Federal Stafford Loan Repayment Options
Are you thinking about how you are going to pay for your education and considering a loan? Already have a federal Stafford loan and wondering about your repayment options for federal student loan repayment? There are a variety of Stafford Loan repayment options you can take advantage of.
Stafford Loan Exit Counseling
Before you enter repayment, your school and the federal government require that you complete an exit counseling session. Failing to complete your exit counseling session could prevent you from graduating, receiving your diploma, obtaining your transcripts to attend another school, and receiving any student account refunds owed to you from your school.
Federal loan borrowers can choose from a variety of repayment plans when it comes time to pay student loans. To select or change plans, you must contact your federal student loan servicer. Your servicer’s contact information can be found at NSLDS.ed.gov.
|Pay As You Earn Repayment||
|Income Contingent Repayment||
|Income Sensitive Repayment||
Federal Loan Consolidation
A consolidation loan allows you to combine all of your previously borrowed federal loans into one low monthly payment. This can reduce the monthly payments you make by as much as 53% by lengthening the overall term of the loan.
Federal Stafford Loan Forgiveness
Under certain circumstances, the federal government will forgive (cancel) all or part of an educational loan. In order to qualify for federal student loan forgiveness, you must:
- Perform military service
- Perform volunteer work
- Teach or practice medicine in certain types of communities
- Be involved in circumstances specified by your loan's forgiveness plan
Stafford Loan and Discharge Options
Federal loan forgiveness is not available to everyone, but there are other options. Certain volunteer programs or fields like healthcare also offer some loan forgiveness/repayment incentives.
In extreme cases, you may even qualify to have your Stafford Loans discharged. This can happen due to various circumstances like disability or bankruptcy.
Federal Stafford Loan Deferment and Forbearance
Loan deferment refers to a temporary period when a borrower is not required to make payments for an eligible reason. For Subsidized Stafford Loans, the interest that accrues on the loan during the deferment is paid by the federal government. For Unsubsidized Stafford Loans, the interest that accrues during a deferment must be paid by the borrower during or after the deferment period.
Stafford Loan forbearance allows borrowers to temporarily postpone or reduce payments for a period of time. This typically takes place because the borrower is experiencing financial difficulty. Both deferment and forbearance are good loan management tools and can help borrowers avoid default.