Repaying Your Student Loans
You Have Several Loan Repayment Options
Repaying your federal student loan debt is an important financial obligation. Our financial support resources help to inform our current and former students about debt management options, to help them throughout their repayment process.
When you borrow federal student loans to pay for your college tuition, you have an obligation to repay those loans. You may have multiple federal student loans serviced by multiple loan servicers. To locate all your federal student loan amounts and loan servicers, visit the National Student Loan Database System (NSLDS) or call the Federal Student Aid Information Center at 800-433-3243.
- Repayment Options
- Other Options
- Loan Servicers
In order to choose the repayment plan that is right for you, it’s best to first understand your repayment options. Listed below are some of the most common repayment plans. Contact a loan advisor at 855-986-2255 to develop a repayment plan that best fits your individual needs.
Payment in Full
If you can afford to pay off your student loan balance in full, you are encouraged to do so as soon as possible. This can save you interest and other fees.
If you have not chosen a repayment plan, your lender will automatically place your account into the standard repayment plan. This is the best choice and the least expensive repayment option in terms of the total interest cost to you. Under the standard repayment plan, you pay a fixed monthly payment over a period of up to 10 years. The Department of Education has a student loan repayment calculator that can help you estimate your monthly standard federal student loan payments.
If you are unable to meet the obligations under the standard repayment plan, a graduated repayment plan may be right for you. This plan gives you up to 10 years to repay your federal student loans. For the first two years, your payments are low, but large enough to cover the cost of the accruing interest; after the first two years, your monthly payments increase about every two years, with payments always large enough to cover the cost of the accruing loan interest. Interest costs are higher under this repayment plan compared to the standard repayment plan, but it may be the right option if you have limited income and expect to have an increased income in the future. The Department of Education’s graduated repayment calculator can help you determine your monthly graduated loan payment.
Income-based Repayment (IBR)
The Income-Based Repayment plan (IBR) may be one of the most affordable loan repayment plans, but not everyone qualifies for it. If your loan payments are more than 15% of your “discretionary” income, you may qualify for this repayment option. Under an IBR, your monthly payments may be less than the accruing interest, and you may qualify to pay back your loans over a period of up to 25 years. If you owe a balance after 25 years, the remaining balance of your outstanding federal student loans will be forgiven. The Department of Education’s IBR calculator can help you determine your eligibility and estimate your monthly IBR student loan payment.
Pay As You Earn (PAYE)
The Pay As You Earn (PAYE) Repayment Plan helps keep your monthly student loan payments affordable by basing it off of your income. To qualify for PAYE, your federal student loan debt must be high in relation to your income. If you qualify for PAYE, your monthly payment will be less than the amount you would be required to pay under a 10-year Standard Repayment Plan. If you owe a balance after 20 years of payments, the remaining balance of your outstanding federal student loan(s) may be forgiven. This program is available only to Direct Loan borrowers.
Public Service Loan Forgiveness (PSLF)
You may qualify for public service loan forgiveness (PSLF) if you are employed with the government or a nonprofit 501(c)(3) organization. To qualify for PSLF, you must make qualifying payments for a total of 10 years (120 monthly payments). After those 10 years of eligible employment and qualifying payments, any remaining debt will be forgiven. If you qualify for PSLF, we recommend you complete the Employment Certification Form annually and submit it to your loan servicer.
Avoid Entering Default
You Have Affordable Options
If you are struggling to pay off your student loans, there may be help for you. Federal Student Aid offers the Income-Based Repayment Plan (IBR). If you qualify, IBR can help you reduce your student loan payments through:
- Affordable monthly payments based on your income and family size
- Pay as you earn opportunities on qualifying federal student loans
- Balance forgiveness after 25 years
To see if you qualify, use the convenient IBR estimation calculator or contact the student loan management team at 855-986-2255.
- Consequences of Default
Your servicer can notify your employer to withhold a portion of your pay, which will be applied to your unpaid balance. This also applies to Social Security Benefits.
Income Tax Refund Seized
Your Federal income tax refunds and other Federal payments may be seized to satisfy the outstanding balance that you owe.
Loss of Federal Financial Aid
If you wish to return to school, you will not be eligible for any additional Federal student aid until you make arrangements to repay your defaulted loan.
Debt Doesn’t Go Away
Your unpaid loan will stay with you until you pay it back. Collection efforts continue until you resolve your defaulted account.
Keep You From Getting Licensed
If you’re looking to get a professional license from your state, your servicer may be able to keep that from happening until you start paying your loans back.
Credit Rating Suffers
Defaulted loans are reported to credit bureaus, causing you, the borrower, to sustain long-term damage to your credit rating. This will likely make it difficult for you to obtain other types of consumer credit, such as a home mortgage or a car loan.
Outstanding interest is capitalized and collection fees may be added, resulting in a loan balance that is higher than the amount borrowed.
Your servicer or the Federal government may file a lawsuit seeking a civil judgment against you for the amount you owe.
Although loan consolidation may result in lower monthly payments, and possibly a lower fixed interest rate, you are likely to pay more total interest when you consolidate your student loans because you extend your repayment period by making smaller monthly payments over a longer period of time. The loan consolidation does allow you to bundle multiple federal student loans into one new loan with the benefit of a convenient single monthly loan payment. Loan consolidation is not the best choice for every borrower. Speak with a loan advisor or your federal loan servicer for additional information. The Department of Education has a loan consolidation calculator that can help estimate your monthly loan consolidation payment.
If you have outstanding student loans and choose to return to school and are actively enrolled at an eligible institution at least half-time, you may qualify for an in-school deferment. In-school deferment will postpone your federal student loan payments while you are attending school. If you return to school, be sure to notify your federal student loan servicers or your student loan advisor at 855-986-2255 to ensure your loans are moved to in-school deferment status.
You do have the option of continuing to pay your monthly student loan while they are in deferment and you are attending school, and we encourage you to do so. Paying your monthly federal student loan payments while you are in school will reduce your outstanding loan debt after you graduate.
If you are called to active duty in the U.S. Armed Forces, you may qualify for a deferment. To determine if you qualify for a military deferment, please contact your student loan advisor or your federal student loan servicer.
Federal Student Loan Servicers
Wells Fargo (loans now serviced by ACS)
Xpress Loan Servicing (loans now serviced by AES)
NOTE: Rasmussen College does not endorse any financial institution; the institutions listed herein are resources only and any lending through these financial institutions will be completed by the student at the student’s sole discretion.
Choosing a Student Loan Repayment Plan
Rasmussen College Student Economics Business Analyst, Angel Patel, compares standard, graduated, and income-based repayment options.
Subsidized Vs. Unsubsidized Student Loans
Rasmussen College Director of Student Economics, Adam Steinbrunner, highlights the differences between subsidized and subsidized loans.
What is Student Loan Deferment?
Rasmussen College Student Economics Business Analyst, Angel Patel, explains deferment and provides an example.
Federal Loan Resources
Studentloans.gov: Helpful tools regarding your federal student loans
Loan repayment plan calculator: Estimate your loan payments under different payment plans
Student Aid on the Web: The Department of Education provides answers to commonly asked questions about student loan repayment.
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