Office of Student Financial Aid

Providing Dollars for OC Students

Student Loan Repayment Assistance

As a Direct Stafford Loan borrower, you have an obligation to repay what you borrow.  Taking out a student loan to help pay for your educational costs is met with many benefits you will not find within a traditional line of credit through a bank, or a private lender.  The Direct Stafford Loan program has many flexible repayment options available to you as a borrower.  These repayment plans can help you manage your own personal household budget while successfully making payments on your student loan.

Always stay in contact with your lender.  A lender servicer, or your Financial Aid Office, is more than happy to assist you in assessing a repayment plan that works for you.  If you become unable to make payments due to unusual circumstances, please scroll down below to read about deferments and forbearance.  Keep in mind, forbearances and deferments are temporary--often, they are not long-term, sustainable solutions--but are there to provide you relief until your income becomes stable.
Listed below are several options to assist you in repaying your student loans, and staying in good standing with your lender.  Remember, these are federally-guaranteed loans, and are not based on credit when they are awarded to you (with the exception of the PLUS loan).  However, missing a payment, going delinquent, or defaulting altogether may adversely affect your credit rating, and subject you to automatically forfeiting your federal tax return, or garnishment of your wages, or other income.  Once you have defaulted, it becomes difficult to recover from that status.  Take steps to prevent that from happening before it happens.

Select the best repayment option for you, and re-assess this yearly as your income changes so you may gain the best benefit to successfully repaying your loan, and managing your personal household budget.

Types of Repayment Plans

Standard Repayment 
This repayment plan is the shortest repayment plan intended to pay off the loan--its interest and principal balance in 10 years. The payment is fixed with the smallest payment required being $50 a month (depending on the amount you borrow).  If you borrow more, the monthly amount required increases.
Extended Repayment
The Extended Repayment plan is available to borrowers with debt that exceeds $30,000. Under the extended repayment plan, you may make smaller payments and you have up to 25 years to pay your student loan balance off.

Graduated Repayment
If your income is low when you graduate, but you expect it to increase when you go into the workforce, graduated repayment can help you start off with low payments, making bigger ones to suit your income as you move forward in your career.  Calculations of your payments are subject to annual review of your income.

Income-Contingent Repayment
Under the Income-Contingent Repayment (ICR) plan, you have up to 25 years to make payments and repayment is based on your family size and your yearly income, and are subject to annual review. Payments will not exceed 20% of your monthly discretionary income*.

Income-Based Repayment
Under the Income-Based Repayment (IBR) plan, your repayment period is 20 years if you were a first-time borrower after July 1, 2014.  Your repayment period is 25 years if you were not a first-time borrower before July 1, 2014.  Monthly payments are based on family size and income, and are subject to annual review.  Under IBR, your payment will not exceed 15% of your discretionary income*.

Pay-As-You-Earn Repayment
Under the IBR or PAYE repayment plan, borrowers must prove they are undergoing a financial hardship.  Generally, payments do not exceed 10% of your discretionary income.  Monthly payments are based on your family size and income, and will not exceed that of what would normally fall under the standard repayment plan. You have up to 20 years to pay on this plan.

*Please visit the Direct Stafford Loan Repayment Plan Information website to learn more about eligibility and obligations of these options.

If you find you are having trouble making your monthly student loan payment altogether due to loss of employment, or illness, disability, etc, you may request a deferment or forbearance from your lender.

Types of Deferments Available

A deferment is a temporary postponement of your monthly student loan payment.

Unemployment Deferment 
An Unemployment Deferment can be granted for 3 months up to 36 months if you are unable to secure full-time work, or if you are experiencing a period of unemployment. 

Economic Hardship Deferment
An Economic Hardship Deferment is during a time where you are serving with the Peace Corps or other service where you are paid minimally in exchange for your dedicated service to a cause. 

In-School Deferment
If you are taking 6 college credits or more in an approved educational program, you qualify to postpone your student loan payments for the time you are in school.  If you drop below 6 credits, you will re-enter repayment.

Please visit the Direct Stafford Loan Deferment Options website to learn more about your eligibility for deferment options. Remember, you must request these services from your lender.  They will not automatically put your loan in these statuses.


Types of Forbearance Available

If you are unable to make your monthly student loan payments, but you are not eligible for a deferment, your lender servicer may determine you qualify for a forbearance.  Forbearance may allow you to postpone payment for up to 12 months, but interest will accrue on the balance of your loan. 

Discretionary Forbearance
If you are suffering from a documented illness, or you are unemployed, you may qualify for a forbearance.  Your lender servicer will make this determination, but you must request it. 

Mandatory Forbearance 
If the total amount you owe on your student loans is more than 20% of your monthly income, or you are a member of the National Guard and have been activated by a governor, or other extenuating circumstances, your lender may determine you qualify for a mandatory forbearance.  You must request your loan servicer review your eligibility for this postponement.

Please visit the Direct Stafford Loan Forbearance Information website to learn more about your eligibility for these options. Remember, you must request these services from your lender.  The loan servicer will not automatically put your loan in these statuses.

. . .

It is your responsibility to ensure you stay current with your lender.  After 270 days of non-payment, your loan will go into default, and then will be sold to a collection agency.  At that point, the balance of the loan is due in full (known as acceleration),  and it gets very difficult to get it into good standing again.  You can attempt to cure your loan in 6 - 9 consecutive payments as agreed through Loan Rehabilitation,  but it is much easier to just stay in contact with your lender when you cannot make a payment.

Please read the information on Student Loan in Collections if you need assistance on rehabilitating your loan. You may also visit the Department of Education's guidance on resolving your defaulted loan at the Federal Student Aid Debt Resolution website.

Last reviewed:  December 2, 2014 KF