Preparing To Repay Loans

Remember, federal student loans are real loans and must be repaid.

Understanding the repayment process for your federal student loans can go a long way toward building a solid financial foundation.

Remember, federal student loans are real loans, just like car loans or mortgages. You must repay a student loan even if your financial circumstances become difficult. Your student loans cannot be canceled because you didn't get the education or job you expected, or because you didn't complete your education (unless you couldn't complete your education because your school closed).

Making Payments

You need to make payments to your loan servicer. Each servicer has its own payment process, so check with your servicer if you aren't sure how or when to make a payment. You are responsible for staying in touch with your servicer and making your payments, even if you do not receive a bill.

Loan Servicers

The U.S. Department of Education (ED) uses several loan servicers to handle the billing and other services on loans for the William D. Ford Federal Direct Loan (Direct Loan) Program and for loans originally made under the Federal Family Education Loan (FFEL) Program but now owned by ED. Learn about loan servicers and how to determine who your loan servicer is.

Choosing a Repayment Plan

You have a choice of several repayment plans that are designed to meet your needs. The amount you pay and the length of time to repay your loans will vary depending on the repayment plan you choose.

Loan Consolidation

A Direct Consolidation Loan allows you to consolidate (combine) multiple federal student loans into one loan. The result is a single monthly payment instead of multiple payments.

There is no application fee to consolidate your federal student loans into a Direct Consolidation Loan. 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's loan consolidation servicer. To apply for a Direct Consolidation Loan, visit the Direct Consolidation Loans website at loanconsolidation.ed.gov.

Deferment and Forbearance

Deferment and forbearance offer a way for you to temporarily postpone or lower your loan payments while you're back in school, in the military, experiencing financial hardship, or in certain other situations. Find out more about deferment and forbearance.

Forgiveness, Cancellation, and Discharge

In circumstances such as certain kinds of teaching service, total and permanent disability, or the closure of the school where you were studying, your obligation to repay your federal student loan may be removed. Learn about forgiveness, cancellation, or discharge of federal student loans due to these and other situations.

Understanding Default

To default means you failed to make your payments on your student loan as scheduled according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan.

If you don't make your loan payments, you risk going into default. Defaulting on your loan has serious consequences. 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. Understand how missing a loan payment can be a problem, what default means and the consequences of default, and what you need to do if your loan is in default or if you think the default on your loan is an error.

NEVER ignore delinquency or default notices from your loan servicer. If you don't make your monthly loan payments, you will become delinquent on your student loan and risk going into default. Contact your servicer immediately if you are having trouble making payments or won't be able to pay on time. Learn about federal student loan default: Find out what may happen if you default, what steps you can take to keep your loan from going into default, and what your options are for getting out of default.

Resolving Disputes

If you have a dispute about your loan, you may be able to resolve it by simply contacting your loan servicer and discussing the issue. If you need additional help, find out what you can do to be better prepared before you seek help to resolve a dispute.