Money and Debt

Repaying student loans

Many people use student loans to help pay for their education. Student loans can help you build credit and take advantage of great opportunities, but they can also become a financial hardship. Learn more about the different types of student loans and your options for repayment.

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Understanding the Basics

See what you need to know to take action.

There are two general types of student loans:

  • Federal. Federal loans are made and regulated by the government. Most student loans are federal. There are limits on the amount of federal loans that you are eligible to receive.
  • Private. Private loans are not made by the government and give the borrower fewer federal protections.

The type of loan that you have can impact your repayment options and the protections that are built-in if you have trouble paying. Federal loans are the better option for most borrowers.

CARES Act and student loans during COVID-19

The CARES Act gives automatic relief for student loan borrowers with certain federal direct loans and Federal Family Education Loans (FFEL): 

  • Suspends loan payments from March 13, 2020 through December 31, 2020; 
  • Stops interest from accruing through March 13, 2020 through December 31, 2020;
  • Counts the months in suspension toward loan forgiveness. For example, for borrowers in the Public Service Loan Forgiveness Program, the U.S. Department of Education (DOE) will treat each month as if you made the payment;
  • Stops all involuntary collection of defaulted loans, including wage garnishment; and,
  • Counts the months in suspension as on-time payments for credit reporting.     

This relief only applies to Direct Loans and FFEL loans currently held by the DOE. The relief does not apply to commercially-held FFEL loans, Perkins loans or private student loans. The CARES Act relief was to end on September 30, 2020, but was extended to December 31, 2020 by the DOE.

The relief is automatic so you do not need to apply. The relief from payment and interest is retroactive to March 13, 2020. If you made a loan payment after March 13, 2020 and would like a refund, contact your loan servicer. To learn more about COVID-19 relief, go to National Consumer Law Center's Student Loan Project and StudentAid.gov. 

If you have a loan that is not covered by the CARES Act and can't make your payment, contact your loan servicer to see what options are available. Many servicers are working with borrowers during the COVID-19 emergency. 

Federal loans

There are different federal loans programs including:

  • The Direct Loan program. Most newer federal student loans come directly from the government.
  • Federal Family Education Loans (FFEL). Many older federal family education loans come from private lenders and are guaranteed by the government.
  • Perkins Loan program. Some older federal loans are from participating schools. Currently, there are no new Perkins loans.

The source of your loan determines your repayment options. If you're not sure about the details of your federal student loans, you can look up that information at StudentAid.gov.

If you can't pay federal loans

If you have trouble repaying your loans, you should:

Public Service Loan Forgiveness

If you work for the federal, state, local or tribal government, or if you work for a nonprofit organization, you might be eligible for the Public Service Loan Forgiveness (PSLF) program. This program forgives the balance of your federal student loans if you:

  • are employed by a U.S. federal, state, local, or tribal government or not-for-profit organization;
  • work full-time for that agency or organization;
  • have Direct Loans (or consolidate other federal student loans into a Direct Loan);
  • repay your loans under an income-driven repayment plan; and,
  • make 120 qualifying payments.

Learn more about PSLF and how to qualify for the program from StudentAid.gov.

If your loan goes into default

If you miss a scheduled payment, your loan becomes delinquent. Then, if you still do not pay, your loan may go into default. Going into default can cause severe financial, legal, professional and educational problems.

To find out if your loan is in default:

  • Contact your loan servicer directly. The best way to check the status of your loan is contacting your loan servicer. To find your servicer’s contact information, log in to StudentAid.gov.
  • View the status of your loan at StudentAid.gov. Remember, this website may not update in real-time, so the status may be outdated.
  • View your credit report. Your credit report lists federal student loan defaults in the negative information section.

If you are in default, you should:

  • Ask your loan servicer if you’re eligible to cancel your loan. You may be eligible to cancel the loan completely.
  • Ask yourself if you can pay the entire remaining amount of your loan. If you pay the entire remaining amount of your loan, you can get out of default immediately.

Consolidation and rehabilitation

If you can not cancel or pay the entire loan, there are two options for getting out of default:

  • Consolidation. Consolidation combines your old loans into a new loan. There are limits on how many times you can consolidate.
  • Rehabilitation. Rehabilitation fixes your existing loan. You can get out of default through rehabilitation once per loan only.

You should not take out personal loans (which have high interest rates) to pay student loans.

Consolidation and rehabilitation have advantages and disadvantages. For example, consolidation may be faster, but you may lose some legal rights. Rehabilitation takes longer (almost a year), but is slightly better for your credit report.

The Department of Education usually recommends rehabilitation. But, both rehabilitation and consolidation may be good options. Always ask questions about all available programs and collection fees.

To begin rehabilitation, contact your loan servicer. 

To begin consolidation, complete the Federal Direct Consolidation Loan Application and Promissory Note.

Private student loans

Private student loans do not have the same protections that come with a federal student loan.

If you have trouble making private student loan payments, you should:

  • Contact your loan servicer. If you aren't sure who services your loan, you can call your original lender to ask. Your school's financial aid office may also be able to help. If neither of these options work, you can also check your credit report.
  • Negotiate a new payment plan. Ask your loan servicer to negotiate a new payment plan.

If you miss private student loan payments

If you miss private loan payments, your lender may take legal action to get the money. Your lender may:

  • Sue you. The lender may take you to court to reclaim the money. 
  • Garnish your wages. The court may allow the lender to keep money from your paycheck. 

If you have a problem with your lender

If you have problems with a student loan lender, contact one of the ombudsman programs such as:

Discharging loans through bankruptcy

To discharge a loan through bankruptcy, you must prove that the loan causes undue hardship. It is difficult to prove undue hardship. So, most people are not eligible to discharge their federal or private loans through bankruptcy.

If you have trouble repaying your loans, you should consider other options besides discharging through bankruptcy.

Forms and Letters

Find forms and letters that you can fill out yourself.

Local Government and Community Resources

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