SUCCESSFUL STUDENT LOAN REPAYMENT INFORMATION

The information provided here is based on what we have found through our experience to be the most popular resources and topics related to student loan repayment. Topics and resources will be added as they become available, so please check back.

How well you manage your student loans and other personal finances will impact how quickly you achieve your financial goals. Handling your student loans responsibly will build a solid financial foundation and positively influence your future ability to obtain credit cards, buy an automobile and purchase a home. Especially in the beginning, repayment of your student loans can be confusing. Successful repayment requires you understand the basics of your student loans.

It is important to know and be in contact with your lender/servicer. Do not be afraid to ask questions – there are no silly questions – and do not wait until it is too late for them to help you if you are having financial difficulties.

To make sure you have the most current information on your federal student loans, it is a good idea to check with the U.S. Department of Education to find out your federal student loan servicer. If you have private student loans but are not sure about your lender, check your paperwork or you can check your credit report. You can request a free credit report every 12 months from each of the nationwide consumer credit reporting companies by going to www.annualcreditreport.com. It is always a good idea to check the accuracy of your credit report on an annual basis.

NCHER has also produced a brochure which answers some of the most prominent questions student loan borrowers have in an easy-to-understand fashion, complete with links and phone numbers.

Your success is also important to the Student Loan Ombudsman Caucus. The Caucus consists of guaranty agencies, lenders, servicers, and the Department of Education. We use a collaborative approach in researching and responding to students and borrowers who have concerns that are brought to our attention. Over the past 15 years we have been tracking and trending data regarding issues that are brought to our individual offices. We are focusing our efforts on providing information to aid in the successful repayment of your student loans.

The Federal Student Aid Ombudsman Group of the U.S. Department of Education is dedicated to helping resolve disputes related to Direct Loans, Federal Family Education Loan (FFEL) Program loans, Guaranteed Student Loans, and Perkins Loans. The Ombudsman Group is a neutral, informal, and confidential resource to help resolve disputes about your federal student loans. Before contacting the Ombudsman Group, be sure to follow the Department’s recommendations to resolve problems with your student loan yourself. If you have tried to resolve the problems with your loan but have not been able to, get prepared before seeking the Ombudsman Group’s help. Once you are prepared, fill out an online form in order to receive assistance from the Ombudsman Group. You can also contact them through the post office, phone or fax.

U.S. Department of Education
FSA Ombudsman Group
830 First Street, N.E., Mail Stop 5144
Washington, DC 20202-5144
Phone: (877) 557-2575
Fax: (202) 275-0549

Guaranty Agency, Lender and Servicer Assistance

Many guaranty agencies, lenders and servicers have their own ombudsman or customer service offices. Click on the button below for a partial list of guaranty agency and lender resources. If your loan holder is not on this list, you should still check to see if they have an ombudsman or customer advocate unit. If you do not know which agency is holding your loan, you should be able to retrieve this information from the National Student Loan Data System.

The agencies prefer that you first try to resolve your problem with the representative from their company or from a collection agency that has already contacted you. The ombudsman will get involved if these initial efforts are unsuccessful. You should only call one of these programs if they hold your loan.

The CFPB has an online form that you can use to tell them about complaints with private student lenders or about servicers and collectors of all types of student loans. The CFPB says that it will assist all borrowers experiencing problems taking out a private student loan, repaying their private student loan, or managing a student loan that has gone into default and may have been referred to a debt collector. The CFPB website also includes other tools to help borrowers understand their student loan options.

Detailed information regarding the following topics is available in the Student Loan Repayment Resources file library found at the bottom of this page.

Subsidized loans – Federally guaranteed loans based on financial need. The federal government pays the interest that accrues on subsidized loans while the student is in school, in their grace period and during an authorized deferment.

Unsubsidized loans – Federally guaranteed loans not based on financial need. Interest will accrue from the time the loan is disbursed to the school until the loan is paid in full. Students will receive their grace period; however, interest continues to accrue.

*See the Subsidized/Unsubsidized FAQ and Example in the Student Loan Repayment Resources file library below.

It’s important to learn and compare the repayment plan options that best meet your individual needs and circumstances based on :

• Your financial goals
• What you can afford to pay each month

To help make informed decisions, you should compare the:

• Monthly payment
• Total cost of paying the loan off, including both principal and interest

Be sure and talk to your lender/servicer regarding which repayment plan best meets your financial situation and helps you maintain successful repayment of your student loans. If the terms of another plan better meet your needs, you generally have the option to change your repayment plan.

