Repay Student Loans

A repayment plan that bases your monthly payment on your yearly income, family size, and loan amount. As your income rises or falls, so do your payments. After 25 years, any remaining balance on the loan will be forgiven, but you may have to pay taxes on the amount forgiven.

Each year your monthly payment will be based on your family size, annual Adjusted Gross Income (AGI) as reported on your federal tax return, and the total amount of your Direct Loan(s). To participate in the ICR Plan you must authorize the U.S. Internal Revenue Service (IRS) to inform the U.S. Department of Education (Department) of the amount of your income. This information will be used to calculate your repayment amount, which will be adjusted annually to reflect changes in your AGI If you select the ICR Plan, you will be billed for only the interest amount that accrues on your loan each month until you complete and return the required documentation.

Source: U.S. Department of Education

After borrowers graduate, leave school, or drop below half-time enrollment, loans that were made for that period of study have several months before payments are due. This period is called the “grace period.”

Grace periods extend from 6 to 12 months after borrowers leave school:

Most FFEL and Direct Loans have 6- month grace periods.

Perkins Loans have grace periods of either 6 or 9 months, depending on when the loan was first disbursed.

Health professions loans have grace periods of 9-12 months.

During the grace period, no interest accrues on SubsidizedUnsubsidized loans during grace periods, and this interest is capitalized when borrowers’ loans enter repayment.

Borrower’s repayment periods begins the day after the grace period ends. First payments will be due within 60 days after the repayment period begins.

Each loan has only one grace period. If borrowers return to school after the grace periods has expired, the borrowers’ loans qualify for deferment while borrowers are enrolled but return to repayment after borrowers leave school. There is no additional grace period.

Source: U.S. Department of Education

Delinquency status indicates that borrowers’ accounts have become past due on payment. This occurs when borrowers’ loan payments are not received by the due dates. Accounts remain delinquent until borrowers bring their accounts current with payments, deferments, or forbearances. If borrowers’ accounts have become delinquent and the borrowers are unable to make payments, deferments or forbearances should be considered.

Source: U.S. Department of Education

Repayment of Consolidation Loans begins within 60 days of the disbursement of the loan. The payback term ranges from 10 to 30 years, depending on the amount of education debt being repaid and the repayment option you select. Education loans not included in the Consolidation Loan are considered in determining the maximum payback period. You may elect to repay your loans under a shorter period than the maximum allowed.

All the FFEL repayment plans are available to FFEL Consolidation Loan borrowers. For Direct Consolidation Loan borrowers, most of the Direct Loan repayment plans are available, except that Direct PLUS Consolidation Loans are not eligible to be repaid under the Income Contingent Repayment Plan and might not be eligible for some discharge/cancellation benefits. Check with the holder of your loan.

Fees – Borrowers who consolidate will not pay any application fees or prepayment penalties.

Credit checks – Under FFEL Consolidation Loans, no credit checks are required, even for PLUS borrowers. Under Direct Loan consolidation, PLUS borrowers are subject to a check for adverse credit history.

Source: U.S. Department of Education

If you claim to have repaid a portion of the loan which is not reflected in your current balance, or to have repaid the loan in full, you should send copies of the canceled payment instruments (i.e. checks, money orders, etc.) used toward repayment of the loan and any other pertinent information to the agency servicing your loan.

An independent student is at least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court, or someone with legal dependents other than a spouse.

A loan for which a borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan. Unsubsidized loans include: Direct Unsubsidized Loans, Direct PLUS Loans, Direct Unsubsidized Consolidation Loans, and Federal Unsubsidized Stafford Loans, Federal PLUS Loans, and Federal Unsubsidized Consolidation Loans.

What is a Preauthorized Debit Account?

A Preauthorized Debit Account (PDA) is an account that gives your bank the authority to automatically deduct your loan repayments from your checking/savings account.

What Are the Benefits?

The benefits of PDA are: your repayments will always be made on time, you will save on postage fees, and you can choose from several repayment options that will better suit your financial budget while repaying your student aid debt.

How Do I Establish An Account?

To establish an account, you will need to complete an application, which you can request by calling our customer service center at 1-800-621-3115.  NOTE:  The Preauthorized Debit Program is only available for defaulted loans, non-defaulted Perkins Loans, and grant overpayments held by the U.S. Department of Education that are payable to the National Payment Center in Greenville, TX.  Please check your billing statements:  if you send your payments to any other address you need to contact your loan-holder to see if the Preauthorized Debit is available.

What Amount Will be Debited from My Account?

You may indicate to us whether your repayment plan is weekly, semi -monthly or monthly. The amount deducted must equal or be greater than the amount designated on your original repayment agreement.

What if I want to Cancel my PDA Service?

To cancel your PDA service, just call ED’s Servicing Center at 1-800-621-3115. After cancellation, it may take seven (7) days to discontinue the electronic debiting service and there may be one more automatic payment deduction from your checking or savings account.

After you graduate, leave school, or drop below half-time enrollment, you have six or nine months before you begin repayment. You will receive information about repayment and will be notified by your loan provider of the date loan repayment begins.

Addressing Your Defaulted Student Loan

If you default on your student loan, the maturity date of each promissory note is accelerated making payment in full immediately due, and you are no longer eligible for any type of deferment or forbearance. Continued failure to repay a loan in default may lead to several negative consequences for you over the long-term including having your wages garnished, your Federal income tax withheld, and losing your eligibility for other federal loans like FHA or VA.

However, there are now more ways than ever before to repay your defaulted student loan and certain programs can even remove your loan from its defaulted status. Determining which repayment option that is right for you depends on what your objective is.

Source: U.S. Department of Education

Total Education Indebtedness is the sum of a Direct Consolidation Loan, and other eligible education indebtedness, up to an amount equal to the Direct Consolidation Loan. Total Education Indebtedness is used to calculate the number of payments under the Standard and Graduated Repayment Plans.