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Student Loan Repayment

Managing your student loan debt is important. If you have any difficulty with your loans, the best strategy is to immediately contact your student loan servicer. You can get information about all of the federal student loans you have received and find the loan servicer­ for your loans by logging in to My Federal Student Aid.

Know Your Repayment Options for Federal Loans

After you graduate, you'll be able to decide on a repayment plan of your choice. If you don't, then you're automatically enrolled in the Standard Repayment Plan. With the Standard Repayment Plan, monthly bills are higher but the loan is paid off sooner, saving you money over time. Alternatively, the Graduated Plan begins with lower payments and they increase every two years. There are several repayment plans that you can choose from, and you are able to change your plan at any time. 

The different plans may seem similar, but each has distinct pros and cons. As a result, choosing the best option for your personal situation is important. Although you may select or be assigned a repayment plan when you first begin repaying your student loan, you can change repayment plans at any time—for free. Contact your loan servicer if you would like to discuss repayment plan options or change your repayment plan. Visit the Federal Student Aid website for more information on the different types of repayment plans.

Department of Education’s Loan Simulator

Before you contact your loan servicer to discuss repayment plans, you can use the Department of Education’s Loan Simulator to get an early look at which plans you may be eligible for and see estimates for how much you would pay monthly and overall. Have the information you will need on hand. The DoE website cautions that you will need to complete the Loan Simulator in one session.

NOTE: If you're seeking Public Service Loan Forgiveness for your federal student loan, you are required to be enrolled in one of the four income-driven repayment plans: PAYE, REPAYE, Income-Based Repayment, or Income Contingent Repayment. Learn more about income-driven repayment options on the Federal Student Aid website.

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Consolidating vs. Refinancing Student Loans

Nomenclature is important with student loans. Although the terms consolidating and refinancing may be used interchangeably, they have very different meanings in the world of student loans.

Technically, consolidation applies only to federal loans. Borrowers with more than one federal loan may take a new government consolidation loan to effectively combine all of their outstanding federal loans. The primary benefits of a consolidation loan: one new loan, one payment, one servicer. The payment term may be extended to 30 years if the outstanding loan balance is large enough. Consolidating federal student loans may be a good strategy to lower monthly payments or to get out of default, but it is not always a good idea.

CAUTION: The consolidation loan interest rate is the weighted average of the loans being consolidated rounded UP to the nearest 1/8 of 1%. This means that the interest rate on the consolidation loan may be higher than your current interest rates.  Also, the total cost of your loans will likely increase because the term is likely to be extended and the interest rate may be slightly higher. 

On the other hand, refinancing student loans generally indicates that you have found a private lender who will make a new loan for you to pay off your outstanding loans. You may refinance one or more of your outstanding student loans. You may also refinance federal and/or private loans. There are some great reasons to refinance student loans: You can lock in lower interest rates, reduce monthly payments, and/or get rid of debt faster.

CAUTION: When you refinance federal loans, you lose all of the federal benefits associated with federal loans including the favorable repayment programs and access to many of the loan forgiveness programs.

Deferment and Forbearance

A deferment or forbearance allows you to temporarily stop making your federal student loan payments or to temporarily reduce the amount you pay. If necessary, after your grace period ends you can further delay loan repayment through either deferment or forbearance, which allows borrowers to suspend or reduce their payments under special circumstances. Be aware that unless you have a Perkins or Subsidized Loan, you are responsible for paying the interest that builds up during the deferment period. 

If you don't qualify for a deferment, then you can apply for forbearance to stop making payments or reduce your monthly payment for up to 12 months. There are two types of forbearances:

  • Discretionary – Forbearance requests due to illness or financial hardship that your lender decides to grant or not to grant.
  • Mandatory forbearance – Your lender is required to grant you a forbearance if you meet the eligibility requirements.

There are pros and cons to each of these options. It's important to know the costs and benefits of each before you make a decision about which is right for you.

Learn more about student loan deferment and forbearance on the Department of Education's website.

The Public Service Loan Forgiveness Program

The Public Service Loan Forgiveness (PSLF) program can be very beneficial to borrowers who qualify. The key is being an educated consumer and ensuring that you meet the requirements for the program right from the start.

  • You need to make 120 eligible payments, on eligible loans, while working for an eligible employer. The key to PSLF eligibility is that you must fulfill all the requirements concurrently, but you don’t need to do so consecutively. This means that only payments made while under an eligible repayment plan on a Federal Direct Loan, and while working for an eligible employer will count towards the 120 you’ll need to receive forgiveness of your loan balance. With that said, if you leave eligible employment at some point, say to return to school, or take a job in the private sector, your prior eligible payments will still be counted if you return to work for an eligible employer and want to continue pursuing PSLF.
  • Be careful about consolidating your loans. Consolidation re-starts the clock for counting the 120 eligible payments. This means if you made payments on your federal student loans and then consolidated those loans, the payments made on the loans which were consolidated do not count toward the 120 eligible payments. Once it’s done, there’s no reversing the process to make those payments on the underlying loans eligible for PSLF. Most borrowers do not need to consolidate their loans to pursue PSLF. The benefits of consolidation may still be important to you; just be aware that the eligible payment clock will restart. 
  • Get in the habit of submitting your proof of employment annually. Submitting the Employment Certification Form annually will trigger the servicer to start counting your eligible payments right away. It will also result in the borrower receiving notification if the employment or payments are not seen as eligible – something borrowers should know when they are starting to make payments rather than after ten years have passed. The PSLF Employer Certification Form and FAQ’s can be found on the Department of Education’s website.

Because you have to make 120 qualifying monthly payments, it will take at least 10 years before you can qualify for PSLF. After you make your 120th qualifying monthly payment for PSLF, you’ll need to submit the PSLF application to receive loan forgiveness. You must be working for a qualifying employer at the time you submit the PSLF application and at the time the remaining balance on your loan is forgiven. Access the application and learn more about the process to apply on the Department of Education’s website.

Depending on a number of factors, including whether you provided timely proof of being employed by an eligible employer via the ECF process, it could take a couple of months or significantly more time if you have to provide additional documentation.

Learn more about the PSLF program and resources on the Department of Education’s website

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Don’t pay for help managing or consolidating your federal student loan. There are plenty of free resources.


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The content on this page provides general consumer information. It is not legal advice or regulatory guidance. We do not endorse or guarantee the accuracy of third-party information.

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