3 Ways to Get Your Loan Out of Default

You didn’t pay your federal student loan for several months, and now a collection agency is calling you telling you your loan has defaulted. If you’re like many borrowers in this situation, you are probably freaked out and don’t know what to do.

options

Don’t worry — you still have options to remedy your situation. You don’t have to run from your debt; you can face it head-on and we can help you.

When you default on a federal student loan, you have three basic options to get your loan back in good standing:

  1. Loan Repayment: You can repay your defaulted loan, but just know that your lender will ask for the full amount. When you default, the entire balance of the loan is due immediately. If you are able, you can pay by check, money order, or credit or debit card. Get more info on where to send your payment. If this isn’t an option for you, keep reading.
  2. Loan Rehabilitation: You can rehabilitate your loan by voluntarily making at least nine payments of an agreed-upon amount over a 10-month period. You can choose your due date, and your payment has to arrive at the Department payment center within 20 days of that due date. You and the Department of Education must work together to agree on a reasonable and affordable payment plan. After you’ve successfully rehabilitated your loan, you may regain eligibility for benefits such as choice of repayment plan, loan forgiveness, deferment, and forbearance. However, it is possible that your monthly payment could increase after you make those initial nine payments due to the additional collection costs that are added to your principal balance.
  3. Loan Consolidation: You may be able to combine all of your federal student loans, including defaulted loans, into a new Direct Consolidation Loan. Usually, you are required to make at least three consecutive, voluntary, and on-time payments on your defaulted loans prior to consolidating. Please note that the principal balance of your new Direct Consolidation Loan may include accrued interest and collection fees. There is also an option to consolidate without making any payments; however, you must agree to one of our income-driven repayment plans as part of this consolidation, and you are required to complete income verification documents. Learn about your options for consolidating.

Now that you understand your options, it’s time to take action. First, contact the agency that is billing you to explain your situation, ask for more information on your options, and let them know that you want to work out a plan to get your loan back on track. In no time, you will be out of default and your loan will be back in good standing.

Tara Marini is a communication analyst at the Department of Education’s office of Federal Student Aid.

5 Ways to Pay Off Your Student Loans Faster

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The first thing people say when they find out where I work: “Can you delete my student loans for me?”

If only I had that power. Just like many of you, I am a student loan borrower. Each month, my federal student loan servicer, withdraws my $381.35 student loan payment from my bank account and I still cringe every time. (Do you know how many trips I could take with that money?) Point is, I understand what you’re going through.

That said, there are manageable ways to pay off your student loans faster than you had planned and save yourself money by doing so!

Here are some ideas:

1) Pay Right Away Even though you’re usually not required to, consider making student loan payments during your grace period or while you’re still in school. If you’re short on cash, consider at least paying enough each month to cover the amount of interest you’re accruing. That way your interest doesn’t capitalize and get added to your principal balance. Not doing this was one of the biggest mistakes I made with my student loans.

2) Sign up for Automatic Debit If you sign up for automatic debit, your student loan servicer will automatically deduct your student loan payment from your bank account each month. Not only does this help ensure that you make payments on time, but you may also be able to get an interest rate deduction for enrolling. Contact your loan servicer to see if your loan is eligible for this benefit.

3) Pay More than Your Minimum Payment Even if it’s $5 a month!  Paying a little extraeach month can reduce the interest you pay and reduce your total cost of your loan over time. (Pay attention! This next part is important!) If you want to ensure that your loan is paid off faster, make sure you tell your loan servicer that the extra amount you’re paying is not intended to be put toward future payments. If given the option, ask your servicer if the additional payment amount can be allocated to your higher interest loans first.

4) Use Your Tax Refund One easy way to pay off your loan faster is to dedicate your tax refund to paying off some of your student loan debt. Part of the reason you may have gotten a refund in the first place is because you get a tax deduction for paying student loan interest. Might as well be smart about the way you spend it.

5) Seek Out Forgiveness and Repayment Options There are a number of situations under which you can have your federal student loan balance forgiven. There are forgiveness and repayment programs for teachers, public servants, members of the United States Armed Forces, and more. Most of these programs have very specific eligibility requirements, but if you think you might qualify, you should definitely do some research. Also, research whether your employer offers repayment assistance for employees with student loans. There are many who do!

Nicole Callahan is a Digital Engagement Strategist at The U.S. Department of Education’s office of Federal Student Aid. She is scheduled to finish repaying her student loans in 2021, but is hoping that by taking her own advice, she will finish much faster.

How to Decide Which Income-Driven Repayment Plan to Choose

If your student loan payments are high compared to your income, you may be eligible to switch your repayment plan to one that calculates your monthly payment based on your income and family size.

