Helping Borrowers With Trusted Resources
SDCC is focused on how the student debt crisis impacts individual borrowers. We provide tools, repayment information, clinics, and other resources to help. For help with your federal student loans, visit any of the links here or browse the frequently asked questions below.
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Income-Driven Repayment (IDR) Plans: https://studentaid.gov/manage-loans/repayment/plans/income-driven
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Latest Updates on the SAVE Plan: https://studentaid.gov/announcements-events/save-plan
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What is Default and Delinquency? https://studentaid.gov/manage-loans/default
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Getting out of Default & Delinquency (if you’re behind on your payments): https://studentaid.gov/manage-loans/default/get-out
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Public Service Loan Forgiveness (PSLF): https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service
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Total & Permanent Disability Discharge: https://studentaid.gov/manage-loans/forgiveness-cancellation/disability-discharge
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Student Loan Consolidation: https://studentaid.gov/manage-loans/consolidation
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Student Loan Servicer Information: https://studentaid.gov/manage-loans/repayment/servicers
Consolidation is the process of converting a loan type or combining one or more loans into a new loan. While consolidation can have certain tradeoffs, a benefit may be that it turns multiple monthly student loan payments into one loan with a regular, fixed interest rate. Federal student loan consolidation is provided for free by your loan servicer. You can apply to consolidate your loans here.
**Consolidating your student loans could result in a loss of IDR and PSLF credits.
You are eligible to consolidate after you graduate, leave school, or drop below half-time enrollment. The loan(s) you consolidate must be in repayment or a grace period.
Most folks choose to consolidate multiple loans, however, can you consolidate a single loan (as long as it’s not a single Direct Consolidation Loan). Under certain circumstances, you may reconsolidate an existing FFEL Consolidation Loan without including any additional loans.
Deferment is a temporary postponement of your loan payments. Deferments are available for specific circumstances such as economic hardship, military service, and unemployment. Deferments are available to anyone with Direct Loans, FFEL loans, and Perkins Loans, and are not automatic with the exception of in-school deferments. To learn more or apply for a deferment, click here.
Depending on your loan type, the loan may or may not accrue interest during your deferment. Unpaid interest that accrues during the deferment period may be added to the principal balance of your loan. During deferment, you are not required to make a payment, however, you are not making progress toward loan forgiveness or loan payoff.
Cancer treatment, economic hardship, graduate fellowship, in-school, military and post-active duty, parent plus borrower, rehabilitation training, and unemployment deferment. Click here to learn more about the different types of deferment and to apply.
A grace period is a set period of time after you graduate, leave school, or drop below half-time enrollment before you must begin repayment on your loan.
The length of a grace period is typically six months, but it can vary depending on your loan type. The promissory note you signed for your loan tells you the length of your grace period or you can ask your servicer.
Direct Subsidized and Direct Unsubsidized Loans have a six-month grace period.
Graduate/professional students automatically receive a six-month deferment after graduating, leaving school, or dropping below half-time enrollment.
Parent PLUS loans do not have a grace period.
Parents who took loans to pay for their child’s education can request a six month deferment after a child graduates, leaves school, or drops below half-time enrollment.
Perkins Loans: For more information on the grace period for Federal Perkins Loans, contact the school where you received your loan.
If called to active military duty more than 30 days before your grace period ends, you will receive the full six-month grace period after returning from active duty service.
If you re-enroll in school before the grace period ends, you will receive a full six-month grace period when you stop attending school or drop below half-time enrollment.
If loan consolidation occurs during a grace period, you forfeit the remainder of the grace period. Payments would start after a Direct Consolidation Loan is processed.
If you’re having trouble with payments you may be interested in a loan deferment or forbearance: Both loan deferments and forbearances allow you to temporarily stop making payments, however deferments are more short-term pauses for specific scenarios while forbearances are more general and can pause payments for up to 12 months.
Because interest can accrue and capitalize while in deferment or forbearance, you may want to consider other repayment plans first, like an income-driven repayment plan. Talk to your loan servicer to discuss the best option for you.
If you’re in school at least half-time and should’ve got an in-school loan deferment: Contact your school’s registrar and get a record of all your dates of attendance; Contact each school you’ve attended since you got your loan, for complete documentation; Then ask your loan servicer for the last date of attendance they have on file for you, and if they have an incorrect date give them a copy of your complete attendance documentation.
If you were approved for deferment: Ask your loan servicer to confirm the start and end dates of your deferments on your loan account, and if the servicer has incorrect information, provide them documentation with correct information.
Your loan becomes delinquent the first day after you miss a student loan payment, which means that it is past due. Your loan will continue to be delinquent until your past due amount is paid, or if you make other payment arrangements like deferment, forbearance, or changing your repayment plan.
