Once repayment begins, it is important to understand details like how to make a payment, when your payment is due, your repayment options and more.
While you are enrolled at least half-time (6 credit hours for an undergraduate student at Purdue Northwest), you are not required to make any payments on your Federal Direct Stafford loans. You may make early payments on your loans as well as payments of the interest on unsubsidized Stafford loans. This will save you money because unpaid interest can be added to the principal balance of your loans.
- Determine who your federal loan servicer is by using the National Student Loan Data System (NSLDS)
- Open an account with your loan servicer and keep contact information current
- Make interest payments if possible and/or begin making payments early
- If you are unable to make monthly interest payments consider making one small payment to understand how the process works
Most Federal Direct Stafford loans have a six month grace period after you are no longer enrolled at least half-time in school due to either graduation, less than half-time enrollment or withdrawal. Repayment of your loans begins after the grace period expires. Note that you only receive one grace period for each loan, once you use the grace period it is gone. Because of this it is possible that you could go into repayment immediately on some loans and have a grace period on other loans.
Example: Jessica decides to work for one semester and does not enroll in the spring after being continuously enrolled at least half-time each fall and spring.
- Enrolled year one; fall and spring semesters
- Enrolled year two; fall semester only
- Not enrolled year two; spring semester
- Enrolled again year three; fall and spring semesters
Since Jessica was not enrolled at least half-time for over six months during her year two spring semester, she has lost her grace period on any loans up to this point. Jessica enrolls full-time in her third year beginning in the fall and stays enrolled each fall and spring semester until graduation. Jessica will have a grace period for any loans received after returning to school, but will have lost grace on the loans taken before year three.
- Contact your loan servicer to let them know you are out of school
- Give your loan servicer your current contact information (address, phone number and email)
- Review your loan borrowing history at the National Student Loan Data System
- Research the different repayment plans (see below)
Repayment begins once your grace period has expired and continues until the loan is paid in full. You will make payments to your loan servicer; each loan servicer may have a different process so check with your servicer if you aren’t sure how or when to make a payment.
- Select your repayment plan
- Sign up for automatic debit (you may qualify for an interest rate reduction)
- If you have difficulty with your payments, contact your loan servicer immediately to discuss your options and avoid delinquency or default
- If you haven’t finished your degree, consider enrolling half-time (at least 6 credit hours) to qualify for an in-school deferment
There are several repayment plans to consider that range from 10 to 25 years in length. Longer repayment plans will result in more interest paid. Use Federal Student Aid’s Repayment Estimator to determine which plans you may be eligible for and to see monthly payment estimates and overall payment.
Federal Student Aid has an excellent overview of the different types of available Repayment Plans. You may choose your repayment plan (some repayment plans have eligibility criteria to qualify) that best fits your circumstances. Keep in mind that longer repayment plans will most likely result in more interest. If you initially start with the Standard Repayment Plan or another plan you may be able to change to a different plan. Contact your loan servicer for additional information.
DEFERMENTS and FORBEARANCE
If you are unable to make full payments on your loan you may qualify for a deferment or forbearance for your federal student loans if you meet certain criteria. Deferments and/or forbearance are tools that may be available to you in order to avoid delinquency and default.
- Deferment temporarily postpones payments on a loan.
- Forbearance temporarily suspends or reduces payments on a loan
There are several situations when you may apply for a deferment or forbearance. Federal Student Aid has detailed information about deferments and forbearance. Keep in mind that interest may continue to accrue on your loans depending on the postponement type and the loan type.
Missing payments or not making payments on your student loans will result in delinquency and possibly default. Avoid default and delinquency by contacting your loan servicer immediately. Default has severe consequences including:
- Demand of immediate payment for the entire unpaid balance of your loans
- Loss of eligibility for deferment, forbearance and repayment plans
- Loss of eligibility for additional federal student aid
- Your loan(s) account is sent to collections
- Your loan(s) will be reported to the credit bureaus
- Your federal and state tax refunds may be confiscated
- Your employer may withhold money from your paycheck (wage garnishment)
Additional Federal Student Aid information is available on Understanding Default
Additional Federal Student Aid information about Loan Repayment