraw, graduate, or enroll less than half time).

      4. Upon leaving school, you must notify your loan service provider of your expected employer and permanent address, the address of next of kin, and any changes in your social security or driver's license numbers.

      5. If you receive notice that your loan is being serviced by an agency other than your lender, you must refer all further correspondence, inquiries, or payments to the servicer.

      6. You should keep copies of all student loan papers, documents, and correspondence.


      When you accept a student loan, you also undertake the obligation to repay it. This is a serious obligation, as you may not include student loan debt should you ever file bankruptcy.

      Contrary to popular belief, default on a student loan is not ignored by colleges, banks, or the government. Default on student loans will affect your credit rating. Extended default eventually can lead to prosecution. Whatever your circumstances, don't default! Lenders would rather work with you if you are finding it difficult to repay and can offer alternatives rather than have you in default. If you fail to repay your loan according to its terms and conditions, your default will be reported to a national credit bureau and you may suffer any or all of the following consequences:

      • Collection agency action;
      • Withholding of federal income tax refunds;
      • Garnishment of wages;
      • Loss of eligibility for federal student aid;
      • Difficulty in obtaining other credit;
      • In most instances, student loans may not be discharged through bankruptcy.
      • If you’re having trouble making payments, don’t wait! Get help from your loan holder or servicer immediately.

      View more information about default and see the National Association of Student Financial Aid Administrators' (NASFAA) Default Facts and Repayment Tips (PDF).


      The Federal Loan grace period begins the day after you leave school ("leaving school" means graduat­ing, withdrawing, or dropping to less than half-time enrollment status). The grace period for most Federal Loans is six months; during this period, no payments are due.

      View more information about grace periods.

      With the SUBSIDIZED Federal Loan, interest accrues during certain periods. The grace period is 6 months, when no payment is required. Approximately 30-45 days after the grace period ends, your first payment will be due. Thereafter, payments are due once a month until the loan is paid in full. You will receive a repayment schedule and disclosure statement for each of your student loans from your loan service provider. This schedule will tell you how much your payments will be, when they are due, and over what period of time you will be paying.

      For UNSUBSIDIZED Federal Loans, students are responsible for paying interest during the period of time that the principal is deferred. Because most lenders will permit students to defer interest repayment during school enrollment, the interest accrues during this deferred period.


      A deferment is a period of time (varying in length as indicated below) when you are not required to make payments on your loans because you temporarily cannot afford the scheduled payments. If you think you are eligible for a deferment, contact your lender/servicer. A deferment does not apply and you are not excused from making loan payments until the documentation is complete. 
      For borrowers with no loans prior to July 1, 1993, the following types of deferment are available:

      • at least half-time study at an eligible school,
      • studying in an approved graduate fellowship or rehabilitation program for the disabled,
      • up to three years, while you are conscientiously seeking but unable to find full-time employment,
      • up to three years, for any reason (in accordance with federal regulations) that has caused you to have an economic hardship.

      Deferments for borrowers with an outstanding FFELP loan disbursed before July 1, 1993, include:

      • unemployment,
      • full-time enrollment at an eligible school,
      • half-time enrollment at an eligible school, if you borrow a new Federal Loan during the enrollment period,
      • participation in a rehabilitation program,
      • study under an approved graduate fellowship program,
      • serving an internship necessary for professional practice or service,
      • temporary or total disability, or inability to work because caring for a temporarily or totally disabled spouse or dependent,
      • parental leave to care for a newborn, if you attend school in the six months prior to the leave,
      • mothers who have pre-school age children and are entering or re-entering the work force at less than $1 above minimum wage,
      • service in the National Oceanic and Atmospheric Administration Corps (NOAA),
      • active duty service in the U.S. armed forces or service as an officer in the Commissioned Corps of the United States Public Health Service,
      • full-time teaching in a private, nonprofit, or public elementary or secondary school shortage area.
      View more information about deferments.

      Should you become financially unable to make monthly payments, you may be able to suspend payments, lower payment amounts, or make interest payments only for a short period of time (six-month periods) at the discretion of your loan service provider.

      View more information about forbearance.

      • Standard Repayment Plan: Federal Loans are repaid with level payments over a ten-year period.

      Advantages: Economical and predictable.  Able to budget more easily as monthly payments stay the same.
      Disadvantages:  No major disadvantages, however, other options may be more customized to fit you.

      There are also several alternative repayment plans available.