TIP: If you are seeking Public Service Loan Forgiveness, you should repay your federal student loans under an income-driven repayment plan.

If you need to make lower monthly payments, one of the three following income-driven plans may be right for you:

  • Income-Based Repayment Plan (IBR)
  • Pay As You Earn Repayment Plan (PAYE)
  • Income-Contingent Repayment Plan (ICR)

What’s the difference between the three plans?

While there are other minor differences between these three repayment plans, these are four significant ways they differ:

You can compare the high-level differences below:

IDR-Chart-Final

It’s also important to note that your loan types must also be eligible to be repaid under an income-driven plan.

How do I decide which income-driven repayment plan to choose?

1) See which plans you qualify for. Not everyone qualifies for an income-driven repayment plan. You can use our Repayment Estimator to estimate your payment amount for all repayment plans, including income-driven plans.

    • Check and see whether the types of federal student loans you have are eligible. In some cases, you may need to consolidate your student loans in order to be able to repay the loan(s) under an income-driven plan or the income-driven repayment plan that offers the lowest monthly payment.
    • If you’re considering our IBR or PAYE, you’ll need to make sure you meet the debt-to-income ratio requirement. To qualify, the payment that you would be required to make under the IBR or PAYE (based on your income and family size) must be less than what you would pay under the Standard Repayment Plan with a 10-year repayment period. Generally, you will meet this requirement if your federal student loan debt is higher than your annual discretionary income or represents a significant portion of your annual income.

2) Compare Plans Based on YOUR Circumstances. Using our repayment estimator, you can estimate your monthly payment amount, repayment period, projected loan forgiveness, and the total interest you’ll pay over the life of your loan. Just log in using your Federal Student Aid PIN, enter basic information about your income, family size, tax filing status, and state of residence and out pops a comparison based on your individual circumstances. You can also view the comparison in graph format!

10.10-repayment-estimator-screenshot

3) Weigh the Pros and Cons. Income-driven repayment plans may lower your federal student loan payments. However, whenever you make lower payments or extend your repayment period, you will likely pay more in interest over time—sometimes significantly more. In addition, under current Internal Revenue Service (IRS) rules, you may be required to pay income tax on any amount that is forgiven if you still have a remaining balance at the end of your repayment period.

Before you apply for an income-driven repayment plan, contact your loan servicer with any questions. Your loan servicer will help you decide whether one of these plans is right for you.

I’ve decided which income-driven plan is right for me. How do I apply?

If you decide that an income-driven repayment plan is right for you, there are a few steps you need to take. To apply, you must submit an application called the Income-Driven Repayment Plan Request. You can submit the application online at StudentLoans.gov or on a paper form, which you can obtain from your loan servicer. Along with the application, you’ll need to provide income information. Find out more information about the documentation you must provide.

FACT: The application allows you to select an income-driven repayment plan by name, or request that your loan servicer determine what income-driven plan or plans you qualify for, and to place you on the income-driven plan with the lowest monthly payment amount.

Is there anything else I should know about choosing an income-driven repayment plan?

      • You must provide updated documentation each year You must provide your loan servicer with updated income documentation and certify your family size on the Income-Driven Repayment Plan Request each year, generally around the same time of the year that you first began repayment under the income-driven plan that you selected. It’s important for you to provide the required information by the annual deadline specified by your loan servicer. If you miss the deadline, you’ll remain on the same income-driven repayment plan, but your monthly payment will no longer based on your income (this means your payment will increase).
      • Your payment amount can change from year to year. Your required monthly payment amount may increase or decrease if your income or family size changes from year to year.

Nicole Callahan is a digital engagement strategist at the Department of Education’s office of Federal Student Aid.

Missed a Few Student Loan Payments? We Can Help You Get Back on Track.

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You’ve recently missed a few payments on your student loan. It might not seem like a big deal, but you are responsible for repaying your federal student loans and when you don’t, you could face huge consequences. You don’t need me to tell you about those; you probably already know what they are. (If you don’t, you can read more about those here.) Instead, let’s talk about how you get back on track. It may be easier than you think.

One of the many benefits of having federal student loans is the flexibility of repayment options. You owe it to yourself (and your credit score) to take advantage of these options.

First things first: whenever you are unable to make your federal student loan payments, you should contact your loan servicer. Your loan servicer can explain your options for lowering or temporarily postponing your payments and help keep your loan in good standing while you get your finances in order.

