You don’t have to begin repaying your federal student loans until after you leave college or drop below half-time enrollment in your final year of undergraduate study. Paying them off sooner allows you to save money, meet your loans’ repayment goals and avoid default. But not paying them off yet can be difficult because it can mean you miss the payments your monthly federal loan payment is calculated to cover.
What if I don’t finish my federal loan obligations by the end of my current calendar year?
You might be able to avoid extra payments if you wait until after the end of the next calendar year to start repaying the full balance. If your loan balances are very large and interest is due on them each month, your interest wont be paid until you pay off all of your balance. Once the balance is paid off, the balance is removed from your federal student loan and you aren’t on the hook for it anymore. If you’d like to get all the details, be sure to look at this website.
Can I defer my loan payments if I am unable to repay them on time?
If you receive a deferment, your payments will continue to be taken from your paycheck, and interest will continue to accrue on your loans, unless you were enrolled in a Direct Loan Program that allows you to defer repayment after you reach a certain income level. A Direct Loan deferment is different from a Public Service Loan Forgiveness, where you receive the governments largest loan forgiveness program. The same repayment rules apply to the two types of deferments, including the ability to defer your federal loans when you’re unemployed. If you do not know whether you qualify for a deferment, you can inquire about them from the Repayment Estimator in the StudentLoans.gov website.
What if I meet the income requirements for the Public Service Loan Forgiveness program?
If you qualify for Public Service Loan Forgiveness and are currently in default, you can stop making payments and receive a Direct Loan disbursement. During the process of a Direct Loan disbursement, you will have the opportunity to establish new repayment plans with the U.S. Department of Education.
What if I meet the income requirements for a Pay As You Earn repayment plan?
If you qualify for a Pay As You Earn repayment plan and have non-Federal student loan debt, you can stop making payments and receive a Direct Loan disbursement. During the process of a Direct Loan disbursement, you will have the opportunity to establish new repayment plans with the U.S. Department of Education. You can also temporarily stop making payments if you have not made any payments on the current plan within two years of becoming eligible for the plan.