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Teachers College, Columbia University
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Federal Student Aid > Repaying Your Loans

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Federal Student Aid

Repaying Your Loans

Managing debt after higher education can be challenging. First, you should get all the details about your loans at www.NSLDS.ed.gov. The Department of Education has established the MyStudentData button to allow students to download their loan, grant, enrollment, and overpayment information from the NSLDS website.

Here are some details to consider as you start getting closer to your repayment dates.

Selecting a Repayment Plan
Take control of your student loan debt by calculating your monthly payments and making a side-by-side comparison of your repayment plan options. Helpful calculators and guides are provided here. We also have a sample for you to see the comparisons.
  • Standard Repayment Plan:
    • Payments will be a fixed amount each month until the loan is paid in full.
    • Minimum monthly payment = $50
    • You have up to 10 years to repay (120 payments).
    • You pay less interest over the life of the loan than with the other repayments plans.
  • Graduated Repayment Plan:
    • Payments start out low but will increase over time.
    • Minimum monthly payment = as low as monthly accrued interest or $30, whichever is higher.
    • Tailored for individuals with relatively low current incomes (e.g., recent college graduates) who expect their incomes to increase in the future.
    • You pay over a period of time not to exceed 10 years.
  • Extended Repayment Plan:
    • Payments can be fixed or graduated repayment.
    • Minimum monthly payment = $50
    • Must have had no outstanding balance on a direct loan as of Oct. 7, 1998, or on the date you obtained a direct loan after Oct. 7, 1998.
    • Must have more than $30,000 in Direct Loan debt.
    • Must pay loan balance in full within 25 years.
  •  Income Based Repayment (IBR) Plan:
    • Monthly payments are capped at an amount that is intended to be affordable based on your income and family size.
    • Minimum monthly payment = 15% of discretionary income (payments may be $0).
    • Must be experiencing “partial financial hardship” to qualify.
    • Monthly payments amount will be adjusted annually based on your income and other tax information.
    • If you repay under the IBR plan for 25 years and meet other requirements, you may have any remaining balance of your loans cancelled. 
    • **DOE has established the electronic IBR/PAYE/ICR application at www.studentloans.gov to help streamline the process for borrowers.
  • Income Contingent Repayment (ICR) Plan:
    • Monthly payments will be based on annual income (your Adjusted Gross Income as well as your spouse’s, if married), your family size, and the total amount of your outstanding Federal Direct Loans.
    • Minimum monthly payment = typically 20% of monthly discretionary income, but other payment options are available.
    • Monthly payment amounts will be adjusted annually.
    • If you have an unpaid portion of the loan after 25 years of satisfactory repayment, the unpaid portion may be forgiven. Note that you may have to pay income tax on the amount that is forgiven.
    • **DOE has established the electronic IBR/PAYE/ICR application at www.studentloans.gov to help streamline the process for borrowers.
  • "Pay As You Earn" (PAYE) Repayment Plan (introduced Dec 21,2012):
    • Monthly payments are capped at an amount that is intended to be affordable based on your income and family size.
    • Minimum monthly payment = 10% of discretionary income.
    • Must be a new borrower on or after Oct. 1, 2007, and must have received a direct loan disbursement on or after Oct. 1, 2011.
    • Must be experiencing “partial financial hardship” to qualify initially.
    • Monthly payments amount will be adjusted annually based on your income and other tax information.
    • If you repay under the PAYE plan for 20 years and meet other requirements, you may have any remaining balance of your loans forgiven.
    • **DOE has established the electronic IBR/PAYE/ICR application at www.studentloans.gov to help streamline the process for borrowers.

 

  • Income-Sensitive Repayment Plan:
    Please visit this page to learn more about the Income-Sensitive Repayment Plan. Please note that Federal Direct Loans are not eligible for this type of repayment plan.

 

Loan Discharge/Forgiveness
There are some situations in which you may be eligible for loan discharge or forgiveness. Some of these situations tend to be ones of an extreme nature. If you are eligible, your student loans will be forgiven and you will not have to repay them. Learn more about cancellation here. Some reasons for cancellation include total disability, someone fraudulently taking the loan out in your name, or death. Concrete documentation will need to be provided to your lender in order to have your loan debt forgiven or discharged.

