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Debt & Default Management

Managing your student loans does not have to be a daunting task. This FAQ will help answer many of your questions and give you resources to assist you while in school, during a leave of absence/withdrawal, and after completion of your program.


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  1. How much should I borrow?
  2. How do I track and manage my loans?
  3. How do I consolidate my student loans?
  4. Who is eligible for loan consolidation?
  5. What is the PUT Program?
  6. How do I repay my student loans?
  7. When should I begin repaying my loans?
  8. How do I qualify for Teacher Loan Forgiveness/Cancellation?
  9. How do I qualify for loan forgiveness for public service?
  10. What repayment plans and calculators are available to me?
  11. What is loan default?
  12. What if I default on my student loans?
  13. How do I get help with my loan problems?
  14. What if I need legal help with my student loans?


How much should I borrow?

We strongly encourage borrowers to carefully weigh the need for loans and to borrow only what is actually needed. We encourage you to estimate and plan your repayment obligations prior to borrowing.

For federal student and parent loans, borrowers should be aware of the repayment options that are available. In addition, there are a number of deferment or forbearance provisions available once the loan is in repayment. For some qualifying majors and professions, such as teaching, federal and state loan forgiveness/cancellation provisions can also be beneficial.

Click here for estimate, repayment, deferment, and forbearance options.

Click here for Loan Forgiveness Program Information.

Remember, loans must be repaid even if you did not complete your program and/or degree.

How do I track and manage my loans?

To keep track of your student loans or to contact your loan servicer for repayment, log on to the National Student Loan Data System (NSLDS) at or call the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243; TTY 1-800-730-8913). The PIN number that you used as your electronic signature for the FAFSA must be used to gain access to NSLDS.

This website will not only show you all of the federal and private loans you borrowed, but also who the servicer is for your loan(s). The servicer is the entity you will be corresponding with to coordinate repayment.

To see a list of Federal Student Aid servicers for the Direct Loan Program and for FFEL Program Loans purchased by the U.S. Department of Education, go to the Loan Servicer page.

If you have borrowed loans in the past through the FFEL Program (ie. a federal loan serviced by Bank of America, Wells Fargo, Citibank, etc) these loans may have been sold to a third party processor. We cannot stress enough how important it is to know your loan servicer. Please refer to "Understanding the PUT Program" under the loan consolidation section for more information.

How do I consolidate my loans?

If you have borrowed more than one Stafford or PLUS loan during your post-secondary education, you may have more than one servicer which will mean you will have multiple payments to make to multiple entities when you enter repayment.

The Direct Lending Consolidation program offers a way for you to combine both loans into one consolidation loan with one point of repayment. This loan consolidation program will be available to you once you graduate and begin thinking about repayment.

There are advantages and disadvantages to loan consolidation and we recommend that you research this option carefully before proceeding.  If you have questions about whether or not consolidation is right for you, please contact the Direct Loan Consolidation Loan Information Center at

Who is eligible for loan consolidation?

To qualify for a Direct Consolidation Loan, borrowers must have at least one Federal Direct Loan or Federal Family Education Loan (FFEL) that is in grace, repayment, deferment, or default status. Loans that are in an in-school status cannot be included in a Direct Consolidation Loan. 

What is the PUT program?

Since 2008 Stafford lenders have sold some of their loans to the Department of Education in an attempt to build liquidity in the market and provide more loans to students. This is called the Loan Purchase Commitment (PUT) Program. 

As a result, continuing students may have already received communication from the Department of Education explaining the purchase. These loans are not considered Federal Direct Loans, but continue to be part of the Federal Family Education Loan Program (FFELP). 

It is important to note that loans borrowed in the future may not have the same servicer as loans you have borrowed already. This means that when you begin to make payments on your loans after graduation you may be making multiple payments to multiple entities.


How do I repay my student loans?

Your loan service provider will provide information about repayment and will notify you of the date loan repayment begins. It is very important that you make your full loan payment on time either monthly (which is usually when you'll pay) or according to your repayment schedule.

If you don't, you could end up in default, which has serious consequences (see What is Loan Default?). Student loans are real loans—just as real as car loans or mortgages. You have to pay back your student loans.

Can you repay your loans while in school? Yes. Contact your loan servicer through


When should I begin repaying my loans?

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 is called the “grace period”.

Grace periods last for to 6 months after borrowers leave school or cease to be enrolled in at least half-time. Grace periods can also extend up to 12 months, however, you must contact your loan servicer directly.