Here are some options that your servicer may suggest to help you:

  • Switch your monthly payment date: You may be able to change the date that your monthly payment is due. For example, if you get paid once a month on the 1st, you may request your federal student loan payment is due on the 2nd of the month instead of the 28th.
  • Switch your repayment plan: You may be able to change your repayment plan to one with lower monthly payments. Just beware that lowering your monthly payments may result in paying more over the life of the loan. You can compare your payments under each repayment plan using our Repayment Estimator.
  • Ask about income-driven repayment plans: You may qualify for a repayment plan that bases your monthly payment amount on your income. Depending on your income, your initial payment could be as low as $0 per month. This is a good option if you cannot afford your current monthly payment amount. Just note that income-driven repayment plans usually end up costing you more over the life of the loan.
  • Consolidate your loans: If you have multiple federal student loans, you may consider combining them into one loan. A Direct Consolidation Loan often results in a lower monthly payment, but does extend the amount of time you have to repay your loan which causes you to pay more over the life of the loan. Find out more about the .

If the options described above won’t work for you, there are a few other options to consider:

  • Ask for a deferment or forbearance: deferment or forbearance allows you to temporarily postpone or reduce your federal student loan payments. You may qualify for a deferment or forbearance for a variety of reasons, including financial/economic hardship, unemployment, or military service. It’s important to note that, in most cases, interest will continue to accrue on your loans when they are in a deferment or forbearance status (except for subsidized loans in deferment).

For more information about options for successfully managing your loans, visit https://studentaid.ed.gov/repay-loans or contact your loan servicer.

Tara Marini is a communication analyst at the Department of Education’s office of Federal Student Aid.

Is Student Loan Consolidation Right for You?

A Direct Consolidation Loan allows you to combine multiple federal education loans into one loan. Before making the decision to consolidate your loans, you’ll want to carefully consider whether loan consolidation is the best option for you. Keep in mind, once your loans are combined into a Direct Consolidation Loan, they cannot be removed.

FACT: You never have to pay to consolidate your student loans. If you have questions about consolidation, contact your loan servicer.

FACT: You never have to pay to consolidate your student loans. If you have questions about consolidation, contact your loan servicer.

Advantages of consolidating your student loans:

  • It’s Free!
    It’s free to apply to consolidate your federal student loans. If you are contacted by someone offering to consolidate your loans for a fee, you are not dealing with the U.S. Department of Education.
  • Simplified Payments
    You’ll have a single monthly payment and a single lender (the U.S. Department of Education) instead of multiple payments and multiple lenders.
  • Lower Monthly Payments
    You may get a longer time to repay your loans, often resulting in lower monthly payments.
  • Qualify for Income-Driven Repayment or Loan Forgiveness

Some benefits such as the Pay As You Earn Repayment Plan and Public Service Loan Forgiveness Program are only available for Direct Loans. If you choose to consolidate your Federal Family Education Loan Program loans into a Direct Consolidation Loan, you may be able to take advantage of these programs.

  • Fixed Interest Rate
    Direct Consolidation Loans have a fixed interest rate, meaning your interest rate won’t change year to year. The fixed interest rate is based on the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of 1%.

Disadvantages of consolidating your student loans:

  • More Interest Paid Over Time
    You will likely pay more money in interest over the life of the loan. The amount of time you have to repay your Direct Consolidation Loan can vary from 10-30 years depending on the amount of your Direct Consolidation Loan and the amount of your other student loan debt. The longer it takes to repay your loan, the more you will make in interest payments.
  • Loss of Borrower Benefits
    You may lose any borrower benefits, such as interest rate discounts, principal rebates, or some loan cancellation benefits, offered with the original loans.

In weighing your options, be sure to compare your current monthly payments to what your monthly payments would be if you consolidated your loans. If you’re just interested in temporarily lowering your monthly payment, consolidation might not be the answer.  Contact your loan servicer to consider alternative options such as switching repayment plans or requesting a deferment or forbearance.

To find out more information about loan consolidation, including eligibility requirements, visit https://studentaid.ed.gov/repay-loans/consolidation.

Tara Marini is a communication analyst at the Department of Education’s office of Federal Student Aid.

The 5 “Qs” of Public Service Loan Forgiveness

#StudentLoanForgiveness. It’s a hashtag now, so you’ll all pay attention, right? Everyone wants their student loans forgiven. The perception is that very few qualify for any forgiveness programs. But did you know that there is one broad, employment-based forgiveness program for federal student loans? Most people don’t, or misunderstand how it works. Let me break down some key points of the Public Service Loan Forgiveness Program to help you figure out if you could qualify.

10.31 How to Determine if You Qualify for Public Service Loan Forgiveness

Can you check the all the boxes?

