HAVING DIFFICULTY REPAYING?

If you have trouble making your education loan payments, contact immediately the organization that services your loan. You might qualify for a deferment, forbearance, or other form of payment relief. It's important to take action before you are charged late fees. For Federal Perkins Loans, contact your loan servicer or the school that made you the loan. For FFEL Loans, contact the lender or agency that holds your loan. For Direct Loans, contact the Direct Loan Servicing Center at www.dl.ed.gov or by calling 1-800-848-0979 or 1-315-738-6634. TTY users should call 1-800-848-0983.

• Deferment: You can receive a deferment for certain defined periods. A deferment is a temporary suspension of loan payments for specific situations such as reenrollment in school, unemployment, or economic hardship. For a list of deferments, click here. You don’t have to pay interest on the loan during deferment if you have a subsidized FFEL or Direct Stafford Loan or a Federal Perkins Loan. If you have an unsubsidized FFEL or Direct Stafford Loan, you’re responsible for the interest during deferment. If you don’t pay the interest as it accrues (accumulates), it will be capitalized (added to the loan principal), and the amount you have to pay in the future will be higher. You have to apply for a deferment to your loan servicer (the organization that handles your loan), and you must continue to make payments until you’ve been notified your deferment has been granted. Otherwise, you could become delinquent or go into default.

• Military deferment: Effective July 1, 2006, for all three loan programs (FFEL, Direct Loans, Perkins Loans), a new military deferment has been created, effective for loans for which the first disbursement is made on or after July 1, 2001. On or after July 1, 2006, a qualified borrower may receive a deferment for a period in which he or she meets the qualifications after July 1, 2001. The deferment shall not exceed a total of three years, and applies only to periods during which borrowers are serving on active duty during a war or other military operation, or national emergency, or performing qualifying National Guard duty during a war or other military operation or national emergency.

  Click here for more information about the new military deferment.

• Forbearance: Forbearance is a temporary postponement or reduction of payments for a period of time because you are experiencing financial difficulty. You can receive forbearance if you’re not eligible for a deferment. Unlike deferment, whether your loans are subsidized or unsubsidized, interest accrues, and you’re responsible for repaying it. Your loan holder can grant forbearance in intervals of up to 12 months at a time for up to 3 years. You have to apply to your loan servicer for forbearance, and you must continue to make payments until you've been notified your forbearance has been granted.

  Note to PLUS Loan borrowers: Generally, the same eligibility requirements and procedures for requesting a deferment or forbearance that apply to Stafford Loan borrowers also apply to you. However, since all PLUS Loans are unsubsidized, you'll be charged interest during periods of deferment or forbearance. If you don't pay the interest as it accrues, it will be capitalized (added to the principal balance of the loan), thereby increasing the amount you'll have to repay.

• Other forms of payment relief: Graduated and income-sensitive repayment plans are available. Graduated payment plans provide short-term relief through low interest-only payments followed by a gradual increase in payments (usually every two years). An income-sensitive payment plan offers borrowers payments based on yearly income. As that rises and falls, so do the payments.

These options can help you during difficult financial circumstances and help you keep a good credit rating. For more detail on your options, go to Repaying Your Student Loans. 

If you're having trouble with loan payments, don't wait—contact your loan servicer immediately. If you don't know which organization(s) are servicing your loan(s), you can research your account information at www.nslds.ed.gov.

If you have already contacted your loan servicer(s) and you still are unable to resolve an issue, you might wish to contact the FSA Office of the Ombudsman, which could help you and the loan servicer communicate better. The FSA Ombudsman can be reached online at www.ombudsman.ed.gov or by phone at 1-877-557-2575. Note that the Ombudsman's office will not relieve you of your responsibility to repay your student loan.

Don't go into default! If you default, which means you fail to make your loan payments according to the terms of the promissory note you signed when you got your loan, you will be in serious trouble. For more information on the consequences of default, read the Default discussion in this section.

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