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.

How much should I borrow?

The Office of Financial Aid strongly encourages borrowers to carefully weigh the need for loans, the obligations to repay, and borrow only the minimum amount necessary. We encourage you to estimate and plan your needs, total debt, and ability to repay prior to borrowing.

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

How do I track and manage my loans?

Your entire federal loan history can be found on the National Student Loan Data System (NSLDS). Borrowers will use their FSA ID (the login/password used to submit a FAFSA) to login to NSLDS. NSLDS will provide the balance information for each loan and who the loan servicer is for your loan(s). The servicer is the entity the government assigned to coordinate repayment for the loan(s).

Should I consolidate my loans?

If you have borrowed more than one Stafford, PLUS, or Perkins during your post-secondary education, you may have more than one servicer and will make a separate payments to each servicer for each loan. Consolidating your loans allows you to combine multiple loans into one consolidation loan under one servicer to simplify the repayment process. However, there are advantages and disadvantages to loan consolidation as this can affect Loan Forgiveness programs or other repayment provisions. 

Please visit Federal Student Aid's Loan Consolidation page for more information.

How do I repay my student loans?

Your loan servicer will provide information about repayment and will notify you of the date loan repayment begins and how to make your payments. It is very important that you make your full loan payments on time. If you don't meet your repayment obligations, 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.

When should I begin repaying my loans?

When student borrowers cease half-time enrollment (due to graduating, leaving the University, or taking less units than is required for 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”. The grace period for Stafford Loans is 6 months and the grace period for a Perkins Loan is 9 months.

While you are not required to make repayment while enrolled or during the grace period, you may make repayments during that time and it is highly recommended to at least pay the interest on Unsubsidized Stafford Loans and PLUS Loans before the grace period ends to prevent the interest from becoming part of the principal balance.

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 Subsidized and Unsubsidized Loans. Federal Direct PLUS Loans are not eligible for this type of forgiveness.

Please visit Federal Student Aid's Teacher Loan Forgiveness site for more information.

How do I qualify for Public Service Loan Forgiveness?

You may qualify for this program if you work in public service, which could be with a government level at any level or non-profit organizations. The Public Service Loan Forgiveness (PSLF) Program provides forgiveness of the remaining balance of a borrower's eligible loans after the borrower has made 120 qualifying payments on those loans.

Please visit Federal Student Aid's Public Service Loan Forgiveness site for more information.

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. You may estimate your payment amounts for each plan using FSA's Repayment Estimator. For assistance with switching your repayment plan, please contact your loan servicer.

Standard Repayment: Pay a fixed amount each month until your loans are paid in full over the course of 10 years.

Extended Repayment: Pay a fixed annual or graduated repayment amount over a period not to exceed 25 years.

Graduated Repayment: 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.

Income-Based Repayment (IBR): The required monthly payment is capped at an amount that is intended to be affordable based on income and family size.

Income-Contingent Repayment Plan (ICR): Payments are calculated each year and are based on your family's annual income, family size, and the total amount of your Direct Loans for up to 25 years.

What is loan default?

Loan default means you failed to make payments on your student loan according to the terms of your Master Promissory Note (the binding legal document you signed at the time you took out your loan). There can be serious legal consequences for people who default on student loans:

  • Default will be placed on your Credit Report, lowering your credit score
  • 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.

There are different options to prevent falling into default status. You must contact your loan servicer before the loan defaults to enact one of the following options:

  • Deferment - a postponement of payment on a loan during which interest does not accrue for some subsidized loans.
  • Forbearance - a period during which your monthly loan payments are temporarily suspended or reduced.
  • Repayment Plan - Change to a different repayment plan.

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.

How do I get help with my loan problems?

If you are having a problem with your federal student loan, contact your loan servicer. If you are having issues with your servicer, please 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. However, this option must be a last resort. The student must exhaust all assistance with the loan servicer first. 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.

And of course, you may contact the Office of Financial Aid and we will be happy to guide you further through this process.