[ 1 ] Work in “Qualifying Employment”

First, you need to work in “qualifying” employment; that is, you must work in “public service.” But what does that mean? Everyone seems to have a different definition. Ours is based on who employs you, not what you do for your employer. The following types of employers qualify:

  • Governmental organizations – Federal, state, local, Tribal
  • Not-for-profit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code
  • A not-for-profit organization that provides some specific public services, such as public education, law enforcement, public health, or legal services

The following types of employers do not qualify:

  • Labor unions
  • Partisan political organizations
  • For-profit organizations

[ 2 ] “Qualifying Employment Status”

If you work at one of these types of organizations—great! That’s the most difficult criteria to meet. Next, you need to work there in a “qualifying” employment status, which means that you must be a full-time employee of the organization. Full time, for our purposes, generally means that you meet your employer’s definition of full time or work at least 30 hours per week, whichever is greater.

[ 3 ] Have a “Qualifying Loan”

A “qualifying” loan is a Direct Loan. It’s that simple. Of course, it’s the government, so nothing is actually that simple. You see, there are (or were) three big federal student loan programs:

  • The Direct Loan Program, which is now the biggest program,
  • The Federal Family Education Loan (FFEL) Program, which is what many students borrowed from until mid-2010, and
  • The Federal Perkins Loan Program, which is a relatively small program.

You may have loans from just one of these programs, or you may have borrowed from all three. If you’re not sure which loan program you borrowed from, I can’t blame you—I had 20 separate loans by the time that I finished graduate school! You can use the National Student Loan Data System to determine which program you borrowed from. Here’s a tip from me to you: basically, if you see “Direct” in the loan type name, it’s a Direct Loan. Otherwise, it’s not.

Don’t have a Direct Loan? Don’t despair! You can consolidate your other federal student loans into a Direct Consolidation Loan and qualify that way. Not having a Direct Loan is the biggest reason that borrowers who are seeking Public Service Loan Forgiveness aren’t on the right track, so be sure that all of your loans that you want forgiven are Direct Loans before you proceed to the next step. If you do need to consolidate, be sure to check the box in the application that says that you’re consolidating for the purposes of loan forgiveness. It will make your life easier, I promise.

[ 4 ] Have a “Qualifying Repayment Plan”

Next, you need a “qualifying” repayment plan. All of the “income-driven repayment plans” are qualifying plans for Public Service Loan Forgiveness. So is the 10-year Standard Repayment Plan, but if you’re on that repayment plan, you should switch to an income-driven repayment plan straight away, or you will have a drastically lower loan balance left to be forgiven after you meet all of the criteria.

If you’re consolidating your loans, you can apply for an income-driven repayment plan in the consolidation application, but if you don’t, you will be placed on the Standard Repayment Plan for Direct Consolidation Loans, which is almost never a qualifying repayment plan for Public Service Loan Forgiveness. If you already have Direct Loans, you can submit an income-driven repayment plan application on StudentLoans.gov.

[ 5 ] Make 120 “Qualifying Payments”

Lastly, you need to make “qualifying” payments—120 of them. A qualifying payment is exactly what you would expect it to be. You get a bill. It has an “amount due” and it has a “due date”. Make the payment in that amount by the due date (or up to 15 days after), and the payment is a “qualifying payment”. If you make a payment when you’re not required to—say, because, you’re in a deferment or you paid your student loan early—then that doesn’t count. But if you reliably make your payment every month for 10 years, you should be okay. The best way to ensure that your payments qualify is to sign up for automatic payments with your loan servicer.

Note that these payments do not need to be consecutive. So, if you had made 10 qualifying payments, and then stop for a period of time (say, you go on a deferment), then start making qualifying payments again, you don’t start over; instead, you pick up where you left off.

And, I’m sorry to have to mention a seemingly arbitrary date, but a payment only qualifies if it was made after October 1, 2007, so nobody can qualify for Public Service Loan Forgiveness until 2017 at the earliest.

Ok, so do I qualify?

Now that you have the details, let me explain how all of the criteria work together. For any payment to count toward Public Service Loan Forgiveness, you need to meet all of the criteria when you make each payment. Stated differently, you need to be working for a qualifying employer on a full-time basis when you make a qualifying payment under a qualifying repayment plan on a Direct Loan. When you break these criteria down separately, it seems simpler. It’s when you try to pack it into one sentence that it seems overwhelming.

As much as I’d like to think that all of you now have a perfect understanding of this program and how it works, I know all of you are thinking—“okay, but do I qualify?” Here’s how you find out. Download this form. Fill it out. Have your employer certify it. Send it to FedLoan Servicing (one of our federal student loan servicers), queue up How I Met Your Mother on Netflix, and wait for an answer. FedLoan Servicing will do the following:

  • Check whether you have any qualifying loans.
  • If you have qualifying loans, validate that your employment qualifies. If none of your loans qualify, they’ll tell you so.
  • If your employment qualifies, they will send you a letter confirming that your employment qualifies. Then, any of your federally held loans that are not serviced by FedLoan Servicing will be transferred to them so that we can keep better track of your loans and payments for Public Service Loan Forgiveness. If your employment doesn’t qualify, they’ll tell you so.
  • After your loans are transferred, they will match up the dates of employment on the form that you submitted to the payments you made during that time and determine how many qualifying payments you made. You’ll receive a letter with a count of qualifying payments and an anticipated forgiveness date (which assumes that all your future payments also qualify).

