Rights and Responsibilities
Having a student loan is a big responsibility. You should not be afraid to borrow what you need to complete your education, but you should not take the decision to borrow lightly. Student loan debt is a serious commitment that will stay with you until you repay it. As a borrower, you have rights to make repayment easier. As long as you make a good-faith effort to repay your loans, your student loan lender will most likely be able to help you find a repayment situation that will work for you.
Your Rights
As a borrower, you have rights and responsibilities when it comes to managing your student loans. There is help to make the repayment terms fit your situation. You have a choice of repayment options such as standard repayment, extended repayment, graduated repayment and income-sensitive repayment. Consolidation of your student loans may also change your repayment terms. You are entitled to suspend your payment temporarily if you meet certain criteria, such as unemployment or economic hardship, by applying for a deferment or forbearance. In rare but important cases, loan forgiveness would discharge the responsibility of repaying your student loan.
Repayment options
With Standard Repayment, the regular repayment schedule unless you choose another one, your loan(s) will be repaid in the least amount of time of any repayment schedule with the least interest charged. However, your monthly payments will initially be higher than under any other repayment schedule. Your standard repayment period for each loan lasts between 5 and 10 years, depending on how much you owe. Your payments will be at least $50 a month and may be more in order to repay the loan within the standard time period. However, you can choose an alternate repayment schedule, if you qualify, to extend your repayment period or reduce your monthly payments.
If you owe more than $30,000 in federal student loans, Extended Repayment will stretch your repayment period to 25 years. This option is available to borrowers whose oldest loan was originated on or after October 7, 1998. Extended Repayment will increase the total amount of interest you repay over the life of your loan.
Graduated Repayment will reduce your monthly payments by giving you smaller payments, as low as interest-only, upfront for up to 4 years. Your payments will then increase gradually so that the loan is repaid in the same amount of time as under Standard Repayment. Graduated Repayment will increase the total amount of interest you repay over the life of your loan.
If your income is low, you may want to choose Income-Sensitive Repayment, which allows you to pick a monthly payment equal to any amount between 4% and 25% of your gross monthly income. You may be able to use this option for up to 5 years, and it may extend your repayment term to up to 15 years. Income-Sensitive Repayment will increase the total amount of interest you repay over the life of your loan.
Consolidation is another popular repayment option that allows you to combine multiple loans into 1, extend your repayment term, and in most cases lower your monthly payment. In most cases, you may only consolidate once, but you may obtain a subsequent consolidation loan under the Direct Loan program if you wish to participate in the Public Service Loan Forgiveness program.
You can change your repayment schedule once a year, or get more information on these options, by contacting your lender. If you have a student loan(s) guaranteed by American Student Assistance, please contact one of our student loan specialists at 866.493.5563 for more information.
What are deferment and forbearance
As a federal student loan borrower, it is your right to temporarily postpone your federal student loan payments with a deferment if you meet certain criteria, such as being enrolled in school at least half-time, being unemployed and actively seeking full-time work, or being on active military duty. Interest will not accrue on your subsidized loans during a deferment period. You are not eligible to defer repayment on any loans that are in default (more than 270 days of non-payment). Visit our forms page for a complete listing of deferment types and criteria. If you borrowed any of your current federal student loans before July 1, 1993, call American Student Assistance at 866.493.5563 for more information on your deferment eligibility.
If you do not qualify for a deferment and you are unable to make your student loan payments, you may qualify to temporarily suspend or reduce your payments with a forbearance. While usually reserved for cases of financial hardship, other criteria may qualify you. A forbearance is issued at your lender’s discretion. Interest will continue to accrue during forbearance periods. Contact your lender for more information.
Loan Forgiveness and Discharge
If you perform certain public service functions or hold certain jobs, you may be eligible to have your loans forgiven.
Public Service Loan Forgiveness
Public Service Loan Forgiveness is a new program that forgives your remaining federal student loan debt after 10 years of eligible employment and qualifying loan payments. Student loan borrowers who work in certain public service careers, including jobs in non-profit organizations, government, education, public health and safety, law enforcement, and emergency management are eligible. FFELP borrowers are eligible to consolidate into Direct Lending to participate in the public service loan forgiveness program.
