So you borrowed during school and accumulated other types of consumer debt. Maybe a little more than you planned. Now what? Managing debt after college can be challenging, but the reality is that it must be repaid. Will your salary be enough to pay your bills? Does your student loan payment fit into your budget? These are just some of the questions you might ask yourself when considering your student loan repayment options.

Selecting a repayment plan

Take control of your student loan debt by calculating your monthly payment and making a side-by-side comparison of your repayment plan options. Use EDWISE, EDFUND's Online Financial Planning Guide, or a Loan Comparison Chart to find a repayment plan that fits with your life.

Federal Interest Rate Flyer — Latest interest rates

There are many repayment options to meet your needs:

Standard repayment plan
Provides fixed annual payment amounts over a fixed period of time. The monthly payment amount is no less than $50, and the repayment period is a maximum of 10 years.

Example
A subsidized Stafford loan repaid at 6.80 percent interest assuming the standard repayment plan of 10 years, or 120 payments.

Graduated repayment plan
A graduated repayment schedule allows your payments to start out low and then incrementally increase, with up to 10 years to pay. The final payment amount will not exceed three times the original payment amount.

Two years' interest only: allows two years of interest-only payments, followed by larger payments in years three through 10.

Four years' interest only: allows four years of interest-only payments, followed by larger payments in years five through 10.

Example
A subsidized Stafford loan repaid at 6.8 percent interest assuming the graduated repayment plan of 10 years, or 120 payments.

Income-sensitive repayment plan
Income-sensitive payment amounts are based on a percentage of your gross monthly income and the amount you borrowed, but must cover at least the interest due. Repayment terms will vary based on the percentage you request, your income and the loan amount.

Example
A subsidized Stafford loan repaid at 6.8 percent interest, assuming the borrower has requested that their payment be based on 4% of their gross monthly income. The income examples are $1,500 per month and $4,000 per month.

Extended repayment plan
The extended repayment schedule is limited to new borrowers on or after October 7, 1998, with an outstanding balance of principal and interest in FFELP loans totaling more than $30,000. The maximum repayment term is 25 years.

Example
A subsidized Stafford loan repaid at 6.8 percent interest assuming an extended repayment plan of 25 years, or 300 payments.

Income contingent repayment
An income-contingent repayment plan is available for direct loans and provides for installments that are based on the borrower's ability to pay each year. The monthly payments are calculated on annual income, certain other factors and the total amount of outstanding direct loans. The maximum repayment term is 25 years.

Saving money
Good financial habits have their rewards. Your lender or secondary market may offer incentives for good repayment behavior such as:

• 1/4 percentage point interest-rate reduction on eligible loans for using "direct pay" - having 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 two-percent 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 prepayment penalty for paying off some or the entire loan before payment is due. These options can save you hundreds, even thousands of dollars in interest.

If you make a monthly payment of $173 on a $15,000 student loan with a rate of 6.8 percent, it will take you 10 years to pay off your debt, and you will have paid $5,714 in interest charges, bringing the total amount repaid to $20,714. A majority of your loan payments goes toward interest charges for the first few years. Pay down your debt faster by making additional payments on the principle.

Pay an extra $50 a month
- 34 months faster - saves $1,766 in interest
Pay an extra $250 a month
- 80 months faster - saves $3,920 in interest
Pay an extra $500 a month
- 96 months faster - saves $4,633 in interest

What is Delinquency?

• The entire balance, plus collection fees assessed to the account, is due immediately.

• Eligibility for any additional federal financial student aid is lost.

• You will lose the options of deferment and/or forbearance.

• The federal government can take legal action against you.

• Your wages and/or your entire state and federal tax refund may be garnished or intercepted and credited to your defaulted student loan account.

• Eligibility for certain state and federal jobs may be impacted.

• Your credit will be negatively impacted.

If you miss a payment, contact your lender or EDFUND toll free at 800.298.9490 immediately.

Resolving delinquency:

Print deferment or forbearance forms online to complete.

Use the Deferment Options by Loan Period Chart to find out which deferment you qualify for.

Find out about loan discharge/forgiveness.

