Repaying student loans

Repayment FAQ

Support for managing your federal student loans

Earning your degree is a personally fulfilling endeavor. But after all that hard work and those long nights, followed by the jubilation of graduation, you know what’s next: It’s time to pay back your federal financial aid student loans.

Of course, making payments while you’re in school can save you money in the long run, and will help you minimize your student loan debt. You can always contact your loan servicer for more information about how to make payments before they come due. Payments can usually be made online, over the phone or by mail.

Frequently asked questions

Make sure to bookmark this page for future reference — even after you’ve completed your degree program.

More help — when loan repayment becomes a challenge

If you’re having difficulty making your payments, contact your loan servicer as soon as possible. It’s important you do so before your loan(s) become delinquent — to protect your credit.

Several options are available for borrowers struggling to make payments, and your loan servicer can help you better understand how to select or change your payment plan — to reduce the monthly payment amount — or establish deferment or forbearance.

Here’s more insight:

When you first enter repayment, your loan servicer will ask you to select a repayment plan. If you don’t select one, you’ll be placed on the Standard Repayment Plan. If, for any reason, you want to change your payment amount, you can do so by changing your plan. Use the loan calculators on FinAid or your servicer’s website to see how your monthly payment and total cost will change on different payment plans.

Each of the available repayment plans is briefly explained here. You can also visit the Federal Student Aid site to learn more.


What are my rights?

With the Standard Repayment Plan, you’ll pay a fixed amount each month until your loans are paid in full. Your monthly payment will be at least $50 — possibly higher, depending on the amount of the loan — and you’ll be on track to repay your loans within 10 years.

Your monthly payment on the standard plan may be higher than it would be on other plans because your payment starts higher to remain consistent throughout the term.. For that reason, with a 10-year limit on repayment, you may pay less interest with this option.

Graduated plans can vary, but the idea is to start with a lower payment while income is lower and then increase every two years or so as income goes up.

The length of your repayment period will be up to 10 years. If you expect your income to increase steadily over time, this plan may be right for you. Your monthly payment will never be less than the amount of interest that accrues between payments. Your monthly payment will increase in time, but no single payment on this plan will be more than three times greater than the amount of your beginning payment.

The extended repayment period can go up to 25 years, and payments are either fixed or graduated. Keep in mind: The longer you take to repay, the more you’ll repay in total.

To qualify for this plan, you must have a minimum of $30,000 in Federal Family Education Loan (FFEL) Program and/or Direct Loans. If you’re a FFEL borrower, you must have more than $30,000 in outstanding FFELP loans. If you’re a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans.

This means, for example, that if you have $35,000 in outstanding FFELP loans and $10,000 in outstanding Direct Loans, you can choose the extended repayment plan for your FFELP loans but not for your Direct Loans. Your fixed monthly payment is lower than it would be on the standard plan, but you’ll ultimately pay more for your loan because of the additional interest that accumulates during the longer repayment period.

You may enter the Income-Based Repayment (IBR) Plan if your federal student loan debt is high relative to your income and family size. The loan servicer will perform the calculation to determine your eligibility, but you can use the U.S. Department of Education’s IBR calculator to estimate whether you would likely qualify for the IBR plan.

The calculator takes into account income, family size and state of residence to calculate the IBR monthly payment. The payment is capped at 15 percent of annual discretionary income. If a borrower is married and files a joint federal tax return, and the spouse also has IBR-eligible loans, the spouse’s eligible loan debt is considered when determining IBR eligibility.

This program is available to FFELP and Direct Loan borrowers. Under this plan, if your monthly payment does not cover the amount of accrued interest, the government will pay the remaining interest accrued — for the first three years of repayment.

To remain in the IBR program, you must submit income documentation each year. At the end of 25 years, any remaining balance is forgiven. There may be tax consequences when the debt is forgiven.

The Income-Contingent Repayment Plan is available only for Direct Loans. Each year, your monthly payment is calculated based on your adjusted gross income, family size and Direct Loan debt.

On this plan, your monthly payment is the lesser of:

  1. The amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income; or

  2. 20 percent of your monthly discretionary income

If the monthly payment does not cover all accrued interest, the unpaid interest amount is capitalized — added to the principal balance — once per year. The capitalization will not exceed 10 percent of the original amount owed when the loan entered repayment.

Repayment can extend to 25 years, after which any remaining balance is discharged. Any discharged amount may have tax implications.

The Pay As You Earn Repayment Plan is only available for Direct Loans. However, FFELP loans are taken into consideration when determining the borrower’s eligibility for this plan.

Each year, the monthly payment is calculated based on adjusted gross income, family size and total federal student loan debt. Married borrowers who file a joint tax return will have the spouse’s income and federal loan debt taken into consideration when determining eligibility for this program. Qualifying for this plan will generally result in a lower monthly payment than other income-driven repayment plans.

On this plan, your monthly payment is the lesser of:

  1. What you would repay under the Standard Repayment Plan; or

  2. 10 percent of your discretionary income

If your monthly payment does not cover the amount of accrued interest, the government will pay the remaining interest accrued — for the first three years of repayment. To help you determine your repayment amount, use this Pay As You Earn calculator.

To qualify for this plan, you must not have an outstanding balance on a Direct Loan or FFELP loan as of October 1, 2007, and must have borrowed a new Direct Loan on or after October 1, 2011. It is possible to consolidate FFELP student loans with Direct Loans to make them eligible for this plan.

