Generally, you’ll have from 10 to 25 years to repay your loan, depending on which repayment plan (there are several) you choose. The Direct Loan Servicing Center will notify you of the date your first payment is due. If you do not choose a repayment plan, the Department will place you on the Standard Repayment Plan, with fixed monthly payments for up to 10 years. Most Direct Loan borrowers choose to stay with the Standard Repayment Plan, but there are other options for borrowers who may need more time to repay or who need to make lower payments at the beginning of the repayment period. You can change repayment plans at any time by going to the Direct Loan Servicing Center’s website and logging in to your account.
Automated payments (electronic debit)
When the Department sends your first bill, they will tell you how to you can sign up for their electronic debit account (EDA) option and have your bank automatically make your monthly loan payments for you from your checking or savings account. You won’t have to write checks, use stamps, or worry if your payment will get to them by the due date. In addition, Direct Loans offers a 0.25% reduction in the interest rate on your loans during any period when your payments are made through EDA.
Trouble making payments
If you’re having trouble making payments on your loans, contact the Direct Loan Servicing Center as soon as possible. The Direct Loan Servicing Center staff will work with you to determine the best option for you. Options include: Changing repayment plans. Deferment, if you meet certain requirements. A deferment allows you to temporarily stop making payments on your loan. Forbearance, if you don’t meet the eligibility requirements for a deferment but are temporarily unable to make your loan payments. A forbearance allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments. If you stop making payments and don’t get a deferment or forbearance, your loan could go into default, which has serious consequences. Your loan first becomes “delinquent” if your monthly payment is not received by the due date. If you fail to make a payment, the Department will send you a reminder that your payment is late. If your account remains delinquent, they will send you warning notices reminding you of your obligation to repay your loans and the consequences of default. If you are delinquent on your loan payments, contact the Direct Loan Servicing Center immediately to find out how to bring your account current. Late fees may be added, and your delinquency will be reported to one or more national consumer reporting agencies (credit bureaus), but this is much better than remaining delinquent on your payments and going into default.
Consequences of default
If you default:
• The Department will require you to immediately repay the entire unpaid amount of your loan.
• The Department may sue you, take all or part of your federal and state tax refunds and other federal or state payments, and/or garnish your wages so that your employer is required to send them part of your salary to pay off your loan.
• The Department will require you to pay reasonable collection fees and costs, plus court costs and attorney fees.
• You may be denied a professional license.
• You will lose eligibility for other federal student aid and assistance under most federal benefit programs.
• You will lose eligibility for loan deferments.
• The Department will report your default to national consumer reporting agencies (credit bureaus).
For more information and to learn what actions to take if you default on your loans, see the website for the Department’s Default Resolution Group.
Loan cancellation (forgiveness or discharge)
Under certain conditions, you can have all or part of your loan cancelled or discharged. Read more about loan cancellation.
Stay in touch with the Direct Loan Servicing Center—let them know if you’ve changed your name or permanent address, and make sure that they know when you’ve completed your educational program or transferred to another school.