It’s after you get this payment count back that you’ll know whether you’re on the right track. So, it really is a good idea to submit this form early and often. We recommend that you submit the form once per year or when you change jobs. The beauty of submitting these forms early and on an ongoing basis is that it means that you won’t have to submit 10 years’ worth of them when you ultimately want to apply for forgiveness. It also means that when you apply for forgiveness, that you’ll be able to do so with confidence that you qualify for it.

One more piece of good news: Public Service Loan Forgiveness is not considered income by the IRS. That means that it’s tax-free.

Ian Foss has worked as a Program Specialist for the Department of Education since 2010. He’s scheduled to be eligible for Public Service Loan Forgiveness on October 6, 2021, if all goes according to plan.

How to Choose the Best Federal Student Loan Repayment Plan

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If you have federal student loans, it’s important that you understand your loan repayment options. For example, did you know that you have the option to choose a repayment plan? That’s right. While your loan servicer (the company that handles the billing and other services on your federal education loan) will automatically place your loan on the Standard Repayment Plan, you CAN choose another plan.

The Department of Education offers several traditional and income-driven repayment plans with different payment options. So, make sure to take the time to understand these options and find the plan that works best for you.

Generally, our repayment plans offer three types of payments:

  • Fixed Payments: Our Standard Repayment Plan and Extended Repayment Plan offer payments that remain the same amount for the life of the loan.
  • Graduated Payments: Our Graduated Repayment Plan and Extended-Graduated Plan offer payments that start out low and gradually increase every two years.
  • Income-Driven Payments: Our three income-driven repayment plans offer payments that are calculated based on your income.

Choosing a repayment plan can feel overwhelming. Don’t worry—there are several resources available to help you understand the repayments plans, determine your eligibility for each plan, and make the right decision for you.

  • Use our online Repayment Estimator to find out which plans you may be eligible for and to estimate how much you would pay under each plan. (If you log-in, the Repayment Estimator will use your actual loan balance to estimate your eligibility and payment information.)
  • Get detailed information about each repayment plan on our website.
  • Watch our Repayment: What to Expect video to get a high-level overview of the repayment plans.
  • Check out our Repayment Plans infographic for an easy-to-understand visual that will give you some key points to keep in mind as you are choosing a repayment plan.
  • Read our Repay Your Federal Student Loans fact sheet for additional information on loan repayment and the repayment plans.
  • Contact your loan servicer to discuss your options and choose a federal student loan repayment plan that’s best for you.

Remember, the repayment plans discussed here are for federal loans only. If you have private loans, check with your lender about available repayment options.

For more information on federal student loan repayment plans, visit Studentaid.ed.gov/repay-loans.

Tara Marini is a communication analyst at the Department of Education’s office of Federal Student Aid.

How to Make Student Loan Payments Based on Your Income

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Maybe you’re just getting out of school and you got a letter from your student loan servicer about repayment, or maybe you read on a blog or in the newspaper about an income-driven repayment plan. Maybe you’re not really sure what they are, how they work, or what they could mean for you. Let me give you the fundamentals.

First, let me explain the naming. “Income-driven repayment” is an umbrella term for three different repayment plans available to those with federal student loans:

  • The Income-Based Repayment Plan
  • The Pay As You Earn Repayment Plan
  • The Income-Contingent Repayment Plan

Notice how the names of all three plans reference “income” or “earnings”? Well, that’s because, under these plans, your payment amount is based on how much money you make. To really understand the differences between income-driven and “traditional” repayment plans, you must understand how your payment amount is calculated under each type of repayment plan.

How Monthly Payments Are Calculated

“Traditional” repayment plans are those such as the Standard and Extended Repayment plans. These traditionalists take three variables—the interest rate, principal balance, and repayment period—and determine the least amount of money that you can pay each month to pay the loan off by the end of the repayment period (usually 10-25 years, but sometimes as much as 30 years). This means that borrowing more, having a higher interest rate, or having a shorter repayment period will increase your monthly payment (and vice versa). Those three variables are all the traditional repayment plans care about—they don’t care if you can afford that payment, they just want your loan to be paid off within a specific time frame.