Loan Forgiveness Demonstration Program for Child Care Providers
You may be eligible if you:
- – Borrowed your outstanding Federal Family Education Loans or Direct Loans after October 7, 1998
- – Received an associate’s or bachelor’s degree in early childhood education after October 7, 1998
- – Have worked full-time as a child care provider in an eligible facility located in a low-income community for at least 2 consecutive years
What types of loans are eligible for forgiveness under this program?
- – Federal Stafford Loans (both subsidized and unsubsidized) made under both the Federal Family Education Loan Program and the Direct Loan Program, made after October 7, 1998, are eligible. Federal PLUS, Consolidation, Perkins and graduate loans are not eligible
- – To be eligible, your loans must have been made before you began qualifying child care service, and the loans must have been for the purpose of completing your associate’s or bachelor’s degree in early childhood education or child care
Please Note: We are not accepting new applicants into the program, because no additional funding has been provided. Applications for renewal benefits are available for those borrowers who have previously been granted forgiveness under the Child Care Provider Loan Forgiveness Program.
For more information on what qualifies as early childhood education, child care service, eligible facilities, and low-income communities, visit the “Repaying” tab of http://studentaid.ed.gov.
Teacher Loan Forgiveness Program
You may be eligible if you:
- – Had no outstanding balance on a Federal Family Education or Direct Loan as of October 1, 1998.
- – Have been employed as a full-time teacher for 5 consecutive years at a low-income elementary or secondary school
- – Have a student loan that was made before the end of the 5th year of qualifying teaching service
- – Had at least 1 of your 5 qualifying years of teaching occur after the 1997 – 1998 academic year
For further definitions, more information on the low-income designation, and additional conditions, visit the “Repaying” tab of http://studentaid.ed.gov.
Discharge
Under certain extreme circumstances, it may be possible to have your student loan debt discharged or reduced.
- – You die or become totally and permanently disabled.
- – Your school closed before you could complete your program.
- – For FFEL and Direct Stafford Loans only: Your school owes your lender a refund, forged your signature on a promissory note, or certified your loan even though you didn’t have the ability to benefit from the coursework.
- – Only in certain extreme situations can federal student loans be discharged through bankruptcy.
Discharge provisions differ depending on whether you have a Federal Perkins Loan or a FFEL/Direct Stafford Loan. For more information, visit the “Repaying” tab of http://studentaid.ed.gov.
Your responsibilities
You must repay your federal student loans
Even if you do not finish your school program or you do not get the job or salary you planned on, you have to repay what you borrow plus any accrued interest. There are some conditions and occupations that will qualify you for loan forgiveness or discharge, but these are very few. Bankruptcy does not necessarily discharge federal student loan debt.
You must notify your lender(s) and school of certain changes
You must notify your lender(s) if you:
- – Change your address, telephone number, or e-mail address
- – Change you name (for example, maiden name to married name)
- – Withdraw from school or begin attending less than half time
- – Transfer from one school to another
- – Change your employer, or your employer’s address or telephone number changes
- – Have any other change in status that would affect your loan (for example, the loss of eligibility for an unemployment deferment by finding a job)
You need to notify your school’s financial aid office if you:
- – Reduce your enrollment in school to less than half-time
- – Withdraw from school, stop attending classes, or fail to re-enroll for any term
- – Change in your expected graduation date
- – Change your name, local address, permanent address, or e-mail address
- – Transfer from one school to another
Shortly before you graduate, transfer, or withdraw from school, you will participate in a required exit counseling session with your school regarding your student loans. At that session, you will be able to update your loan records with your permanent address, e-mail address, telephone number, future employer (if known), and references.
When you must start to repay your loans
After you graduate or drop below half-time enrollment in school, you will have a 6-month grace period during which no loan payments will be due for your Stafford loans. After that, your first loan payment will be due within 60 days of the end of your grace period. If you have PLUS loans, your first loan payment will be due within 60 days of the loan being fully disbursed, unless you qualify for a deferment, such as an in-school deferment. Your lender will notify you when your first payment is due. You are expected to make payments even if you do not receive a bill or repayment notice, so make sure you update your lender with your current address every time you move. Your minimum payments on all your FFELP loans will be at least $600 per year, unless you select and are eligible for Graduated or Income-Sensitive Repayment.
Learn what to do if you’re experiencing difficulty repaying your loan(s).
