After students graduate, leave school or drop below halftime enrollment, there is a period of time before students have to begin repaying their loans.
This time is called “grace period” and is:
- Six months for Federal Stafford Loans (subsidized and unsubsidized)
- Nine months for Federal Perkins Loans
Parent borrowers (PLUS Loan only) do not have a grace period. The loan repayment period starts 60 days after the loan is fully disbursed which is:
- 60 days after the first day of the spring semester if parents borrowed for an academic year (fall and spring)
- 60 days after the first day of the semester if parents borrowed for on semester only (fall or spring)
After the grace period expires, loan payment begins.
Federal loans in standard repayment have up to 10 years. There are various payment plan options available on the federal loans. Please visit Federal Student Aid website for detailed descriptions on these options. Monthly payment of the loan will depend on the amount of debt and the length of repayment.
It is extremely important to make all payments on time. Failure to make the payments without special arrangements with your lender or the Department of Education will result in default.
If you default, it means you failed to make payments on your student loan according to the terms of your promissory note (MPN), the binding legal document you signed at the time you took out your loan.
In other words, you failed to make your loan payments as scheduled. Your school, the financial institution that made or owns your loan, your loan guarantor and the federal government can all take action to recover the money you owe.
Here are some consequences of default:
- National credit bureaus can be notified of your default, which will harm your credit rating, making it hard to buy a car, house or other purchases depending on credit history
- You would be ineligible for additional federal student aid if you decided to return to school
- Loan payments can be deducted from your paycheck
- State and federal income tax refunds can be withheld and applied toward the amount you owe
- You will have to pay late fees and collection costs on top of what you already owe
- You can be sued
To view your loan history including amounts, dates, status and lender, visit the U.S. Department of Education National Data System (NSLDS) at www.nslds.ed.gov.
The federal loans are usually eligible for consolidation.