Income-driven repayment plans take these variables and stand them on their heads. These plans say, “you’ll pay what you can afford: a percentage of your ‘discretionary income’” (hint: that’s something less than your total income). Depending on the plan, that may be 10%, 15%, or something else. What you ultimately pay depends on the plan you choose and when you borrowed, but in all cases, it should be something you can afford. Sometimes, it can be as low as $0 per month.

Student Loan Forgiveness and the Income-Driven Repayment Plans

Because your payment under the income-driven repayment plans is not calculated to ensure that your loan is paid off within a specific time frame, the plans have another special feature: loan forgiveness. These plans do have a repayment period—20 or 25 years. However, it’s not the point at which your loan must be paid off; instead, it serves as a counter toward loan forgiveness. Under these plans, if your loan is not repaid in full at the end of your repayment period—20 or 25 years—then the remaining balance will be forgiven. Let me be clear: this is not to say that everyone who selects an income-driven repayment plan will receive forgiveness. You may end up paying your loan off in full before you’re eligible for some forgiveness. Because your payment is based on your income, your payment changes when your income rises (or falls). Your income is the “x” factor, and we don’t know what will happen to it in the future. Under these plans, then, you may pay your loan off in full, or not, but the income-driven repayment plans are happy either way.

What else affects whether you will receive loan forgiveness? Well, it’s those familiar variables of loan balance and interest rate. Remember, interest accrues each day on whatever your principal balance is. The income-driven repayment plans do not change this fact. So, even though your payment isn’t related to how much interest is accruing, that interest still accrues and must still be paid before you can pay down the principal balance on your loan. Ultimately, because your payment is less than it would be under another plan and may even be less than the amount of interest that accrues on your loan, then you will pay down your principal balance more slowly and increase the likelihood of receiving loan forgiveness. This also means that your loan will cost you more over time. Does this mean that you shouldn’t choose an income-driven repayment plan? Of course not! But, I wouldn’t be doing my job if I didn’t explain that there was some sort of cost to receiving this benefit.

Disclaimers

To be a good bureaucrat, I need to give you a few disclaimers before I wrap this up:

  • If you receive loan forgiveness under an Income-Driven Repayment Plan, it may be considered taxable income by the Internal Revenue Service.
  • The Income-Based and Pay As You Earn Repayment plans both have an eligibility criteria that tests to see whether you “need” to enter the plan—this test checks how much federal student loan debt you have relative to your income.
  • There are loan-based eligibility criteria that I didn’t even mention, but know that these plans are only available for federal student loans—loans made under the Direct Loan and Federal Family Education Loan Programs, to be specific.
  • If you are married, how you file your federal income tax return matters; sometimes it matters a lot.

How to Apply

In closing, let me give you some actionable steps that you can take:

  • Use the Repayment Estimator to model your eligibility and payment amount for an income-driven repayment plan.
  • If you have still questions, call your loan servicer and discuss whether one of these plans is a good fit for you.
  • Apply online at StudentLoans.gov. Because this stuff is complicated, check the box that allows your loan servicer to put you on the income-driven repayment plan with the lowest monthly payment amount.

The English language was not marred through the use of acronyms in this blog post. Ian Foss has worked for the Department of Education since 2010, and, thanks to the Income-Based Repayment Plan, has been able to eat more than just ramen noodles since he finished school.

Student Loan Forgiveness (and Other Ways the Government Can Help You Repay Your Loans)

forgiveness

Have you heard or read about student loan forgiveness? Are you wondering what it is or if it is really possible? Perhaps you already know a little about it and you want to find out if you qualify. Well, you’ve come to the right place. We’ll provide answers these questions and tell you where you can go to learn more.

What is loan forgiveness?

Loan forgiveness is the cancellation of all or some portion of your federal student loan balance. Yes, that’s right—cancellation of your loan balance. If your loan is forgiven, you are no longer required to repay that loan.

Is it really possible to have your student loans forgiven?

Yes. However, there are very specific eligibility requirements for each situation in which you can apply for loan forgiveness. If you think you may qualify, it’s definitely worth investigating.

How do I get my loans forgiven?

There are a number of situations under which you can have your federal student loan balance forgiven, and we’ve provided a few in this post. You will, however, want to research your options at StudentAid.gov/repay and contact your loan servicer for any questions you may have about student loan forgiveness.