Repayment can extend up to 20 years, and any remaining balance — after 20 years of on-time payments — is discharged. Any discharged amount may have tax implications.

Deferment is a temporary suspension of student loan payments for a specific situation, such as unemployment or enrolling in school at least half time. If you have a subsidized student loan, interest will not accrue during a deferment. If you have an unsubsidized loan, interest will accrue during a deferment.


What are my rights?

If you satisfy the requirements for deferment — unemployment, hardship or enrollment in school at least half time — you may be required to complete a deferment form and return it to your loan servicer.

Deferment forms can be downloaded from the loan servicer’s website. Complete and return your deferment forms to each of your loan servicers. Here are links to the most common deferment forms:

In some cases, your loans will automatically go into deferment if you return to school at least half time.

Speak with your loan servicer about this option, keeping in mind that you’ll be responsible to pay any interest that accrues during a deferment. You may pay those interest charges before the loan is capitalized (added to the principal balance). 

Learn more about deferment options by visiting the Federal Student Aid site.

Forbearance is a temporary postponement of payments or a reduction in the payment amount for a period of time when the borrower is experiencing financial difficulty. Forbearance is not subsidized by the government, which means you’re responsible for the payment of any interest that accrues. This status is generally for individuals who have exhausted other options for resolving a delinquent loan.


What are my rights?

In many cases, forbearance can be established immediately over the phone with your loan servicer. Just make sure you understand the possible financial ramifications of entering forbearance (explained in the next FAQ).

Forbearance might be a desirable, short-term option, but be sure you understand the potential costs beforehand.

Anytime you stop making scheduled payments, you increase the overall cost of loan repayment due to accrual of additional interest. You are responsible for repaying any interest that accrues during forbearance. Any unpaid interest is added to the principal balance — called capitalization — which will increase the loan principal and could result in an increase in future interest charges. This could lead to a higher loan balance for the remaining life of the loan.

To avoid capitalization of the accrued interest during forbearance, consider paying any interest that accrues before it capitalizes.

A borrower should never have to default on a federal student loan. Remember to contact your loan servicer as soon as possible to discuss your options.


What are my rights?

A loan is in default when you fail to pay several regular installments on time or otherwise fail to meet the terms and conditions of the loan repayment agreement. Your federal student loan is considered in default when it reaches 270 days of delinquency.

Defaulting on a federal student loan has serious consequences:

  • Collection costs of up to 25 percent can be added to the balance.
  • The holder of the loan can take legal action to recover the money.
  • Your wages can be garnished administratively without a court order.
  • Income tax refunds can be seized.
  • Default is reported to the national credit reporting agencies.
  • Loss of eligibility for future federal financial aid, unless a satisfactory repayment schedule is arranged.
  • Loss of eligibility for some federal and/or state jobs in certain fields (ex., criminal justice).
  • Generally, your student loan is not dischargeable in bankruptcy.

One consequence of default is losing eligibility for federal financial aid. To regain eligibility, contact your loan servicer or guarantor to do one of the following:

  • Pay the loan in full.
  • Make six consecutive, on-time monthly payments.
    • You must continue monthly payments to retain eligibility.
  • Make three consecutive, on-time monthly payments and then pay the default in full through consolidation.
  • Make nine consecutive, on-time monthly payments and qualify to rehabilitate the loan.
    • Rehabilitation is a good option because the loan is no longer in default and is reported as such to the national credit reporting agencies.

A 30-day late payment typically drops a FICO® score by about 90 points. A defaulted loan will generally drop a FICO score about 150–200 points. If you have average credit, 90 points can damage your credit score. Remember, you can avoid the negative score impact by working with your loan servicers before a payment is late.

The following is an example of delinquency and default impact on a $150,000, 30-year mortgage. You’ll see that not paying back your student loans can have a big impact on your FICO score, in turn affecting the interest rate and monthly payment on a home loan. If you’re having trouble repaying student loans, think about this chart and remember there are many alternatives to delinquency.


Average Point Drop

Estimated FICO Score

Interest Rate

Monthly Payment
















FAFSA is a registered trademark of the U.S. Department of Education, Federal Student Aid.
FICO is a registered trademark of Fair Isaac Corp.


Repayment Counseling Center

If you have questions regarding your student loans or need assistance contacting your loan servicer, contact the University’s Repayment Counseling Center.

Our mission is to facilitate long-term solutions by providing student-focused, individualized counseling that results in successful student loan repayment. As student advocates, we strive to provide unparalleled customer service by offering accurate and positive information to ensure your overall financial success.

Our repayment partners

We partner with two repayment servicers who will communicate with you through mail, email or telephone to keep you informed of your options when it’s time to repay your loans. Our repayment partners are: ECMC Solutions and i3.

Repayment partners

Options to postpone repayment

If you’re struggling to make payments, call your loan servicer today and ask for help. You may qualify for deferment or forbearance: The most frequently requested deferments are unemployment and economic hardship. If you qualify, complete one of the forms below and return it to your loan servicer.

Connect with us

Stay knowledgeable — and keep your finances in good standing — with help from Financial Services Community managers Casey Gorman and Chris Conway. Current students and graduates can get up-to-date support and information about repaying student loans on PhoenixConnect®. (You must be logged into eCampus for access.)