Repaying your loans 

Be careful and think ahead. These are the maximum limits for all borrowers and aren’t related to your own personal earning potential. The maximum amount you’re eligible to borrow may be more than you’re able to repay. If you can’t repay your education loans, you could seriously damage your credit rating. That could make it hard to get other types of consumer loans.

On Federal Direct Unsubsidized Loans and Federal Direct PLUS Loans, the government starts charging interest as soon as we receive the loan funds. You can pay the interest while in school or capitalize it (have it added to the principal) and begin repaying it after you graduate.

Paying the interest while in school will help you reduce your payments later. When interest is capitalized, the loan principal increases—which means that each time interest is figured, it’s figured on a larger amount. 

When you’re about to graduate, or if you drop below half-time enrollment, you’ll be asked to complete loan exit counseling for your Federal Direct Loans. Exit counseling will give you the information you need to know about repaying your federal student loans. The exit counseling process for Federal Direct Loans is different from other student loans such as a Health Professions Loan or a Federal Nursing Loan.

No matter what kind of loan you have, we’ll send you an email to let you know how to get started with your exit counseling. 

If you’re having difficulty making your current federal student loan payments, you have other repayment plan alternatives. Contact your loan servicer for details.

If you have more than one federal student loan, you may be able to consolidate them into a single loan with one monthly payment. This payment can be quite a bit lower than your total monthly payments on multiple loans.

Pros and cons of consolidation you should consider: 

Pros of consolidating

• Likelihood of lower monthly payments and flexible repayment options.
• Fixed interest rate for the life of the loan.
• Single monthly payment for multiple loans.

Cons of consolidating

• You may lose some discharge (cancellation) benefits if you include a Federal Perkins Loan in a consolidation loan.
• If you extend your repayment period, you may pay more interest over time.
• You may have an earlier repayment start date if you consolidate during the loan’s grace period.
• Once a consolidation has been completed, you can’t reverse it—the original loans no longer exist, because they’re paid off by the consolidation.

If you don’t pay back a loan according to the terms of the Master Promissory Note (MPN) you signed, you may default on the loan. Default occurs if you don’t pay on time or if you don’t comply with other terms of your MPN.

What happens if you default?

If you default on a federal loan, the government may take some serious actions against you. You may:

• Lose wages and tax refunds, which will be applied toward your unpaid loans
• Lose eligibility for future student aid
• Be unable to get a home, car, or other loan
• Lose job opportunities or be unable to get a professional license
• Damage your credit rating when your loan is reported to the national credit bureaus