Loan Repayment Options

Exit Counseling
If you have received federal student loans and you have graduated, stopped attending or dropped below six credit hours, you are required, in accordance with Department of Education regulations, to complete exit counseling. You may submit exit counseling online by going to https://studentaid.gov/h/manage-loans.

Borrower Grace Periods
After you graduate, leave school, or drop below half-time enrollment, you have a period of time before you have to begin repayment. This "grace period" will be six months for a Federal Stafford Loan (Direct Loan ProgramSM or Federal Family Education Loan (FFELSM) Program).

If your loans were first disbursed from July 1, 2012 through June 30, 2014, the federal government will not pay the interest during your grace period.

Make Your Payments on Time
Your loan servicer will provide information about repayment and will notify you of the date loan repayment begins. It is very important that you make your full loan payment on time either monthly (which is usually when you'll pay) or according to your repayment schedule. If you don't, you could end up in default, which has serious consequences. Student loans are real loans—just as real as car loans or mortgages. You have to pay back your student loans.

Repayment Plans

Overview of Direct Loan and FFEL Program Repayment Plans

Repayment Plan	Eligible Loans	Monthly Payment and Time Frame	Quick Comparison
Standard Repayment Plan	Direct Subsidized and Unsubsidized Loans Subsidized and Unsubsidized Federal Stafford Loans all PLUS loans	Payments are a fixed amount of at least $50 per month. Up to 10 years	You'll pay less *interest* for your loan over time under this plan than you would under other plans.
Graduated Repayment Plan	Direct Subsidized and Unsubsidized Loans Subsidized and Unsubsidized Federal Stafford Loans all PLUS loans	Payments are lower at first and then increase, usually every two years. Up to 10 years	You'll pay more for your loan 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	Payments may be fixed or graduated. Up to 25 years	Your monthly payments would be lower than the 10-year standard plan. If you are a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans. FFEL borrower, you must have more than $30,000 in outstanding FFEL Program loans. For example, if you have $35,000 in outstanding FFEL Program loans, and $10,000 in Direct Loans, you can use the extended repayment plan for your FFEL Program loans, but not for your Direct Loans. For both programs, you must also be a *new borrower* as of Oct. 7, 1998. You'll pay more for your loan over time than under the 10-year standard plan.
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 maximum monthly payments will be 15 percent of *discretionary income*, the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence (other conditions apply). Your payments change as your income changes. Up to 25 years	You must have a *partial financial hardship*. Your monthly payments will be lower than payments under the 10-year standard plan. You'll pay more for your loan over time than you would under the 10-year standard plan. If you have not repaid your loan in full after making the equivalent of 25 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven. You may have to pay income tax on any amount that is forgiven.
Pay As You Earn Repayment Plan	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, the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence (other conditions apply). Your payments change as your income changes. Up to 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 partial financial hardship. Your monthly payments will be lower than payments under the 10-year standard plan. You'll pay more for your loan over time than you would under the 10-year standard plan. If you have not repaid your loan in full after you made the equivalent of 20 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven. You may have to pay income tax on any amount that is forgiven.
Income-Contingent Repayment Plan	Direct Subsidized and Unsubsidized Loans Direct PLUS Loans made to students Direct Consolidation Loans	Payments are calculated each year and are based on your adjusted gross income, family size, and the total amount of your Direct Loans. Your payments change as your income changes. Up to 25 years	You'll pay more for your loan over time than under the 10-year standard plan. If you do not repay your loan after making the equivalent of 25 years of qualifying monthly payments, the unpaid portion will be forgiven. You may have to pay income tax on the amount that is forgiven.
Income-Sensitive Repayment Plan	Subsidized and Unsubsidized Federal Stafford Loans FFEL PLUS Loans FFEL Consolidation Loans	Your monthly payment is based on annual income. Your payments change as your income changes. Up to 10 years	You'll pay more for your loan over time than you would under the 10-year standard plan. Each *lender*'s formula for determining the monthly payment amount under this plan can vary