A couple examples of situations in which your federal student loans may be forgiven include:

  • Teacher Loan Forgiveness: If you teach full-time for five complete and consecutive academic years in certain elementary and secondary schools and educational service agencies that serve low-income families, and meet other qualifications, you may be eligible for forgiveness of up to a combined total of $17,500 on certain federal student loans. For details about this program, see Teacher Loan Forgiveness.
  • Public Service Loan Forgiveness (PSLF): If you work full-time in certain public service jobs you may qualify for forgiveness of the remaining balance of your Direct Loans after you’ve made 120 qualifying payments on those loans—that’s usually about 10 years of payments. Serving in the Peace Corps or AmeriCorps is considered qualifying employment. To benefit from PSLF, you should enroll in a repayment plan that bases your monthly payment on your income. Learn more about income driven repayment plans. For loan repayment and borrower eligibility requirements, see Public Service Loan Forgiveness.

There are additional situations that allow you to apply for cancellation of your federal student loans. For example, if you are totally and permanently disabled, a member of the U.S. armed forces (serving in area of hostilities), a member of the Peace Corps, or a law enforcement or corrections officer, you may be eligible for cancellation of a portion of your federal student loan. Learn more about how you may qualify for loan forgiveness and contact your loan servicer with questions.

Are there other ways in which I can get help repaying my loans?

There are additional government programs that provide student loan repayment assistance for individuals who provide certain types of service. A couple examples include:

  • Military Service: In acknowledgement of your service to our country, there are special benefits and repayment options for your student loans available from the U.S. Department of Education and the U.S. Department of Defense. Learn about federal student loan benefits for members of the U.S. Armed Forces.
  • AmeriCorps: The Segal AmeriCorps Education Award is a post-service benefit received by participants who complete a term of national service in an approved AmeriCorps program—AmeriCorps VISTA, AmeriCorps NCCC, or AmeriCorps State and National. An AmeriCorps member serving in a full-time term of national service is required to complete the service within 12 months. Upon successful completion of the service, members are eligible to receive a Segal AmeriCorps Education Award which can be used to pay educational costs at eligible postsecondary institutions, as well as to repay qualified student loans. 

Remember, there are resources available to help you repay your loans. In addition to loan forgiveness and other benefit programs, you also have other options (including repayment plans that are based on your income) if you find yourself in a situation where you’re having trouble making your loan payments. Be sure to discuss your options with your loan servicer.

Lisa Rhodes is a writer at the Department of Education’s office of Federal Student Aid.

Where To Find Help With Your Federal Student Loans

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You received a federal student loan and now it’s time to repay it. If you’re like most student loan borrowers, you may find the repayment process a little overwhelming. But you have an important resource—your student loan servicer—to help you navigate the repayment process.

What is a loan servicer?

loan servicer handles the billing and other services on your federal student loans. The U.S. Department of Education (ED) assigns your loan to a servicer, and the servicer assists you with repayment and any questions you may have about your federal student loan.

What’s so important about my loan servicer?

There are several reasons why your loan servicer is important, including the fact that you’ll make your loan payments to your servicer.

Your servicer will help you:

How do I get contact information for my loan servicer?

To view information about all of your federal student loans including contact information for your loan servicer, log in to “My Federal Student Aid.” You’ll need your Federal Student Aid PIN, so make sure you have that handy. Once you’re logged in, select “Your Federal Student Loan Summary” to view your loan information. Note: If you have multiple federal student loans you may have more than one loan servicer, be sure to select each loan to see information specific to that loan.

Remember that your loan servicer will help you throughout the loan repayment process, so keep in touch with them, especially if your financial circumstances change.

Lisa Rhodes is a writer at the Department of Education’s office of Federal Student Aid.

Avoid These 4 Mistakes I Made With My Student Loans

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It’s been tough for me to come to terms with, but, unfortunately for me, I am not in college anymore. In fact, this spring marked three years since I graduated from college and went into repayment on my student loans. I know, not the most exciting thing in the world, but important. So while I don’t claim to be a student loan expert, I have learned a lot of lessons along the way, mostly through trial and error. In hopes that you won’t make the same mistakes I did, here are some things I wish I had known when I was graduating and getting ready to start repaying my student loans:

1. I should have kept track of what I was borrowing

Let’s be real. When you take out student loans to help pay for college, it’s easy to forget that the money will eventually have to be paid back … with interest. The money just doesn’t seem real when you’re in college, and I didn’t do a good job of keeping track of what I was borrowing and how it was building up. When it was time to start repaying my loans, I was quite overwhelmed. I had different types of loans and different interest rates. When I did eventually see my loan balance, I was pretty shocked.

You can avoid this problem. Had I known there was a super easy way to keep track of how much I’d borrowed in federal student loans, I would have been much better off. You can view all your federal student loans in one place by going to StudentAid.gov/login.

