Working with the financial aid office of your school(s), EdManage is dedicated to helping you answer the questions surrounding student loan repayment. While we may not be the holder of your loan(s), your successful repayment benefits you, the school and your loan servicer. We understand that outside issues including the slow economy and job market can make repaying student loans difficult. There are options such as income-based repayment plans, deferment, or forbearance that can help and may prevent you from becoming delinquent or defaulting. Loan forgiveness and discharge are also options for those that qualify.
You have the right to:
- Deferment of repayment if you are eligible and if you apply according to requirements;
- Receive from your lender/servicer (after your loan is fully repaid) a copy of your promissory note or some other document showing that you have discharged your obligation
You are responsible for notifying your lender/servicer of:
- Name changes
- Address changes
- Telephone number (home & business) changes
- SSN changes or discrepancies
- Not enrolling at least half time at the school that certified your loan
- Withdrawing, dropping below half time, graduating, or transferring schools
- You should also notify the lender of any other changes in your status that would affect your loan status.
- You are responsible for the repayment of your loan(s)
Your loan becomes delinquent the first day after you miss a payment. The delinquency will continue until all payments are made to bring your loan current. Loan servicers report all delinquencies of at least 90 days to the three major credit bureaus. A negative credit rating may make it difficult for you to borrow money to buy a car or a house (you will be charged much higher interest rates). You also may have trouble signing up for utilities, getting home owner's insurance, getting a cellphone plan, or getting approval to rent an apartment (credit checks usually are required for renters).
It is important to begin repaying as soon as you receive a bill. Keep track of your student loan and learn how to manage your loan repayments.
There are a variety of repayment plans to help you ensure successful repayment of your loan. Although you may be assigned a repayment plan when you first begin repaying your student loan, you can change repayment plans at any time. Contact your loan servicer if you would like to discuss repayment plan options or change your repayment plan. Remember that any private loans you may have received are not federal loans and are not included in the information on NSLDS or My Federal Student Aid.
- Standard Repayment Plan - This plan is available for Direct Subsidized and Unsubsidized Loans, FFEL Subsidized and Unsubsidized Loans and all PLUS loans. This plan provides for substantially equal monthly payments during the life of the loan, not to exceed 10 years ($50 minimum per month).
- Graduated Repayment Plan - This plan is available for Direct Subsidized and Unsubsidized Loans, FFEL Subsidized and Unsubsidized Loans and all PLUS loans. The plan allows for a reduced payment initially with an increase in your payments usually every two years with a maximum 10 year term.
- Extended Repayment Plan - This plan is available for new borrowers on or after October 7, 1998 with FFEL loans exceeding $30,000, or Direct Loans exceeding $30,000. This plan sets a fixed annual or graduated repayment amount paid over an extended period of time, not to exceed 25 years ($50 minimum per month). Because the loan term is longer than the 10-year standard or graduated repayment plan, you will pay more for your loan over time.
- Income-Sensitive Repayment Plan - This plan is available for all FFEL loan types. Monthly payments are adjusted annually based on expected total monthly gross income from all sources. Your payment changes as your income changes. Repayment is based on a 10-year maximum term. Each lender’s formula for determining the monthly payment amount under this plan can vary. Contact your lender or servicer for more information.
- Income-Based Repayment Plan (IBR) - Direct Subsidized or Unsubsidized Loans, FFEL Subsidized or Unsubsidized Stafford Loans and all PLUS loans made to student borrowers are eligible for IBR. Consolidation loans (Direct or FFEL) that do not include Direct or FFEL PLUS loans made to parents are also eligible. The borrower must have an established “partial financial hardship” to enter the IBR plan. Your maximum monthly payment is 15% of discretionary income (the difference between your adjusted gross income and 150% of the poverty guideline for your family size and state of residence. Your payment is established annually. If you have not repaid your loan in full after making the equivalent of 25 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven. At this time, any amount that is forgiven is considered taxable income. To apply for IBR, you may complete the electronic Income-Based (IBR)/Pay As You Earn/Income-Contingent (ICR) Repayment Plan Request or go to the Download Forms page to download a paper version.