During the grace period, no interest accrues on most subsidized loans. Interest accrues on unsubsidized loans and on subsidized loans disbursed between July 1, 2012 and July 1, 2014 during grace periods and this accrued interest if not paid off, will capitalize when borrowers loans enter repayment.

A borrower's repayment period begins the day after the loan's grace period ends. First payment 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 immediately after borrowers leave school or cease to be enrolled at least half-time. There is no additional grace period.

You are able to make payments on your student loan while you are still enrolled. If you have unsubsidized loans, you are able to make payments on your interest that is accruing.

60 Ways to Get Rid Of Your Student Loans (Without Paying Them)

Click here for the guide to student loan forgiveness and discharge

How do I qualify for teacher loan forgiveness/cancellation?

If you are a full-time teacher and have taught 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 your Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Stafford Loans. If you have PLUS Loans only, you are not eligible for this type of forgiveness. More information on this can be found on the Department of Education's (ED) website at:


How do I qualify for public service loan forgiveness?

You may qualify for this program if you work in a public service job. There are multiple job that are considered public service, some of which are: military service, law enforcement and public education.  

The Public Service Loan Forgiveness (PSLF) Program provides for forgiveness of the remaining balance of a borrower's eligible loans after the borrower has made 120 qualifying payments on those loans. In general, only borrowers who are making reduced monthly payments through the Direct Loan Income Contingent or Income Based repayment plans will have a remaining balance after making 120 payments on a loan.

For more important information about PSLF, download an PSLF Fact Sheet (PDF), click here.


What repayment plans are available to me?

When it comes time to start repaying your student loan(s), you can select a repayment plan that’s right for your financial situation. Generally, you'll have from 10 to 25 years to repay your loan, depending on which repayment plan you choose.

Standard Repayment

With the standard plan, you'll pay a fixed amount each month until your loans are paid in full. Your monthly payments will be at least $50, and you'll have up to 10 years to repay your loans.

Your monthly payment under the standard plan may be higher than it would be under the other plans because your loans will be repaid in the shortest time, which means, you may pay less interest.

To calculate your estimated loan payments, go to the Standard Repayment plan calculator.


Extended Repayment

Under the extended repayment plan, you’ll pay a fixed annual or graduated repayment amount over a period not to exceed 25 years. If you're a FFEL borrower, you must have more than $30,000 in outstanding FFEL Program loans. If you're a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans.

This means, for example, that if you have $35,000 in outstanding FFEL Program loans and $10,000 in outstanding Direct Loans, you can choose the extended repayment plan for your FFEL Program loans, but not for your Direct Loans. Your fixed monthly payment is lower than it would be under the Standard Plan, but you'll ultimately pay more for your loan because of the interest that accumulates during the longer repayment period.

This is a good plan if you will need to make smaller monthly payments. Because the repayment period will be between 10 and 25 years, your monthly payments will be less than with the standard plan. However, you may pay more in interest because you're taking longer to repay the loans. Remember that the longer your loans are in repayment, the more interest you will pay.

To calculate your estimated loan payments, go to the Extended Repayment plan calculator.

Graduated Repayment

With this plan, your payments start out low and increase every two years. The length of your repayment period will be up to ten years. If you expect your income to increase steadily over time, this plan may be right for you.

Your monthly payment will never be less than the amount of interest that accrues between payments. Although your monthly payment will gradually increase, no single payment under this plan will be more than three times greater than any other payment.

To calculate your estimated loan payments, go to the Graduated Repayment plan calculator.

Income-Based Repayment (IBR)

Under IBR, the required monthly payment is capped at an amount that is intended to be affordable based on income and family size.

You are eligible for IBR if the monthly repayment amount under IBR will be less than the monthly amount calculated under a 10-year Standard Repayment Plan and exceeds 15 percent of the difference between your adjusted gross income (AGI) and 150 percent of the poverty line for your family size in the state where you live . If you repay under the IBR plan for 25 years and meet other requirements, you may have any remaining balance of your loan(s) cancelled.

Additionally, if you work in public service and have reduced loan payments through IBR, the remaining balance after ten years in a public service job could be cancelled. For more important information about IBR go to IBR Plan Information. Or, to download an IBR Fact Sheet in PDF format, click here.

Income-Contingent Repayment Plan (ICR)

Under this repayment plan, payments are calculated each year and are based on your annual income, family size, and the total amount of your Direct Loans for up to 25 years. If you are married, your spouse's income is included into your annual income calculation.