      • Extended Repayment Plan: Lower monthly payments over extended repayment period (up to 30 years).

      Advantages:  Lower monthly payments than Standard Plan
      Disadvantages:  You’ll pay more over more time as interest accrues.

      • Graduated Repayment: Smaller monthly payments that increase at a predetermined rate over a ten-year period

      Advantages: Monthly payments will be easier to manage at first; initial payments will be lower than the Standard Plan.
      Disadvantages:  You will end up paying more in interest over the life of the loan.  Also, without an increasing income, you may have as the monthly payments rise over time.

      •  Income Sensitive Repayment: Payments are tied to income levels, family size, interest rate and loan amount; payments will rise and fall throughout the repayment.

      Advantages:  Up to 25 years to repay. Any portion of the loan amount that has not been repaid up to this time is forgiven.
      Disadvantages:  After 25 years, the forgiven loan balance will be counted as income and is taxable.  Parent loans are not eligible

      •  Income-Based Repayment (IBR): Under IBR, the required monthly payment is capped at an amount that is intended to be affordable based on your income and family size. You are eligible for IBR if the monthly repayment amount under IBR will be less than the monthly amount calculated under a 10-year standard repayment plan. If you repay under the IBR plan for 25 years and meet other requirements, you may have any remaining balance of your loan(s) cancelled. Additionally, if you work in public service and have reduced loan payments through IBR, the remaining balance after ten years in a public service job could be cancelled. You may your loan holder or loan servicer, or visit www.studentaid.ed.gov for more detailed information about the Income-Based Repayment Plan.
      •  Income-Contingent Repayment Plan (for Direct subsidized and Unsubsidized Loans and Direct PLUS Loans for Graduate and Professional Students): Your monthly payments will be based on your annual income (and that of your spouse, if married), your family size, and the total amount of your Direct Loans. Borrowers have 25 years to repay under this plan, the unpaid portion will be forgiven. However, you may have to pay income tax on the amount that is forgiven.

        Direct Subsidized Loans, Direct Unsubsidized Loans and Direct PLUS Loans for graduate and professional student PLUS borrowers may be repaid under the income-contingent repayment (ICR) plan. Direct PLUS Loans for parent borrowers may not be repaid under ICR.

      View more information about repayment plans that may be available.


       Here are some pros and cons to loan consolidation:

      • obtain a fixed interest rate and one monthly payment
      • extend the time for repayment (up to 30 years)
      • reduce the monthly payment amount
      • pay in full one or more of your existing student loans
      • you may pay MORE overall.

      The interest rate for the consolidation loan is the "weighted average" of the interest rates on the loans being consolidated and is fixed for the life of the loan. Before committing to loan consolidation, be sure to discuss your particular situation fully with a loan consolidation specialist to see if loan consolidation is best for you.

      If you do not have any Federal Direct Student Loans, you must first contact the holders of your loans or loan servicer to see if any participate in the consolidation loan program. If so, they will provide you with the application and an explanation of the procedure.

      If the federal loan holder does not offer a federal consolidation loan program, does not offer you acceptable income-sensitive terms, or you intend to apply for the Public Service Loan Forgiveness Program; you can apply for a Federal Direct Consolidation Loan.

      View more information about loan consolidation.


      In order to manage your student loan debt, you will need to manage your finances in general. Good money management involves setting goals, setting a time frame to reach those goals, and developing and following a budget. To reach your goals, you should begin thinking about your budget while in college. The amount of your expected starting salary is an important element in creating and managing a budget. You may wish to contact the Purdue University Center for Career Opportunities for up-to-date salary information for your field and the part of the country in which you intend to live.

      The U. S. Department of Education has made available to students the office of the FSA Student Loan Ombudsman. This office works with student loan borrowers to informally resolve federal loan disputes and problems. It is best to think of the Ombudsman as a LAST RESOURCE. When you have made a reasonable effort to resolve your student loan problem with your lender/servicer and the problem is still not resolved, contact the Ombudsman. This office may be contacted online for assistance, via e-mail at fsaombudsmanoffice@ed.gov; or via telephone 1-877-557-2575 (toll free)


      Contact your lender or servicer for more information about student loan repayment.

      Federal Direct Loan student loan information is available at the Federal Student Loans website.

      All Federal student loan borrowing history is available through the National Student Loan Data System (NSLDS) website at www.NSLDS.ed.gov