Student Loan Repayment
Student Loan Repayment can be a challenge and a stressful task for most college students after the college years. Unfortunately most do not realize there are ways to lessen the immediate burden of student loans. Many ask themselves – Do I have repayment options?
[ad] Yes. The repayment periods for Stafford Loans vary from 10 to 30 years depending on whether the loan is a Direct or FFEL Stafford Loan and depending on which repayment plan you choose. When it comes time to repay, you can pick a repayment plan that’s right for you:
• A 10-year Standard Plan with a minimum monthly
payment of $50;
• An Extended Plan that allows you to repay your loan
over a longer period;
• A Graduated Plan with a monthly payment that starts
low and then increases gradually during the repayment
period; or
• A plan that bases the monthly payment amount on
how much money you make. Under Direct Stafford
Loans, this plan is called the Income Contingent
Under certain circumstances, you can receive periods of deferment or forbearance, during Student Loan Repayment period, that allow you to postpone loan repayment. These periods don’t count toward the length of time you have to repay your loan. You can’t get a deferment or forbearance for a loan in default.
What is deferment?
A deferment is a period of time during which no payments are
required and interest does not accrue (accumulate), unless you
have an unsubsidized Stafford Loan. In that case, you must pay the interest.
How do I qualify for a deferment?
The most typical loan deferment conditions are enrollment in
school at least half-time,* inability to find full-time employment
(for up to three years) and economic hardship (for up to three
years). Other deferment conditions are loan specific.
What is forbearance?
If you temporarily can’t meet your repayment schedule but you’re not eligible for a deferment, your lender might grant you forbearance for a limited and specific period of time. Forbearance occurs when your lender or loan-servicing agency agrees (in writing) to either temporarily reduce or postpone your student loan payments. Interest continues to accrue (accumulate), however, and you are responsible for paying it, no matter what kind of loan you have. Generally, your lender can grant forbearance for periods up to 12 months at a time, for a maximum of three years. You’ll have to provide documentation to the lender to show why you should be granted forbearance.
Applying for deferment or forbearance
Receiving deferment or forbearance is not automatic. You or your parents must apply for it.
• Federal Perkins Loans—Contact the school that
made your loan or the school’s servicing agent.
• Direct Loans (includes Direct PLUS Loans)—Contact
the Direct Loan Servicing Center at 1-800-848-0979.
TTY users should call 1-800-848-0983. Or, go to www.dl.ed.gov.
• FFEL Loans (includes FFEL PLUS Loans)—Contact the lender or agency holding your loan.
Regardless of which type of federal student loan you have, you must pay the interest that accrues (accumulates) during any period of forbearance a point to remember when planning Student Loan Repayment.
from federalstudentaid.ed.gov
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