Eligible federal loans are the Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans made to graduate or professional students, and Direct Consolidation Loans (except Direct PLUS Consolidation Loans). Any loans under the Federal Family Education Loan (FFEL) Program and Direct PLUS Loans made to parents, unless consolidated into a Direct Consolidation Loan on or after July 1, 2006, are not eligible for this repayment program. 

If you have not repaid your loans after 25 years, any unpaid portion will be forgiven. Taxes may need to be paid on any amount that has been forgiven.

To calculate your estimated loan payments under ICR, click here

Income-Sensitive Repayment Plan

This is available to borrowers who have Federal Family Education Loan (FFEL) Program Loans. Payments under this plan increase or decrease based on your annual income.

Your monthly payment is based on your annual income and as your income changes, so do your payments. You loan payments are spread out over the maximum of 10 years. Direct Loans are not eligible under this program.

If, because of the PUT Program, you have FFEL Program loans owned by the U.S. Department of Education, contact your loan servicer.  If you FFEL Program loans that are not owned by the U.S. Department of Education, contact your lender. Loan servicers' and lenders' contact information can be found on the National Student Loan Data System (NSLDS) web site.


What is loan default?

Loan default is failure to repay a loan in accordance with the terms of the Master Promissory Note. There can be serious legal consequences for people who default on student loans.

There are different options to prevent falling into default status.

  • Deferment = a postponement of payment on a loan that is allowed under certain conditions and during which interest does not accrue for some subsidized loans. This request can be made if you are returning to school and are enrolled in at least half-time status. For Deferment options, click here. Please contact your loan servicer for more information.
  • Forbearance = a period during which your monthly loan payments are temporarily suspended or reduced.
    You may qualify for forbearance if you are willing, but not able to make loan payments due to certain types of financial hardships.
  • A complete list of Direct Loan forbearances and their eligibility criteria can be reviewed at
  • Repayment Plan = Changing your repayment plan is a good way to manage your loan debt when financial circumstances change. For example, you can usually lower your monthly payment by changing to a repayment plan with a longer term to repay the loan. There are no penalties for changing repayment plans.


What if I default on my loan?

If you default, it means you failed to make payments on your student loan according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan. In other words, you failed to make your loan payments as scheduled. Your school, the financial institution that made or owns your loan, your loan guarantor, and the federal government all can take action to recover the money you owe.

Consequences of Default

  • National credit bureaus can be notified of your default, which will harm your credit rating making it hard to buy a car or a house.
  • You will be ineligible for additional Federal Student Aid if you decide to return to school. 
  • Loan payments can be deducted from your paycheck.
  • State and federal income tax refunds can be withheld and applied toward the amount you owe.
  • You will have to pay late fees and collection costs on top of what you already owe.
  • You can be sued.


How do I get help with my loan problems?

If you are having a problem with your federal student loan, contact the FSA Ombudsman at the US Department of Education. The FSA Ombudsman is dedicated to helping students resolve disputes and other problems with federal student loans.

The FSA Ombudsman will research your problem in an impartial and objective manner and will try to develop a fair solution. The FSA Ombudsman does not have the authority to impose a solution. Nevertheless, many students have found the FSA Ombudsman to be helpful in resolving disputes with lenders.

You can contact the FSA Ombudsman by phone at 1-877-557-2575, by fax at 1-202-275-0549, by mail at U.S. Department of Education, FSA Ombudsman, 830 First Street, NE, Fourth Floor, Washington, DC 20202-5144, by visiting or by e-mail at

For more information and to learn what actions to take if you default on your loans, see the Department of Education’s Default Resolution Group Web site.

Dominican is committed to helping you be successful while in school and after you have graduated or while taking time off of school. We understand finding a job or maintaining employment in our given economy can be difficult as well as managing your student loans. Know that our Counseling and Career Center office can assist you in locating the necessary resources for finding employment and writing a resume.

There are also numerous articles which address this very concern such as on —"Managing student loans in a shaky economy."

Important: Remember, you are responsible to repay your student loans as agreed on your signed Master Promissory Note(s). Please keep your contact information up to date with your loan servicer to ensure you receive important correspondence.

When in doubt, contact your loan servicer. Staying in touch with your loan servicer will maintain a good relationship and decrease the chances of loan default.


What If I need legal help?

If you're in a dispute about your federal student loan, contact the Federal Student Aid Ombudsman Group as a last resort. For more information please click here.

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