Repaying Your Student Loan
Prepare to pay back your loans before you graduate.
Student loans are as much a responsibility as any other loan a person can acquire. Student borrowers are required to repay their education loans, even if they do not complete school, cannot find a job after they leave school, or feel dissatisfied with the education they received.
Before you take out a loan, you should take certain steps to help you avoid default, such as finding out about repayment guidelines and talking to your lender or servicer about the particular terms of a loan. Planning for repayment can help you avoid the difficulties that may come with the responsibilities of borrowing money and help you avoid default.
- Think seriously about student loans ahead of time.
- Take steps before you borrow money that will help you avoid default later.
- Find out about repayment guidelines.
- Talk to a lender or to someone in your servicer’s assistance center about the terms of a loan.
- Find out about prepayment here.
Planning for repayment can help you avoid problems later.
Part of your plan for repayment should include actively beginning your search for full-time employment.
Keep in touch
If you borrow, keep in touch with your lender, especially if personal circumstances change. Lenders are often willing to work with borrowers to make repayment possible and easier. You may be eligible for consolidation programs or deferment/forbearance plans.
Contact your lender if you:
- Leave school
- Change schools
- Change graduation dates
- Change your enrollment status from full-time to less than half time
- Change deferment status
- Change your name, address, or phone number
- Have trouble making your loan payment.
Who is my servicer and How much have I borrowed?
An important first step toward successful repayment of any type of student loan is communicating with your loan servicer. Here are some questions financial aid officers, student loan counselors, and former lenders recommend you ask your servicer:
1. When exactly will my payments begin?
2. Do you have my current contact information on file?
3. What is my interest rate?
4. Is my interest rate competitive?
5. Is there any way to get an interest rate reduction?
6. Is consolidating my loans a good option for me?
7. How do I qualify for Interest-Based Repayment or Income-Contingent Repayment?
8. Do I qualify for an economic hardship deferment?
9. What happens if I lose my job?
10. If I go back to graduate school, what are my loan options?
Options for Managing Repayment
- Alternative repayment plans. You may qualify for an income-sensitive, graduated, or extended payment plan.
- Income-sensitive payment plan - If you choose this plan, your monthly payments will be adjusted annually, base on your expected total monthly gross income from all sources.
- Graduated payment plan - If you choose this plan, you will usually make lower monthly payments at first, and your payments will increase over time.
- Extended payment plan - This plan allows certain borrowers to repay loans in excess of $30,000 over a 25-year period.
- Income-Based Repayment (IBR) - This repayment plan caps your required monthly payment at an amount intended to be affordable based on your income and family size.
- Deferment. You may postpone your payments if you qualify for deferment based on specific situations (e.g., economic hardship, school enrollment, unemployment, or disability).
- Forbearance. Forbearance is a period of time during which a lender temporarily permits you to cease making payments, or temporarily accepts smaller payments than were previously scheduled. Your lender will determine if you qualify for a forbearance.