Less extreme ways to have loans forgiven or discharged include completing service as a teacher or becoming eligible for forgiveness under the Public Service Loan Forgiveness (PSLF) program.
  • Learn more about Teacher Loan Forgiveness and Teacher Cancellation here.
  • Learn more about the Public Service Loan Forgiveness (PSLF) here.
Loan Consolidation
Loan consolidation is another option you may want to consider. Consolidation can streamline your payment process because you are repaying all of your loans with one monthly payment. There are pros and cons to consolidation, so you should do thorough research to see if it is the right choice for you. Learn more about consolidation here.

Some important things to note about loan consolidation:
  • Allows student borrowers to combine multiple federal educational loans into one loan with one monthly payment.
  • Lengthens the repayment up to 30 years and reduces your monthly payments.
  • In the long run, you will pay more interest.
  • Fixed interest rate calculated using a weighted average of the loans being consolidated.
  • Available with Direct Lending.
Avoid Delinquency
You should take all the necessary precautions to avoid becoming delinquent on your loan(s). Delinquency occurs if you are 30 days late in making payments. Once your loan(s) has been delinquent for 270 days, your loan(s) is in default.
    Consequences of Default
    • The entire balance (including late & collection fees) is due immediately.
    • Eligibility for any additional federal financial student aid is lost until the default issue is resolved.
    • You will lose the options of deferment and/or forbearance.
    • The federal government can take legal action against you.
    • Your wages may be garnished.
    • You SS/disability income and/or your entire state/federal tax refund may be seized.
    • Eligibility for certain state and federal jobs may be impacted.
    • Your credit will be negatively impacted.
    If you know that you may miss a payment, contact your lender immediately to discuss possible solutions, such as deferment or forbearance.

    Deferment

    Deferment is an entitled period in which repayment of the principal balance is temporarily postponed if you meet certain requirements. For the Federal Perkins and Direct Subsidized Stafford loans, you do not have to pay principal or interest during deferment. For the Federal Direct Unsubsidized Stafford and Federal Graduate PLUS loans, you are responsible for the interest that accrues during the deferment period. Note: You may pay the interest as it accrues during deferment or allow it to be capitalized.
     
    The most common reasons for deferment include:
    • Return to school for at least half-time attendance (six credit hours or the equivalent per semester)
    • Loss of job or inability to find a job
    • Extreme economic hardship
    • On active duty during war, national emergency or military operation
    Forbearance
    Forbearance is a temporary postponement or reduction of payments for a period of time because you are experiencing financial difficulty. Forbearance may be granted at the servicer's discretion. If you are not eligible for a deferment, your lender may grant you a forbearance for a limited and specific period of time. Interest continues to accrue while you are in forbearance on all loans. You will be responsible for paying this interest. When you resume making payments at the end of the forbearance period, any unpaid interest will be capitalized.
     
    The most common reasons for forbearance include:
    • Economic hardship
    • Illness

    ***If you live in an area that was impacted by Hurricane Sandy, you may be eligible for a period of forbearance. Please visit this link or contact your lender to learn more.***

    Learn to Save Money through Good Financial Habits
    Your lender or secondary market may offer incentives for good repayment behavior. These options can save you hundreds, if not thousands, of dollars in interest. Some of the incentives you should know of include:
    • A 1/4% interest rate reduction on eligible loans for using their direct pay system, which is when you have your monthly payments deducted directly from your personal checking or savings account. Not only do you make payments on time, but you maintain good credit.
    • A 2% interest rate reduction after making 48 consecutive monthly, on-time payments. On a $15,000 loan, you could save nearly $1,000 in interest and reduce your payments by six months.
    • No pre-payment penalty for paying off some or the entire loan before payment is due.
    **Always maintain an open channel of communication with your lender regarding any questions and/or concerns about your loans. Take all the necessary steps to remain in "good borrower" standing! **

    Additional Resources