2. I should have made interest payments while I was still in school

If you’re anything like me, you probably consumed your fair share of instant noodles while trying to survive on a college student’s budget. Trust me, I get it. But one thing I really regret when it comes to my student loans was not paying interest while I was in school or during my grace period. Like I said, I was far from rich, but when I was in college, I did have a work-study job and waited tables on the side. I probably could have spared a few dollars each month to pay down some student loan interest. Remember, student loans are borrowed money that you have to repay with interest and more importantly, that interest may capitalize, or be added to your total balance. My advice: Even though you don’t have to, do yourself a favor and consider paying at least some of your student loan interest while you’re in school. It will save you money in the long run.

3. I should have kept my loan servicer in the loop

If you’re getting ready to graduate or have graduated recently and haven’t heard from your loan servicer, make sure you check that your loan servicer has up-to-date contact info for you. When I graduated and moved into my first big-girl apartment, I forgot to change my address with my loan servicer. I found out that all of my student loan correspondence was going to my mom’s address. I hadn’t even thought to update my loan servicer with my new contact information. Don’t make the same mistake I did. Keep your servicer informed of address, email, and phone changes.

4. I should have figured out what my monthly loan payments were going to be BEFORE I went into repayment

By the time my grace period was over, I had a decent idea of how much I had borrowed in total, but I had no idea what my monthly payments would be. I thought I was fine. I had started my new job and been paying rent and other bills for about six months. Then my grace period ended, and I got my first bill from my loan servicer. It was definitely an expense I hadn’t fully taken into account.

Don’t make the same mistake. Federal Student Aid has an awesome repayment estimator that allows you to pull in your federal student loan information and compare what your monthly payments would be under the different repayment plans that are offered. That way, you can choose the right repayment plan, know how much you can expect to pay monthly, and budget accordingly … unlike me.

I’ll be the first to admit that this whole process can be a little overwhelming, especially when you’re new at it. But just remember, your loan servicer is there to help you. If you need advice or have questions about your student loans, don’t hesitate to contact your loan servicer. Their assistance is FREE!

Nicole Callahan is a digital engagement strategist at the Department of Education’s office of Federal Student Aid.

6 Things You MUST Know About Repaying Your Student Loans

When it comes to repaying your federal student loans, there’s a lot to consider. By taking the time to understand the details of repayment, you can save yourself time and money.

REMEMBER: You never have to pay for help with your federal student loans. If you have any questions at all, contact your servicer. They provide FREE help.

This should help you get started.

When do I begin repaying my federal student loans?

You don’t have to begin repaying most federal student loans until after you leave college or drop below half-time enrollment. Many federal student loans will even have a grace period. The grace period gives you time to get financially settled and to select your repayment plan. Note that for most loans, interest will accrue during your grace period.

Your loan servicer or lender will provide you with a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment.

Whom do I pay?

You will make your federal student loan payments to your loan servicer*, not the U.S. Department of Education (ED) directly. ED uses several loan servicers to handle the billing and other services on federal student loans. Your loan servicer can work with you to choose a repayment plan and can answer any questions you have about your federal student loans. It’s important to maintain contact with your loan servicer and keep your servicer informed of any changes to your mailing address, e-mail, or phone number so they know where to send correspondence and how to contact you. How much do I need to pay?

Your bill will tell you how much to pay. Your payment (usually made monthly) depends on

  • the type of loan you received,
  • how much money you borrowed,
  • the interest rate on your loan, and
  • the repayment plan you choose.

You can use our repayment estimator to estimate your monthly payments under different repayment plans to determine which option is right for you. Just remember, if you would like to switch repayment plans, you must contact your loan servicer.

How do I make my student loan payments?

There are several ways you can submit payments to your loan servicer, including options to submit your payment online through your loan servicer’s website.

TIP: Your servicer may offer the option to have your payments automatically withdrawn from your bank account each month. You may want to consider this option so you don’t forget to make your payments.

What should I do if I’m having trouble making my student loan payments?

Contact your loan servicer as soon as possible. You may be able to change your repayment plan to one that will allow you to have a longer repayment period or to one that is based on your income. If switching repayment plans isn’t a good option for you, ask your loan servicer about your options for loan consolidation or a deferment or forbearance.

Note: Several third-party companies offer student loan assistance for a fee. Most of these services can be obtained for free from your loan servicer.

What happens if I don’t make my payments?

Not making your student loan payments can result in default, which negatively impacts your credit score. This may affect your ability to borrow for things like buying a car or purchasing a home. Your tax refunds may also be withheld and applied to your outstanding student loan debt. There is never a reason to default. The Department of Education offers several options to ensure that you can successfully manage your student loans. If you’re feeling overwhelmed or having difficulty making payments, contact your loan servicer for help.

*If you are repaying federal student loans made by a private lender (before July 1, 2010), you may be required to make payments directly to that lender.

Nicole Callahan is a digital engagement analyst at the Department of Education’s office of Federal Student Aid.