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Debt Management

STUDENT LOAN REPAYMENT

You have certain Rights & Responsibilities as a Borrower.  You are responsible for repaying your student loans even if you do not graduate, have trouble finding a job or are dissatisfied with your education. Ask your lender or servicer about repayment options. Also, communicate with your lender or servicer to discuss alternatives if you are experiencing difficulties.

The National Student Loan Database System (NSLDS) will give you a comprehensive record of your Federal Loans and your loan servicer(s).  It can be accessed using your Department of Education PIN (the same PIN used to complete the FAFSA form).   You can use this form if you would like to keep track of the amount of loans you have with each of your servicers.

You can also calculate what a monthly loan payment would be using standard and extended repayment terms using the Loan Payment Calculator.

All federal education loans allow prepayment or paying all or part of your loans at any time without penalty. The advantage of prepaying is that it will decrease the amount of interest owed over the lifetime of the loan.

Grace Period

After you graduate, leave school or drop below half-time enrollment, you have a six-month grace period before you must begin to repay your Direct Stafford Loan.  Perkins Loans receive a nine-month grace period.  Subsidized Loans may not accrue interest during a grace period depending upon when they were disbursed. Unsubsidized loans do continue to accrue interest during this time.  

Loan Consolidation

Consolidation permits eligible students who are finished with their education to combine repayment of various loans into one monthly payment.  Consolidation can reduce your monthly payment amount by extending your repayment term; however, a longer repayment period will result in more interest accruing over the life of the loan. You may consolidate Federal Student Loans through the U.S. Department of Education's Federal Direct Loan Consolidation Program.

Click here for a consolidation payment calculator.  It can be used with the loan information you received from the NSLDS site to compare estimated monthly payment amounts if your loans were to be consolidated.

Click here different ways to apply for the consolidation.  The customer service number for consolidation inquiries is (800) 557-7392.

HAVING TROUBLE MAKING PAYMENTS?

A deferment is an arrangement in which principal and/or interest payments are postponed. The government may pay the interest on subsidized loans in deferment depending upon when they were disbursed.  Interest continues to accrue on any unsubsidized loans.  

Common Deferment Types:

In school at least half-time, Graduate fellowship or rehabilitation training (no time limit)

Unemployment (3-year limit)

Economic hardship (3-year limit) 

A forbearance  is a temporary postponement or reduction of monthly payment obligations due to financial hardship. Interest continues to accrue while the loan is in forbearance.

Common Forbearance Types :

Discretionary

Economic hardship    

These and other types of deferments and forbearances can be viewed here.

Delinquency  

Failure to make loan payments on time results in the loan becoming delinquent. If you are over 60 days late in making your payments, your delinquency will be reported to national credit bureaus.  Default proceedings start after 270 days of delinquency.  The worst thing you can do is miss a payment or be habitually late in making your payments. If you are having trouble making a payment, it is best to contact the servicer of your loan and explain your situation. The servicer may be willing to explore different repayment plans or grant a financial hardship forbearance.

YouCanDealWithIt.com offers information about personal finances, debt management, loan repayment, car shopping, budgeting tips and more. The site is a comprehensive guide to decisions and situations that students encounter and provides resources for healthy economic planning.

Credit Reports 

When you use credit, you create your own credit history. When you apply for credit again, a new creditor will check your history. Your credit report is based on your payment history (on-time and late) gathered from banks and other creditors. Education loans appear on your credit report. You have a legal right to a copy of your personal credit report. The following credit reporting agencies may have a file of your credit history.  

Experian Information Solutions  1-888-397-3742

Equifax   1-800-997-2493 

TransUnion 1-800-916-8800 

 

If You Default on Your Student Loans

You won't receive any more federal financial aid until you repay the loan in full or make arrangements to repay what you already owe and make at least six consecutive, on-time, monthly payments;

Your loans may be turned over to a collection agency;

You will be liable for the costs associated with collecting your loan, including court costs and attorney fees;

You may be sued for the entire amount of your loan;

Your wages may be garnished;

Your federal and state income tax refunds may be withheld

Your defaulted loans will appear on your credit record, making it difficult for you to obtain an auto loan or even credit cards. A bad credit record can also harm your ability to find a job;

You may be ineligible for assistance under most federal benefit programs;

You will be ineligible for deferments;

Federal interest benefits will be denied;

You may not be able to renew a professional license you hold;

And of course, you will still owe the full amount of your loan.