Learn about how, when, and to whom you make your federal loan payments

Most loans have a grace period, but you’ll want to determine your repayment plan as early as possible. When it comes to repaying your federal student loan, there’s a lot to consider. Understanding the details of repayment can save you time and money. Find out when repayment starts, how to make your payment, repayment plan options, what to do if you have trouble making payments, and more.

When do I begin repaying my federal student loan?

You don’t have to begin repaying most federal student loans until after you leave college or drop below half-time enrollment. However, PLUS loans enter repayment once your loan is fully disbursed (paid out). Your loan servicer or lender must provide you with a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment. Keep in mind that your loan may have a grace period.

What’s a grace period?

The grace period is a set period of time after you graduate, leave school, or drop below half-time enrollment before you must begin repayment on your loan. The grace period gives you time to get financially settled and to select your repayment plan. Not all federal student loans have a grace period. Note that for most loans, interest will accrue during your grace period.

• Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans, and Unsubsidized Federal Stafford Loans have a six-month grace period before payments are due.
• PLUS loans have no grace period. They enter repayment once they are fully disbursed but may be eligible for a deferment. Contact your loan servicer for more information.
• If you received a Federal Perkins Loan, check with the school where you received your loan.

Can my grace period change?

Circumstances that may change your grace period include the following:

• Active duty military: If you are called to active military duty for more than 30 days before the end of your grace period, you will receive the full six-month grace period when you return from active duty.
• Returning to school before the end of your loan’s grace period: If you reenroll in school at least half-time before the end of your grace period, you will receive the full six-month grace period when you stop attending school or drop below half-time enrollment (other conditions apply).
• Loan consolidation: If you consolidate your loans during your grace period, you will give up the remainder of your grace period and begin repayment after your Direct Consolidation Loan is disbursed (paid out).  Your first bill will be due approximately two months after the Direct Consolidation Loan is disbursed.

How much will I need to pay?

Your bill will tell you how much to pay. Your payment (usually made monthly) depends on

• the type of loan you received,
• how much money you borrowed,
• the interest rate on your loan, and
• The repayment plan you choose.

How do I make my payments?

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 that were made under the Federal Family Education Loan (FFEL) Program and that ED later purchased. You’ll tell your loan servicer which repayment plan you’d like to choose.

Which Organizations Handle Which Loans

Type of Loan and Whom to Pay

• Direct Loans and FFEL loans owned by ED: You will make your payments to your loan servicer. Your loan servicer will provide you with information about your repayment terms and your repayment start date.
• FFEL loans not owned by ED: You will make your payments to your lender, the organization that made the loan initially. The lender could be a bank, credit union, or other lending institution. Your lender will provide you with information about your repayment terms and your repayment start date.
• Federal Perkins Loans: Your loan servicer will most likely be the school you were attending when you received the loan, but in some cases, the school will have a separate organization handle the billing and other services for your Perkins Loan. Contact the school about making Perkins Loan payments.

There are several ways you can make your payments.

If you want to make electronic payments, you can do the following:

• Receive your student loan statement electronically.
• Make your student loan payment through electronic debiting.
• Schedule a recurring electronic debit to pay your bill (you may get a 0.25% interest rate deduction if you have Direct Loans). You can enroll in electronic debit in several ways, depending on which type of loan you are repaying. Contact the organization that services your loan for information.

If you want to make payments by postal mail, you should mail your payments directly to your loan servicer.

Can I pay more than my required monthly payment?

You can make payments before they are due or pay more than the amount due each month. Paying a little extra each month can reduce the interest you pay and reduce your total cost of your loan over time. If you want to ensure that your loan is paid off faster, tell your loan servicer that the extra you pay is not intended to be put toward future payments.

What should I do if I’m having trouble making my loan payment?

Contact your loan servicer as soon as possible. You may be able to change your repayment plan to one that will allow you to have a longer repayment period or to one that is based on your income. Also ask your loan servicer about your options for a deferment or forbearance or loan consolidation.

What happens if I don’t make my student loan payment?

If you don’t make your student loan payment or make your payment late, your loan may eventually go into default. If you default on your student loan, that status will be reported to credit bureaus, and your credit rating and future borrowing ability will be damaged. In addition, legal action can be taken to require payment through garnishment of wages and withholding of tax refunds.

Can I cancel my loan?

You have a right to cancel all or a portion of a loan disbursement within 120 days of the date your school disbursed your loan money (by crediting the loan money to your school, by paying it directly to you or both). If you choose to cancel, the money you received will have to be returned, but no interest or fees will be charged. See your school’s financial aid office for further information.

You are generally required to repay your student loan. In certain situations, your loan may be forgiven, canceled, or discharged.