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 Direct Stafford Loan.
- Nine months for Federal Perkins Loans
Note to parents: If you have a Direct PLUS Loan, you don't have a grace period-repayment. Payment generally must begin within 60 days after the loan is fully disbursed.
You'll receive information about repayment, and your loan provider will notify you of the date loan repayment begins. We can't emphasize enough the importance of making 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 (scroll down to the Default discussion below). Student loans are real loans—just as real as car loans or mortgages. You have to pay back your student loans.
Get Your Loan Information
The U.S. Department of Education's National Student Loan Data System (NSLDS) allows you to access information on loan and/or federal grant amounts, your loan status (including outstanding balances), and disbursements made. Go to studentaid.gov.
Paying Back Your Loan
You have a choice of repayment plans if you received a Federal Direct Loan. Federal Perkins Loans don't have repayment plan choices; you generally have up to 10 years to repay, however. Your monthly payment will depend on the size of your debt and the length of your repayment period. Federal Student Loans: Repaying Your Loans (PDF) explains available repayment options, includes examples of monthly payments for different loan amounts, and covers other topics you need to consider when managing your loans. See also: Direct Loan Exit Counseling Guide (PDF)
Note to parents: Generally, Direct PLUS Loan borrowers can choose all but the Income Contingent Repayment Plan.
Federal Direct Loans
You will make payments to your Federal Direct Loan Servicer.
In some cases, you might be able to reduce your interest rate if you sign up for electronic debiting.
A loan servicer is a company that handles the billing and other services on your federal student loan. The loan servicer will work with you on repayment plans and loan consolidation and will assist you with other tasks related to your federal student loan. It is important to maintain contact with your loan servicer. If your circumstances change at any time during your repayment period, your loan servicer will be able to help.
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.
Loan Discharge (Cancellation)
In certain circumstances, your loan can be discharged/canceled.
Cancellation and Deferment Options for Teachers
If you're a teacher serving in a low-income or subject-matter shortage area, it may be possible for you to cancel or defer your student loans.
A Consolidation Loan allows you to combine all the federal student loans you received to finance your college education into a single loan.
Going Into 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:
- Consumer reporting agencies can be notified of your default, which will harm your credit rating, making 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.