Deferment
Deferments allow you to temporarily postpone payment of your loan. Deferments are not automatic; you must apply and be approved. The most common reasons for deferment include:

• Return to school for at least half-time attendance
• Loss of job or inability to find a job
• Economic hardship
• On active duty during war, national emergency or military operation

During periods of deferment on subsidized Stafford loans, the principal payments are postponed and interest is billed to the federal government. However, you are responsible for interest that accrues on any unsubsidized Stafford loan.

Forbearance
If you do not qualify for a deferment, consider requesting a forbearance from your lender. Forbearance is the temporary postponement or reduction in your monthly payment. Often the amount of time it takes to repay your loan is extended. Interest continues to accrue during the period, increasing the loan balance. Possible reasons for forbearance include:

• Poor health
• A rigorous residency program
• Payments that exceed 20 percent of your total monthly gross income

You are allowed to postpone payments for a combined period not to exceed a total of 12 months. The combined period equals any delinquency period plus any additional period requested.

Consequences of not resolving delinquency
If you don't make your required payments and have not made arrangements with your lender, your loan may go into default.

The trouble begins when you miss a required payment, so be sure you don't let this happen! If you do miss a payment, contact your lender immediately. They can offer you solutions to help. If you are 240 days late on making your payment, the entire amount of your loan becomes immediately due in full. Once your loan is 270 days delinquent, your loan(s) is in default.

As indicated in previous sections, there are many options to help you meet the repayment obligations on your student loan. There is no excuse for becoming delinquent or defaulting on your student loan(s).

Loan discharge/forgiveness
Consider loan discharge/forgiveness of your student loan if you meet the federally mandated requirements. If you are eligible for loan discharge, your student loan will be forgiven and you will not have to repay the loan. Call EDFUND’s Post Default Services at 800.367.1590 for additional information.

Possible reasons for student loan discharge include:

Total and permanent disability
A student loan may be discharged if the borrower is totally and permanently disabled. To be eligible for a total and permanent disability discharge, a doctor of medicine or osteopathy must make the determination and certify the condition. A borrower is considered totally and permanently disabled if he/she is unable to work and earn money or attend school because of a medical impairment.

There are certification forms that must be completed to request student loan discharge for reason of total and permanent disability. Contact your lender or EDFUND for additional information, or see default remedies.

Death
If a borrower dies, his or her loan is discharged. In the case of a parent loan (PLUS), if the dependent student for whom the parent obtained the loan dies on or after July 23, 1993, the parent's loan is discharged. An original certified death certificate must be provided to the holder of the loan. You can obtain additional information about this provision by contacting the holder of the loan or EDFUND.

Closed school
This option applies only to a very limited number of borrowers who were not able to complete their program of study because their school closed. The student must have been in attendance or on an approved leave of absence when the school closed or have withdrawn from school within 90 days of the school closure date. This discharge provision is only available to borrowers who received their loan on or after January 1, 1986. There are additional eligibility requirements, as well as certification forms, that must be completed in order to request this discharge.

If you believe you may be eligible for loan forgiveness because your school closed, contact your lender or EDFUND for additional information.

Bankruptcy
Some student loans may be discharged if the borrower requests a "hardship hearing" by filing a petition of adversary action through the bankruptcy court. Any questions on discharging your student loan(s) for reason of bankruptcy must be discussed with a licensed legal professional (e.g., an attorney or legal clinic)."
More information on Bankruptcy

False certification
This option applies to a very limited number of borrowers whose loan applications were falsely certified by their schools. The false certification of a student's "ability to benefit" from the education program may also qualify the borrower for loan forgiveness. This discharge provision is only available to borrowers who received their loan on or after January 1, 1986.

Effective July 1, 2006, the Higher Education Act of 1965 is amended to include identity theft as a reason for obtaining a false identification discharge.

There are additional eligibility requirements, as well as certification forms that must be completed in order to request this discharge. Contact EDFUND for additional information and guidance, or see default remedies.

Unpaid refund
Effective July 1, 2000, the Higher Education Act of 1965 was amended to create a new Unpaid Refund Discharge Program. If a student withdrew, did not attend or was terminated from a school within the timeframe allowed by the school's refund policy, the student is eligible for the discharge of the amount that should have been refunded by the school. Sections 682.402, 685.212 and 685.215 of the Code of Federal Regulations describe the eligibility requirements to discharge all or a portion of a student loan on the basis of an unpaid refund.