Properly managing student loans is an important step in establishing a financial foundation during and after college. Students who borrow money to pay for college MUST pay it back. Here are some of the things students need to know about repaying student loans.
- Payments for most federal loans are not typically expected until the student leaves college or reduces to less than half-time enrollment. Payments for PLUS loans begin as soon as the money is disbursed.
- Defaulting on student loans will damage the student’s ability to borrow money in the future and can result in garnishments of wages and tax refunds.
- Student loan deferments postpone or reduce payments and interest for a limited period of time and require the student to meet specific requirements.
- Student loan forbearance options postpone only payments. Interest will still accrue during forbearance. A discretionary forbearance is decided by the lender. A mandatory forbearance requires students to meet specific eligibility requirements.
- Students should contact the loan servicer if they are having trouble making payments. In some cases, the repayment plan can be changed to allow for lower payments over a longer period of time.
- Under VERY LIMITED circumstances, students may qualify to have their student loans forgiven, canceled or discharged.