Repay Student 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

The very first step: Take inventory of your student loans.
For information on your student loans, review your loan documents, and contact your lender or loan servicer.

Monthly Payment Amount

If you are not in repayment status yet, estimate your monthly non- consolidated loan payment based on the current interest rate and your loan balance. You can get payment amounts by calling your lender or loan servicer.

Next Steps

Determine whether your monthly payment exceeds the percentage of your income to be allocated to student loan payment. This percentage should be based on a realistic budget.

–If payment exceeds monthly allocation, reevaluate budget and assess income situation.

Consider deferment or forbearance option for short-term payment relief needs.

–If debt relief needs are long term, consider consolidation.

Select loans for consolidation.

Determine monthly payment and total interest costs for Consolidation Loan and compare to cost of repaying loans without consolidation.

–For help in calculating monthly payments, contact your lender or loan servicer.

Consider the impact of consolidation on future deferment options, cancellation options, and other borrower benefits such as interest rate discounts or principal rebates, which can significantly reduce the cost of repaying your loans. You might lose some discharge (cancellation) benefits or deferment benefits if you include certain types of loans in your Consolidation Loan—Federal Perkins Loans, for example. To find out more about the impact consolidating might have on deferment and cancellation benefits, contact the holder of your loan.

If you decide consolidation is right for you, contact your lender to begin the consolidation process.

If eligible for in-school consolidation and planning to consolidate while in school, make sure to apply prior to leaving school. — >
If still in the grace period, consider consolidating approximately two months before the end of the grace period to allow enough time to have your Consolidation Loan processed before the grace period expires, yet not so early that you lose too much of your grace period if you have a FFEL Consolidation Loan. (For FFEL Consolidation Loans, if you consolidate during the grace period, you give up whatever portion of your grace period remains. You retain all of your grace period, however, if you have a Direct Consolidation Loan.) Some FFEL lenders offer to hold disbursement of Consolidation Loans until the end of the grace period to enable borrowers to minimize their interest rate and maximize their grace period.

Remember that if you consolidate during your grace period, you can lock in an interest rate at least a half percent lower than the current repayment rate.

When filling out the consolidation application, provide complete address information, include two references, and sign the promissory note.

If already in repayment, make sure to continue making payments on your loans until consolidation is completed.

–If you need immediate payment relief, request deferment or forbearance.

If you have questions about consolidation, do not hesitate to contact your lender or loan servicer. Check your loan documents for the toll-free customer assistance number.

Source: U.S. Department of Education

Direct Consolidation Loans allow borrowers to combine one or more of their Federal education loans into a new loan that offers several advantages.

One Lender and One Monthly Payment

With only one lender and one monthly bill, it is easier than ever for borrowers to manage their debt. Borrowers have only one lender, the U.S. Department of Education, for all loans included in a Direct Consolidation Loan.

Flexible Repayment Options

Borrowers can choose from four different plans to repay their Direct Consolidation Loan, including an Income Contingent Repayment Plan. These plans are designed to be flexible to meet the different and changing needs of borrowers. With a Direct Consolidation Loan, borrowers can switch repayment plans at anytime.

No Minimum or Maximum Loan Amounts or Fees

There is no minimum amount required to qualify for a Direct Consolidation Loan! In addition, consolidation is free.
Varied Deferment Options

Borrowers with Direct Consolidation Loans may qualify for renewed deferment benefits. If borrowers have exhausted the deferment options on their current Federal education loans, a Direct Consolidation Loan may renew many of those deferment options. In addition, borrowers may be eligible for additional deferment options if they have an outstanding balance on a FFEL Program loan made before July 1, 1993, when they obtain their first Direct Loan.

Reduced Monthly Payments

A Direct Consolidation Loan may ease the strain on a borrower’s budget by lowering the borrower’s overall monthly payment. The minimum monthly payment on a Direct Consolidation Loan may be lower than the combined payments charged on a borrower’s Federal education loans.

Retention of Subsidy Benefits

There are two (2) possible portions to a Direct Consolidation Loan: Subsidized and Unsubsidized. Borrowers retain their subsidy benefits on loans that are consolidated into the subsidized portion of a Direct Consolidation Loan.

The process of combining one or more eligible educational loans into a single new loan. The Direct Loan Program offers a Direct Consolidation Loan for those borrowers who are interested in consolidating their eligible educational loans.