Understanding Repayment

Navigating the repayment of your federal student loan requires careful consideration and understanding. Familiarizing yourself with repayment details can help you save both time and money. Learn about key aspects such as when repayment begins, payment methods, available repayment plans, steps to take if you encounter difficulties with payments, and additional pertinent information.

When do I begin repaying my federal student loan?

You typically don’t need to start repaying most federal student loans until after you graduate or drop below half-time enrollment. However, PLUS loans require repayment once the loan is fully disbursed.

Your loan servicer or lender is required to furnish you with a loan repayment schedule outlining when your initial payment is due, the frequency of payments, and the amount of each payment. Remember that your loan might come with a grace period.

What’s a grace period?

The grace period is a specific duration following your graduation, departure from school, or reduction to less than half-time enrollment before you’re required to start repaying your loan. It allows you to adjust financially and choose your repayment plan. It’s important to note that not all federal student loans offer a grace period interest will accrue during your grace period.

• Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans, and Unsubsidized Federal Stafford Loans offer a six-month grace period before payments commence.
• However, PLUS loans do not have a grace period. They enter repayment immediately upon full disbursement but may qualify for a deferment. For further details, reach out to your loan servicer.

Can my grace period change?

Circumstances that may change your grace period include the following:

• Active duty military personnel called to active duty for more than 30 days before their grace period ends will receive the full six-month grace period upon their return.
• If you resume school at least half-time before your grace period concludes, you’ll receive the complete six-month grace period upon ceasing enrollment or dropping below half-time status (additional conditions may apply).
• Opting for loan consolidation during your grace period forfeits the remainder of your grace period, and repayment starts after your Direct Consolidation Loan is disbursed. The initial bill is typically due around two months following disbursement.

How much will I need to pay?

Your bill will tell you how much to pay. Your payment (usually made monthly) depends on

• the type of loan you received,
• how much money you borrowed,
• the interest rate on your loan, and
• the repayment plan you choose.

How do I make my payments?

There are several ways you can make your payments.

If you want to make electronic payments, you can do the following:

• Receive your student loan statement electronically.
• Make your student loan payment through electronic debiting.
• Schedule a recurring electronic debit to pay your bill (you may get a 0.25% interest rate deduction if you have Direct Loans). You can enroll in electronic debit in several ways, depending on which type of loan you are repaying. Contact the organization that services your loan for information.
• If you want to make payments by postal mail, you should mail your payments directly to your loan servicer.

Can I pay more than my required monthly payment?

You have the option to make payments ahead of schedule or pay more than the required amount each month. By adding a bit extra to your monthly payments, you can lower the overall interest you’ll pay and decrease the total cost of your loan over its lifetime. If you’re aiming to pay off your loan sooner, inform your loan servicer that any additional payments you make should not be applied to future payments.

What should I do if I’m having trouble making my loan payment?

Contact your loan servicer as soon as possible. You may be able to change your repayment plan to one that will allow you to have a longer repayment period or to one that is based on your income. Also, ask your loan servicer about your options for a deferment or forbearance, or loan consolidation.

What happens if I don’t make my student loan payment?

Failing to make your student loan payment on time or not making it at all can lead to default. Defaulting on your student loan will be reported to credit bureaus, negatively impacting your credit score and ability to borrow in the future. Moreover, you may face legal consequences, such as wage garnishment and withholding of tax refunds, to compel payment.

Can I cancel my loan?

You can opt to cancel all or part of a loan disbursement within 120 days from when your school disbursed the funds (either by crediting them to your school account or paying them directly to you). If you decide to cancel, you’ll need to return the received funds, but you won’t incur any interest or fees. For more details, visit the financial aid office.

You are generally required to repay your student loan. In certain situations, your loan may be forgiven, canceled, or discharged.

_{Source: Federal Student Aid}

Last updated: 5/17/2024