Repayment Plan Options

Time-Driven

• Standard repayment
• Graduated Repayment
• Extended Repayment

Income-Driven

• Income-Based Repayment (IBR) – available for FFELP and Direct Loans
• Pay As You Earn – Available for certain Direct Loans
• Revised Pay As You Earn (REPAYE) – Available December 2015 for Direct Loans
• Income-Contingent Repayment (ICR) – Available for Direct Loans
• Income-Sensitive Repayment – Available for FFELP loans

More detailed information about the income-driven repayment plans can be found on the Income Driven Repayment page.

The federal loan programs offer various repayment plans to make your monthly student loan payment affordable and fit within your budget. Various calculators are available online to estimate your budget and monthly payments under each plan. The Department of Education’s calculator provides information across all of the repayment plans as well as side-by-side results for all options, including information about the total cost of a loan over time. This calculator can be found at StudentAid.gov/Loan Simulator

Remember, there are no penalties or charges for paying off your student loans early and you will save money by paying less interest.

Discount for Direct Debit – Check with your lender/servicer regarding what interest rate deduction you may be eligible to receive by signing up for direct debit to make your student loan payments. For Direct Loans, there’s a .25% interest rate deduction.

Grace Period

When you graduate, drop to less than full time, or withdraw from college there is a one-time 6 month suspension period before your first payment is due on any Stafford loans you borrowed. This is called a grace period.

Payment Application and Prepayments

All educational loans, including federal and private student loans, allow for penalty-free prepayment. This means you can make extra payments to reduce the balance of the loan, or even pay off the entire balance early, without having to pay an extra fee.

Prepayment can save you money by paying off your loan earlier and by reducing the total interest paid over the lifetime of the loan. Since the loan balance is reduced, more of your subsequent monthly payments will go toward further reducing the loan balance and less toward interest.

*See the Payment Application and Pre-Payment FAQ and Example in the Student Loan Repayment Resources file library below.

Avoid Student Loan Default

If you do not make your monthly payments as scheduled and you do not make any special arrangements with your lender/servicer, your student loan will go into default. Once the loan goes into default, the entire balance (principal, interest and collection fees) generally becomes immediately due and payable. The consequences of default are severe. For federal loans, these consequences include wage garnishment, state and federal income tax refund offset and litigation. Don’t wait until it is too late to ask for help – you have more options available to you if your student loan is not in default – rather than waiting until after default and asking for help.

Short–term solutions to avoid default include certain deferments for which you may be eligible and forbearance. Contact your lender/servicers for more details.

Options for Repaying Defaulted Federal Student Loans

If you do default on your student loan, the following repayment options are available:

• Payment in full
• Loan rehabilitation
• Loan consolidation

For more detailed information regarding the topics below, please click on the linked titles.

Who’s My Student Loan Servicer?

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 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.

Direct Consolidation Loans

A Direct Consolidation Loan allows you to consolidate (combine) multiple federal education loans into one loan. The result is a single monthly payment instead of multiple payments.

There is no application fee to consolidate your federal education loans into a Direct Consolidation Loan. If you are contacted by someone offering to consolidate your loans for a fee, you are not dealing with one of the U.S. Department of Education’s (ED’s) consolidation servicers. The U.S. Department of Education’s Student Loan Ombudsman warns borrowers to beware of student loan debt relief offers and credit repair deals.

Public Service Loan Forgiveness (PSLF) Program

The Public Service Loan Forgiveness (PSLF) Program is intended to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance of their Direct Loans after they have made 120 qualifying payments on those loans while employed full time by certain public service employers.

Total and Permanent Disability and Loan Discharge

A total and permanent disability (TPD) discharge relieves you from having to repay a William D. Ford Federal Direct Loan (Direct Loan) Program loan, Federal Family Education Loan (FFEL) Program loan, and/or Federal Perkins Loan (Perkins Loan) Program loan or complete a TEACH Grant service obligation on the basis of your total and permanent disability. Before your federal student loans or TEACH Grant service obligation can be discharged, you must provide information to the U.S. Department of Education (ED) to show that you are totally and permanently disabled. ED will evaluate the information and determine if you qualify for a TPD discharge.

For more detailed information regarding the TPD discharge process including how to apply, click here: Total and Permanent Discharge (TPD) 101

Servicemember Benefits

Thank you to the men and women in uniform for your service and sacrifice to help protect our country. Whether you are currently serving in the military or a veteran, we want to ensure that servicemembers and their families understand the student loan benefits that are currently available to eligible servicemembers. This page includes a high-level summary of the major federal benefits and programs. Other student loan benefits may be available at the state or local level. Please contact your current lender/servicer for more detailed information, including what documentation may be required.