Borrower Repayment Options

Lenders offer multiple repayment options which give you the flexibility to decide which option works best for you. You can change your repayment options once a year.

Standard Repayment allows you to make fixed, equal monthly payments, with a minimum payment of $50 per month, depending on the original loan amount you borrowed.

Graduated Repayment allows you to make reduced monthly payments at the start of repayment and increased payments later. Interest over the course of the repayment period will be higher than with standard repayment plans.

Extended Repayment allows you up to 25 years to repay if your Federal Stafford loan debt is at least $30,000. Your monthly payments will be lower, but the total interest you pay will be higher than with other repayment options.

Income-Sensitive Repayment allows you to make reduced payments based on a percentage of your income. Because the loan is repaid more slowly, your total interest costs will be higher than with standard repayment plans.

Loan Serialization is a loan-repayment method where a lender holds or purchases your loans and services them in one account with a single monthly payment. This allows you to retain the original terms, conditions and borrower benefits of the original loan.

Consequences of Default

Defaulting on your loan has serious consequences. If you default on your student loan:

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  Your loans will be referred to a collection agency;
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  You will lose deferment eligibility;
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  You will lose eligibility for future federal and state financial aid;
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  Your wages and tax refunds will be withheld to repay your obligations;
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  Your credit rating will be damaged for at least seven years, limiting your ability to obtain credit for future purchases and bonding required to secure employment;
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  You may lose your professional license to practice your chosen profession.

Discharge/Cancellation

Federal education loans can be discharged or reduced under the following circumstances:

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  the borrower dies or becomes totally disabled
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  the school attended closed before the student could complete the program
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  the school fraudulently certified the loan
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  the school did not return loan funds owed the lender
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  the student borrower becomes a full-time teacher for five years in a designated low-income school
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  the student borrower becomes a child care provider for two years in an eligible low-income facility

To obtain a discharge of your loan debt, you must submit an application to the holder of your loan. Perkins loan cancellations vary slightly from those outlined above.

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