If you are delinquent for over 90 days, your loan servicer will report the delinquency to credit reporting agencies. Continued delinquency risks your loan going into default. Loan delinquency can detrimentally affect your credit score which may make it harder to get a credit card, home, or car loan, and can increase your interest rates on any loans you receive. It is important to contact your loan servicer if you are having trouble making payments.
Default is a status that a loan is placed in if the borrower has failed to make a payment when due for the number of days allowed by the applicable regulations, or if the borrower violates other terms and conditions of the promissory note. Continued delinquency may result in your loan going into default.
The point at which a loan is considered to be in default varies depending on the type of loan you received:
Direct Loans- After 270 days
FFEL loans- After 270 days
Perkins loans- Your loan holder can declare your loan to be in default if you don’t make your scheduled payments by the due date.
Defaulting on your loans can impact your finances and your ability to receive federal aid, including student loans. Consequences include the following:
Your entire unpaid loan balance and interest becomes immediately due
Losing access to deferment, forbearance, and repayment plans
You become ineligible for additional federal student aid
Damage to your credit score, making any type of loan hard to get
Any tax refunds, federal benefits, social security, and wages may be garnished.
Some schools can withhold your official transcript, but upon your request, schools must give you an unofficial transcript. If your school is not giving you an unofficial transcript, report it to the Consumer Financial Protection Bureau (CFPB).
This section applies to defaulted student loans that are held by the U.S. Department of Education (ED); typically Direct, FFEL, and Federal Perkins loans.
If your loan goes into default, the entire loan becomes immediately due, and the loan holder can garnish your wages, federal payments, and tax returns. Note that private collection agencies will no longer service ED-held defaulted loans. To get out of default, you can reach out to the Department of Ed’s Default Resolution Group for free at (800)-621-3115.
To collect payment on a defaulted loan, your loan holder can withhold up to 15% of your paycheck (after taxes). Wage garnishment will continue until your defaulted loan is fully paid or you get out of default.
In garnishment, you have the right to:
a notice that explains ED’s intention to garnish your wages in 30 days,
the nature and amount of your debt,
a chance to inspect/copy your debt records,
a right to object to garnishment,
and to avoid garnishment by voluntary repayments.
You can also enter into a written agreement with ED to get out of default. Your employer can’t fire you, refuse employment, or punish you because of your garnishment. Additionally, you have the right to legal action against your employer if workplace retaliation occurs.
You can have be given a hearing to present any objection you have to the existence, amount, or enforceability of your debt; any objection that wage garnishment would produce extreme financial hardship; or any objection stating that garnishment cannot be used because you’ve been employed for less than 12 months after previous unemployment. And you can have garnishment withheld by filing a timely hearing request, until the hearing is completed and a decision issued. If you decide to request a hearing for your garnishment specifically you should make a request in writing no later than 30 days from the garnishment notice. If you’re successful in disputing garnishment, your wages will not be garnished for one year. Contact ED’s Default Resolution Group or your loan servicer to get out of default.
When in default, ED can withhold money from your government income tax refunds, Social Security payments, disability benefits, and other federal payments. These will be applied toward your defaulted student loan repayment. You will be mailed a notice, and withholding will begin 65 days after notification. This will continue either until your debt is repaid or you get out of default. You have the right to request an account review to prevent withholdings. If the Social Security Administration determines you are “totally disabled” then your benefits won’t be taken. But retirement benefits can be withheld to pay your loan. For help on getting out of default and preventing withholdings, contact your loan holder or reach out to ED’s Default Resolution Group.
Another option for getting your loan out of default is loan rehabilitation.
To rehabilitate a defaulted Direct Loan or FFEL Loan, you must:
1) agree in writing to make nine voluntary, reasonable, and affordable monthly payments (as determined by your loan holder, although the nine payments are equal to 15 percent of your annual discretionary income, divided by 12) within 20 days of the due date, and
2) make all nine payments during a period of 10 consecutive months.
To start the loan rehabilitation process, you must contact your loan holder. If you’re not sure who your loan holder is, you can log in to studentaid.gov to view your loan servicer details or you can contact the Default Resolution Group for further assistance:
Phone: 1-800-621-3115
Online: https://myeddebt.ed.gov/
What you need to do to rehabilitate your loan(s) depends on your loan type and who holds your loan. Direct Loans and FFEL Loans have different requirements than Federal Perkins loans.
You can learn more about the benefits of loan rehabilitation here: https://studentaid.gov/manage-loans/default/get-out#loan-rehab
Yes! Another option to get your loan(s) out of default is to consolidate your defaulted federal student loan(s) into a Direct Consolidation Loan.
