It is possible that you took out multiple loans to help pay for college. This may mean that you will be making payments to more than one place, and you may also have different repayment terms. It is important to know the terms for each type of loan you have. Below is information about repayment for some loan types:
There are four basic rules to successfully repaying your student loans. While all cases are different, following these steps can ease the responsibility of repaying student loans.
- Establish a Budget
The most effective way to ensure you are going to have enough cash to cover all your bills is to establish a monthly budget. The easiest way to determine what you are going to be able to spend each month is a budget calculator. (There are numerous free budget calculators on the web.) The first step towards developing an accurate budget is determining your take home pay after taxes. With this number established, use the calculator to subtract you expenditures such as housing, utilities, car bills, gas, medical expenses, groceries, credit card and other bills, student loans, entertainment and miscellaneous expenses. With this completed, you have a monthly budget to follow.
- Know Your Rights and Responsibilities
You are responsible for:
- Repaying the loan as agreed (including any accrued interest, and the guarantee and origination fees deducted from the loan at disbursement) even if you do not complete your education, are unable to find employment, or are dissatisfied with the education you received.
- Repaying the loan even if a bill is not sent; failure to receive a bill or coupon booklet does not relieve you of the obligation to repay your loans on schedule.
- Attending an entrance interview prior to receiving the first disbursement and an exit interview prior to leaving school.
- Keep in Contact with Your Lender or Servicer
You are responsible for notifying your lender immediately in the event of:
- a change in name, address, phone number, or social security number,
- a drop below half-time student status,
- graduation, withdrawal, or transfer to another school,
- inability to meet the repayment terms agreed upon,
- the need to apply for a deferment or forbearance.
- Know Your Repayment Schedule
Remember it is your responsibility to make your payments on time, even if your servicer does not send you a coupon book or bill. If you do not follow your payment schedule, you could be considered in default.
Deferment: A deferment allows you to defer or postpone your scheduled monthly loan payments. Deferments may apply to PLUS loans, Federal Direct Loans and Federal Consolidation Loans.
Deferments last for different amounts of time. If you have already received a prior deferment, you may qualify for the same one again. In some cases, if you have exceeded the time limit on a particular deferment, you may no longer be eligible to apply for the same deferment.
During the deferment period, the federal government will pay the interest on subsidized loans. If you have an unsubsidized loan, you can save money by paying the interest at regular intervals; otherwise, the interest will be added to the loan principal.
Forbearance: If a borrower does not qualify for a deferment, they may request a forbearance. A forbearance allows the temporary reduction or postponement of the principal payments for periods of up to one year at a time. Forbearances are not automatic, however. You must apply for a forbearance in writing through your lender. You must supply documentation to support your request for a forbearance. You will also have to continue your payments until you are notified that your forbearance has been granted.
Cancellation: Loans will be canceled in the event of the borrower's death or if the borrower becomes totally and permanently disabled after the loan is distributed. In addition, Perkins and Direct loans may qualify for loan cancellation. For more information see the loan book.
Student Loan Scams
Getting help figuring out your Federal Student Loans is ALWAYS free from your loan servicer. If you are contacted by a company asking for a fee to help you, promising fast and easy loan forgiveness, or asking for your FSA ID, it is likely a scam. NEVER provide your FSA ID password to anyone. Your Federal Loan Servicer can assist for free with:
- submitting your loan payments;
- answering any questions you have about your loans;
- helping you decide which repayment plan best suits you; and
- guiding you to switch to a new plan at no cost.
When in doubt about a call or an email, always contact your servicer directly. You can find your servicer by logging in to studentaid.gov with your FSA ID, or find their contact information at: https://studentaid.gov/manage-loans/repayment/servicers