Consumer Information

Solutions for Loan Repayment Problems

Your lender understands that you may experience financial difficulty and offers options that temporarily reduce or suspend your monthly payment.  When experiencing trouble making payments you should contact your lender immediately to check on a possible deferment or forbearance.  Continue making your payments until you receive written notification that deferment or forbearance has been granted.

A deferment is a period of time during which your lender temporarily suspends your regular payments.  If your loans were made on or after July 1, 1993, you may eligible for the following deferments:

  • At least half-time enrollment at an eligible school
  • Graduate fellowship program
  • Rehabilitation training program
  • Military service (for loans made on or after July 1, 2001)
  • Unemployment
  • Economic hardship

Refer to your promissory note for specific deferment provisions.  Additional deferment provisions are available for loans made before July 1, 1993.

The federal government will pay the interest that accrues on your subsidized Stafford loans during deferment periods.  You are responsible for the interest on unsubsidized Stafford loans.  Your lender must determine your eligibility for any of these deferments.  In most cases, to apply for a deferment, complete the appropriate form with all required documentation and return it promptly to your lender.

Forbearance is a period of time during which your lender temporarily reduces or suspends your regular payments.  You may request forbearance if you are willing but unable to make your full payment.  You are responsible for the interest that accrues during the forbearance period,  You may pay the interest as it accrues or allow it to capitalize.  Capitalized interest is applied to the principal balance and may result in a higher monthly payment upon conclusion of the forbearance period.  Contact your lender for more information on applying for forbearance.

If you die, your loan obligation will be cancelled.  Your loan also may be cancelled if you become totally and permanently disabled.  Loan cancellation due to disability requires certification from a physician and is subject to a conditional period of three years.  Your loan may be cancelled in other instances including school closure, false certification, identity theft, or failure of the school to pay a refund if you withdraw.

A loan forgiveness program for teachers serving in designated low-income schools exists for new Stafford loan borrowers after October 1, 1998.  The borrower must teach in a low-income school for five (5) consecutive, complete school years to qualify for forgiveness of up to a maximum of $5,000 in Stafford loan principal and interest.  A similar loan forgiveness program exists for Federal Stafford Loan borrowers who are child care providers.  This is a demonstration program, and Congress appropriates funds for this program on an annual basis.  Contact your lender or guarantor for more information.

A student who participates in the AmeriCorps service program may receive education awards to help pay for college or help pay back student loans.  To learn more about this program, visit the AmeriCorps website or call (800) 942-2677.

If you serve as an enlisted person in certain specialties of the U.S. Army, Army Reserves, the Army National Guard, or the Air National Guard, the U.S. Department of Defense may repay a portion of your federal loans.  This is not loan cancellation.  Contact your recruiting officer for more information.

Generally, federal student loans may not be cancelled or discharged due to bankruptcy.

You may visit the National Council of Higher Education Loan Programs to download the deferment form germane to your circumstances.  In-School Deferment Request must be completed by the student and submitted to the office of Enrollment and Registration Services for enrollment certification.