Consolidation allows you to pay off your federal student loan(s) by creating a new loan. To consolidate your defaulted loan(s), you must either:
Enter an income-driven repayment plan for your new Direct Consolidation Loan,
or make three consecutive, voluntary, on-time, full monthly payments on the defaulted loan before consolidation.
(If you choose to make three payments on the defaulted loan before consolidation, the payment amount will be determined by your loan holder.)
Consolidating a FFEL or a Direct Consolidation Loan
FFEL Consolidation Loan - You can consolidate a single defaulted FFEL Consolidation Loan, but only if you agree to repay the new Direct Consolidation Loan under an income-driven repayment plan.
Direct Consolidation Loan - To reconsolidate your defaulted Direct Consolidation Loan, you must include at least one other loan in the consolidation. If you don’t have any other loans to consolidate, you can’t get out of default through loan consolidation.
You can learn more about the benefits of consolidating to get out of default here: https://studentaid.gov/manage-loans/default/get-out#loan-consolidation
The Federal Family Education Loan (FFEL) Program was a program that worked with private lenders to provide education loans guaranteed by the federal government. The FFEL Program ended in 2010. All new student loans are now made through the William D. Ford Federal Direct Loan Program.
This former loan program included Subsidized Federal Stafford Loans, Unsubsidized Federal Stafford Loans, FFEL PLUS Loans, and FFEL Consolidated Loans.
There are two main owners of FFEL loans: the U.S. Department of Education and private companies. FFEL Loans owned by private companies are considered commercially held and do not receive all of the benefits that loans held by the Department of Education do. Commercially held FFEL Loans were not included in the federal student loan payment pause.
Forbearance is a period during which a borrower may temporarily stop making loan payments, temporarily make smaller payments, or extend the time for making payments. A borrower who does not meet the eligibility requirements for a deferment may, at the discretion of the loan holder, receive a forbearance if the borrower is temporarily unable to make loan payments for reasons including, but not limited to, financial hardship or illness. Borrowers are also entitled to receive forbearance if they meet certain regulatory eligibility criteria. Interest will continue to accrue during this time.
There are two main types of forbearance: general and mandatory.
General forbearance:
With this type of forbearance, your loan servicer decides whether to grant a request for “general forbearance.” You can request forbearance if you can’t make your monthly loan payments for the following reasons:
Financial difficulties,
Medical expenses,
Change in employment,
Other reasons accepted by your loan servicer.
General forbearances are available for Direct Loans, FFEL loans, and Perkins Loans. However, this type of forbearance has a maximum cap of 12 months at a time. But at the time of expiration, you can request another general forbearance. Cumulatively for a loan, you may be granted 3 years of general forbearances in total; but remember that a loan’s interest will continue to grow. Click theGeneral Forbearance Request for more information.
Mandatory forbearance:
If you meet mandatory forbearance eligibility requirements, your loan servicer is required to grant you a forbearance. Mandatory forbearances can be given for up to 12 months at a time. If you have Direct or FFEL loans and meet any of these requirements, you may be eligible:
Currently serving in AmeriCorps and have received a national service award;
if in Department of Defense Student Loan Repayment Program you qualify for partial loan repayment;
if serving in a Medical or Dental Internship/Residency;
if you are a National Guard member and have been activated;
if your Student Loan Debt Burden is more than 20% of your total monthly gross income, for up to three years (This is open to Direct, FFEL, and Perkins loans); and
if you perform teaching service which qualifies for Teacher Loan Forgiveness.
A loan servicer is a company that the federal government assigns to manage billing and other services on federal student loans, at no cost to you. Loan servicers work with borrowers on repayment options and assist with other tasks related to federal student loans. The federal government assigns borrowers to a specific loan servicer. Servicers contact borrowers after being assigned to a specific loan.
Sometimes your federal student loan servicer might change. While the federal government still owns the loan, the new servicer will take over the responsibilities of managing student loan billing and the other services of your previous servicer. If your loan is transferred, you can expect an email or letter from your new servicer to inform you of a transfer and to share their contact information. All of your loan information will be transferred to the new servicer, and any payments made during the transition will still be credited to your student loans. Please note that there will be no change in the terms of your loans.
A change in your loan servicer should be shown in your StudentAid.gov account within 7-10 business days after your transferred loans have been loaded into the new servicer’s system.
After receiving a welcome letter from the new servicer, you should begin making loan payments to them. You will need to create an account on their website and add your banking information to make online payments. If you were previously enrolled in Autopay, you will need to re-enroll. It is important to know that loan servicers do not charge for their services.
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