- Pay-As-You-Earn Repayment Plan - This repayment plan is available to new borrowers on or after 10/1/07 who have received a disbursement of a qualifying Direct Loan on or after 10/1/11. Qualifying loans include Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans made to students and Direct Consolidation Loans that do not include (Direct or FFEL) PLUS loans made to parents. Like IBR, Pay-As-You-Earn applicants must have a partial financial hardship. Monthly payments under this plan are based on 10% of discretionary income (the difference between your adjusted gross income and 150% of the poverty guideline for your family size and state of residence). Your payment changes as your income changes. If you have not repaid your loan in full after you have made the equivalent of 20 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven. At this time, any amount that is forgiven is considered taxable income. To apply for Pay As You Earn, complete the electronic Income-Based (IBR)/Pay As You Earn/Income-Contingent (ICR) Repayment Plan Request or go to the Download Forms page to download a paper version.
- Income Contingent Repayment (ICR) Plan - Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans made to students, and Direct Consolidation Loan borrowers may be eligible for this repayment plan. Payments are calculated each year and are based on your adjusted gross income, family size, and the total amount of your Direct Loans. If you don’t repay your loan after making the equivalent of 25 years of qualifying monthly payments, the unpaid portion will be forgiven. You may have to pay income tax on the amount that is forgiven. To apply for ICR, complete the electronic Income-Based (IBR)/Pay As You Earn/Income-Contingent (ICR) Repayment Plan Request or go to the Download Forms page to download a paper version.
Carefully consider whether loan consolidation is the best option for you. Loan consolidation can greatly simplify loan repayment by centralizing your loans to one bill and can lower monthly payments by giving you up to 30 years to repay your loans. You might also have access to alternative repayment plans you would not have had before, and you’ll be able to switch your variable interest rate loans to a fixed interest rate.
However, if you increase the length of your repayment period, you'll also make more payments and pay more in interest. Be sure to compare your current monthly payments to what monthly payments would be if you consolidated your loans.
You also should consider the impact of losing any borrower benefits offered with the original loans. Borrower benefits from your original loan, which may include interest rate discounts, principal rebates, or some loan cancellation benefits, can significantly reduce the cost of repaying your loans. You might lose those benefits if you consolidate.
If you want to lower your monthly payment amount but are concerned about the impact of loan consolidation, you can consider reevaluating your budget and income situation. You can also consider deferment or forbearance as options for short-term payment relief needs.
For more information on Loan Consolidation, visit the StudentLoans.gov Website.
Forbearance is a period of time when you may need to temporarily suspend making payments but you may not qualify for a deferment. During a forbearance period, interest continues to accrue on your account. Unpaid accrued interest will be capitalized (added to the principal) at the end of the forbearance period. Capitalization may increase your future monthly payment amount. To apply for a forbearance, download the appropriate forbearance form below and submit it to your servicer or contact your servicer directly. Go to the Download Forms page for forbearance options and applicable forms.
During a deferment, you are not required to make payments. Depending on the type of loan you have, the federal government may pay the interest that accrues for you. The government will not pay the interest on unsubsidized loans or any PLUS loan types. Even though you are not required to make “regular” payments during a period of deferment, you are responsible for paying any interest that may accrue. If not paid, this interest will capitalize (be added to your principal balance) at the end of the deferment period. Capitalization may increase the amount of your future monthly payments. If you are eligible for a deferment, download and complete the applicable deferment form below and send it to your servicer. Go to the Download Forms page for deferment options and applicable forms.
You are required to repay your loans even if you do not complete your education, you cannot find a job related to your particular program of study or you are unhappy with the education that you paid for with your loan proceeds. However, there are certain situations or circumstances which may lead to your loans being eligible for cancellation, forgiveness or discharge. Go to the Download Forms page for the following forms (unless noted otherwise):
- Total and Permanent Disability (TPD) Discharge – A TPD discharge relieves you from having to repay a William D. Ford Federal Direct Loan (Direct Loan) Program loan, Federal Family Education Loan (FFEL) Program loan, and/or Federal Perkins Loan (Perkins Loan) Program loan or complete a TEACH Grant service obligation on the basis of your total and permanent disability. Before your federal student loans or TEACH Grant service obligation can be discharged, you must provide information to the U.S. Department of Education (ED) to show that you are totally and permanently disabled. ED will evaluate the information and determine if you qualify for a TPD discharge.
You can show that you are totally and permanently disabled in one of the following three ways:
- If you are a veteran, you can submit documentation from the U.S. Department of Veterans Affairs (VA) showing that the VA has determined that you are unemployable due to a service-connected disability.
- If you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within five to seven years from the date of your most recent SSA disability determination.
- You can submit certification from a physician that you are totally and permanently disabled. Your physician must certify that you are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that:
- Can be expected to result in death,
- Has lasted for a continuous period of not less than 60 months, or
- Can be expected to last for a continuous period of not less than 60 months.
