A Seventh-day Adventist Organization

Repaying Your Student Loans

Planning for the repayment of your student loans takes some thought and an evaluation of your situation and options.   It is important that you be aware of your rights and responsibilities as a student borrower.  Should you decide to apply for and receive a loan, you should understand the seriousness and importance of the repayment obligation you are assuming.  You should carefully assess your financial need before taking out a loan and never borrow more than you need. 

You must repay a student loan even if your financial circumstances become difficult.  Your student loans cannot be canceled just because you didn’t get the education or job you expected.  Failure to repay a loan can have serious consequences.  The good news is that there are many resources available to students having trouble making payments on their federal student loans.  These resources include deferments, forbearance, and a number of repayment options.

Sample Loan Repayment Schedule

Entrance Counseling

The goal of entrance counseling is to help you understand what it means to take out a federal student loan and the seriousness and importance of repaying the loan.  The U.S. Department of Education requires entrance counseling for all students taking a Direct Loan.  If you are awarded a Perkins Loan by the institution, you will be provided with information prior to receiving the loan.

You must complete entrance counseling before the first disbursement of your loan.  Direct Loan entrance counseling may be completed online at http://www.studentloans.gov/.

Exit Counseling

The Federal Government requires all Direct Loan borrowers to complete the Exit Counseling requirement when a student graduates, withdraws from school, or drops below half-time status.  A student must complete exit counseling even if they will be enrolling at another institution or resuming half-time enrollment in a future quarter.

Students may complete exit counseling for the Direct Loan programs at https://www.studentloans.gov/.  If you are unavailable to check out at the Office of Financial Aid, an exit packet will be mailed to you at your last known address.  Students are encouraged to meet with a financial aid advisor if they have any questions regarding loan repayment and the exit counseling they receive.

Please have the following information before you begin your exit counseling:

  • Social security number
  • Address
  • Telephone number for closets living relative
  • Two reference who live in the U.S. and at separate addresses
  • Current or expected employer (if known)

Perkins Loan counseling is provided by Student Loan Collections.  More information on exit counseling for the Perkins Loan and other campus based loans may be found by going to /campus-and-spiritual-life/student-services/financial-aid/student-loan-exit-interview-instructions-0.  Perkins Loan counseling and counseling for other campus based loans are separate from the exit counseling that must be completed for Direct Loans.

Importance of Repaying Loans

It is very important to repay your loans.  Loans are a legal obligation.  If you are having trouble making your monthly payment, you should immediately contact your loan holder or loan servicer.  There are ways to avoid delinquency and default.

Delinquency can result in additional fees.  A loan default has serious consequences which may include the following:

  • Your entire loan balance (principal and interest) will be due in full immediately
  • Your college records may be placed on hold.
  • You’ll lose eligibility for loan deferment.
  • You won’t be eligible for additional federal student aid.
  • Your credit rating is adversely affected due to delinquent and/or defaulted loans as your payment status is reported to national credit bureaus.
  • You may not be able to obtain a professional license or get hired by an employer that performs credit checks.  If you already have a professional license, you may have it suspended, or risk non-renewal of it.
  • You may have a portion of your wages garnished.
  • Your federal and state incomes tax refunds can be withheld to pay the loan debt.

Repayment Options

For Direct Loans, you have a choice of several repayment plans designed to meet your needs and financial situation.  The amount you pay and the length of time to repay your loans will vary depending on the repayment plan you choose.  You may review the payment plans at the following Federal Student Aid website: https://studentaid.ed.gov/repay-loans/understand/plans.

Having Trouble Making Payments?

Under certain circumstances, you can receive a deferment or forbearance that allows you to temporarily postpone or reduce your federal student loan payments. Postponing or reducing your payments may help you avoid default.  You’ll need to work with your loan servicer to apply for deferment or forbearance; and be sure to keep making payments on your loan until the deferment or forbearance is in place.

Deferment is a period during which repayment of the principal and interest of your loan is temporarily delayed.  You do not need to make payments on your loan if it is deferred.  You must meet a condition that qualifies you for deferment.  Situations that may make you eligible for deferments include attending college as at least a half-time student, unemployment, and a period of economic hardship.  Additional situations apply; if you are in repayment contact your loan servicer for more information on requesting a deferment.  After the period of deferment has ended, loan repayment will resume.

Forbearance is a period in which you are able to stop making payments or reduce your monthly payments.  Interest continues to accrue on your loans.  If you can’t make your scheduled loan payments, but don’t qualify for a deferment, your loan servicer may be able to grant you a forbearance.  You must request a forbearance from your loan servicer.