Type of Forgiveness, Cancellation, or Discharge	Direct Loans	*Federal Family Education Loan (FFEL) Program* Loans	Perkins Loans
Total and Permanent Disability Discharge	X	X	X
Death Discharge	X	X	X
Discharge in Bankruptcy (in rare cases)	X	X	X
Closed School Discharge	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 Loan Forgiveness	X
Perkins Loan Cancellation and Discharge (includes Teacher Cancellation)			X

Click the link below for more information regarding each repayment option:
https://studentaid.gov/manage-loans/repayment/plans

Trouble Making Payments
If you're having trouble making payments on your loans, contact your loan servicer as soon as possible. Your servicer will work with you to determine the best option for you. Options include:
• Changing repayment plans.
• Requesting a deferment—If you meet certain requirements, a deferment allows you to temporarily stop making payments on your loan.
• Requesting a forbearance—If you don't meet the eligibility requirements for a deferment but are temporarily unable to make your loan payments, then (in limited circumstances) a forbearance allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments.
If you stop making payments and don't get a deferment or forbearance, your loan could go into default (see Default section below), which has serious consequences.

Postponing Repayment
If you have trouble making your education loan payments, contact immediately the organization that services your loan. You might qualify for a deferment, forbearance, or other form of payment relief. It's important to take action before you are charged late fees. For Direct and FFEL Stafford Loans, contact your loan servicer. If you do not know who your servicer is, you can look it up in the U.S. Department of Education’s National Student Loan Data System (NSLDS).

Deferment
You can receive a deferment for certain defined periods. A deferment is a temporary suspension of loan payments for specific situations such as re-enrollment in school, unemployment, or economic hardship. You don’t have to pay interest on the loan during deferment if you have a subsidized Direct or FFEL, Stafford Loan or a Federal Perkins Loan.

If you have an unsubsidized Direct or FFEL Stafford Loan, you’re responsible for the interest during deferment. If you don’t pay the interest as it accrues (accumulates), it will be capitalized (added to the loan principal), and the amount you have to pay in the future will be higher. You have to apply for a deferment to your loan servicer (the organization that handles your loan), and you must continue to make payments until you’ve been notified your deferment has been granted. Otherwise, you could become delinquent or go into default.

Forbearance

Forbearance is a temporary postponement or reduction of payments for a period of time because you are experiencing financial difficulty. You can receive forbearance if you’re not eligible for a deferment. Unlike deferment, whether your loans are subsidized or unsubsidized, interest accrues, and you’re responsible for repaying it. Your loan holder can grant forbearance in intervals of up to 12 months at a time for up to 3 years. You have to apply to your loan servicer for forbearance, and you must continue to make payments until you've been notified your forbearance has been granted.

Other Forms of Payment Relief

Although you’re asked to choose a repayment plan when you first begin repayment, you might want to switch repayment plans later if a different plan would work better for your current financial situation. Under the Federal Family Education Loan Program, you can change repayment plans once a year. Under the Federal Direct Student Loan Program, you can change plans any time as long as the maximum repayment period under your new plan is longer than the time your Direct Loans have already been in repayment.

Default

If you default, it means you 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 took out 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, making it hard to buy a car or a house.
You will be ineligible for additional federal student aid if you decide 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.

Loan Interest Rates

Congress has passed, and the President has signed the Bipartisan Student Loan Certainty Act of 2013, which ties federal student loan interest rates to financial markets. Under this Act, interest rates will be determined each June for new loans being made for the upcoming award year, which runs from July 1 to the following June 30. Each loan will have a fixed interest rate for the life of the loan.

Federal Loan Limits Annual Subsidized Limits

1st Year Undergraduates = $3,500
2nd Year Undergraduates = $4,500

Annual Unsubsidized Limits

Dependent undergraduates whose parents can borrow PLUS = $2,000
1st and 2nd-year undergraduate dependent students whose parents cannot borrow PLUS and independent students = $6,000
Remaining undergraduate years for dependent students whose parents cannot borrow PLUS and independent students = $7,000

Aggregate Limits

Undergraduate
Dependent students = $31,000 (up to $23,000 may be subsidized)
Independent students and dependent students whose parents cannot borrow PLUS = $57,000 (up to $23,000 may be subsidized)

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