Repaying Your Student Loans

You’ve attended college or received other education beyond high school, and you received federal student loans* from the US Department of Education (ED) along the way. You’re now about to deal with paying them back. You’ll need to know how to manage your student loan debt to avoid repayment problems. This publication explains available repayment options so you can successfully repay your debt. It will also tell you what steps to take so you won’t get behind in payments or go into default.

Federal student loans are real loans, just like car loans or mortgage loans. You can’t just get out of repaying a student loan if your financial circumstances become difficult, unless you qualify for bankruptcy. But, it’s very difficult to have federal student loans discharged in bankruptcy; this happens only rarely. Also, you can’t cancel your student loans if you didn’t get theeducation you expected, didn’t get the job you expected, or didn’t complete your education, unless you leave school for a reason that qualifies you for a discharge of your loan**. Remember, your student loans belong to you; you have to pay them back.

*1)Federal Perkins Loans

2)Federal Family Education Loans (FFELs), consisting of subsidized and unsubsidized Federal

3)William D. Ford Federal Direct Loans (Direct Loans), consisting of subsidized and unsubsidized Federal Direct Stafford/Ford Loans, Federal Direct PLUS Loans (for parents who borrow for their children), and Federal Direct Consolidation Loans

** For example, you might have left school because

1)You became totally and permanently disabled. However, your condition cannot have existed before you applied for your federal loan, unless a doctor certifies that your condition substantially deteriorated since the loan was made.

2)Your school falsely certified your eligibility or signed your application or promissory note without your approval.

3)Your school closed, and you couldn’t complete your program of study. In this case, you cannot have withdrawn from the school more than 90 days before it closed. (The day the school closed is defined as the day it stopped providing educational instruction in all programs.) You don’t qualify for a loan discharge if you withdrew before your school closed, but you completed the program of study for which the loan was intended either by transferring academic credits or hours earned at the closed school to another school, or by any other means. Note that the state agency or other nonprofit agency that guaranteed the loan makes the final decision on whether your loan is eligible for discharge.