For more information, contact the Department of Education’s TPD Servicer at:
Nelnet Total and Permanent Disability Servicer
1-888-303-7817 from 8:00 a.m. to 8:00 p.m. (Eastern)
Email Nelnet at firstname.lastname@example.org
Visit the web site to start your application for discharge on line at www.disabilitydischarge.com.
Bankruptcy – In rare cases, student loan debt may be discharged in bankruptcy. This is not an automatic process – you must prove to the bankruptcy court that repaying your student loan would cause undue hardship. If your loan is discharged, you will not have to repay any portion of your loan, and all collection activity will stop. You will also regain eligibility for federal student aid if you had previously lost it.
Death Discharge – If you, the borrower, die, then your federal student loans will be discharged. If you, as a benefitting student on a parent PLUS loan, die, then that loan is also eligible for discharge. A family member or representative may provide a certified copy of the death certificate to the school or to the loan servicer. For more information, contact the loan servicer.
Closed School - You may be eligible for discharge of your Direct Loans and FFEL Program loans under either of these circumstances:
- Your school closes while you're enrolled, and you do not complete your program because of the closure. Any federal student loan obtained to pay your cost of attendance at that school could be discharged. If you were on an approved leave of absence, you are considered to have been enrolled at the school.
- Your school closes within 90 days after you withdraw.
You are not eligible for discharge of your Direct Loans or FFEL Program loans if your school closes and any of the following is true:
- You withdraw more than 90 days before the school closes.
- You are completing a comparable educational program at another school. If you complete such a program at another school after your loan is discharged, you might have to pay back the amount of the discharge.
- You have completed all the coursework for the program, but you have not received a diploma or certificate.
False Certification of Student Eligibility or Unauthorized Payment Discharge - You may be eligible for a discharge of your Direct Loan or FFEL Program loan in these circumstances:
- Your school falsely certified your eligibility to receive the loan based on your ability to benefit from its training, and you did not meet the ability to benefit student eligibility requirements.
- The school signed your name on the application or promissory note without your authorization or the school endorsed your loan check or signed your authorization for electronic funds transfer without your knowledge, unless the proceeds of the loan were delivered to you or applied to charges owed by you to the school.
- Your loan was falsely certified because you were a victim of identity theft.
- The school certified your eligibility, but because of a physical or mental condition, age, criminal record, or other reason you are disqualified from employment in the occupation in which you were being trained.
Unpaid Refund Discharge - You may be eligible for a discharge of your Direct Loan or FFEL Program loan if you withdrew from school, but the school didn’t pay a refund that it owed to the U.S. Department of Education or to the lender, as appropriate. Check with the school to see how refund policies apply to federal aid at the school.
Only the amount of the unpaid refund will be discharged. You may qualify for this partial discharge whether the school is closed or open.
Teacher Loan Forgiveness - If you are a teacher and also a new borrower (i.e., you did not have an outstanding balance on a Direct Loan or FFEL Program loan on Oct. 1, 1998, or on the date you obtained a Direct Loan or FFEL Program loan after Oct. 1, 1998) and have been teaching full-time in a low-income elementary or secondary school or educational service agency for five consecutive years, you may be able to have as much as $17,500 of your subsidized or unsubsidized loans forgiven. Your PLUS loans cannot be included.
Public Service Loan Forgiveness - If you are employed in certain public service jobs and have made 120 payments on your Direct Loans (after Oct. 1, 2007), the remaining balance that you owe may be forgiven. Only payments made under certain repayment plans may be counted toward the required 120 payments. You must not be in default on the loans that are forgiven. For more information, go to Public Service Loan Forgiveness or contact your Direct Loan Servicer.
Avoid default. Take the time to fully understand your loan agreement and the types of loans you received.
- Develop a sound and realistic financial plan.
- Track your loans online at My Federal Student Aid or NSLDS.
- Keep good records
- Notify your loan servicer when you need help making your monthly payments
First, identify your loan problem and then contact your loan servicer. By identifying your problem, you can request appropriate information to help you solve it. Request a payment history if you think you may have an issue with your account balance. If you believe your servicer has reported you to the credit bureau erroneously, file a consumer dispute. Learn how to get a free copy of your credit report. If you are not the person listed on the loan records then provide proof of your identity to the servicer.
Keep careful notes of all conversations and who you spoke with. Keep copies of all correspondence and save originals of all receipts, bills, letters and emails. Ask for a response in a reasonable period of time and be sure to provide accurate, up-to-date contact information. If your problem is not solved or you are unsatisfied with the resolution, contact the Department of Education’s Ombudsman Group as a last resort.