Options for repaying your federal student loan
It takes a plan to pay off your student loans. Learn about your options, get expert help, and find the right next step for your situation.
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What if I’ve missed payments on my federal student loans or my payment is too high?
If you're struggling to pay your federal student loan, there are steps you can take to improve your situation and avoid default.
First, apply for lower payments based on your income
An income-driven repayment (IDR) plan can reduce your monthly payment to as low as $0. to choose the right plan for you.
Pausing your payments can provide immediate stress relief, but there are downsides. These pauses are not long-term solutions. Forbearance and some deferment will increase your principal balance and monthly payments because of interest and capitalization. To better understand the possible consequences, here are some questions for your servicer about deferment and forbearance.
Act quickly. If you default on a federal loan (miss 9 or more payments), you could suffer wage and tax return garnishment, credit problems, and other consequences.
Next, avoid risks and wasting money
- Find help with making a budget and explore strategies for reducing debt when you take control of your loans.
- Know where to find help—and what to say—so you can take action when you run into problems
- Don't pay for help with your student loans, and don't use credit cards or home equity to pay your student loans. Find out more about these and other ways you can avoid scams and wasting money.
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How do I get my federal student loan out of default?
It may feel overwhelming, but you can take simple steps to get out of default and move forward with your loans.
First, choose a way out of default
You’re not alone if you’ve received a letter from a debt collector after missing many payments. This is called default. Most federal student loans go into default if you make no payment for 270 days.
Once you check to make sure you owe this debt, start considering your options. If you can’t pay off the loan immediately, you have two options: .
- Rehabilitation: After 9 months of reasonable payments, your loan will be in good standing, and you will regain eligibility for federal student aid. Rehabilitation removes the default note from your credit report, so it is better for your credit. A defaulted loan can only be rehabilitated one time.
- Consolidation is much faster, which helps if you want to enroll in school soon. But the default will stay on your credit report.
Contact your servicer to discuss your options and find out your next steps.
Act quickly. The sooner you get out of default, the sooner you can halt consequences like wage garnishment and collections fees, and .
Next, prevent future default
Once you’re out of default, make your monthly payment affordable with an income-driven repayment (IDR) plan. You could pay as little as $0 per month. to choose the right plan for you.
Can't afford your IDR payment? If your income or household size has changed, contact your servicer to reevaluate your IDR payment.
You can also avoid default by requesting a pause in payments. There are two types of pauses: deferment and forbearance. Use deferment if you . Pay off your interest during the pause to keep it from compounding. to learn more.
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What's the best strategy to start repaying federal student loans?
A few simple steps now will help set you up for success as you repay your loan. These options may save you time and money in the long run as you pay off your student loan debt.
First, choose a repayment plan that supports your goals
If you choose one of the income-driven repayment (IDR) plans, here are some tips for staying on track.
Next, see tips to manage your student loan payments
- Keep good records, including your notes on calls with your servicer.
- Consider consolidating if you have multiple servicers.
- Set up automatic payments, and make extra payments if you can, so you can pay less interest in the long run.
Explore other situations
- Here are some other tips to help you get out of debt faster and hassle-free
- If you're in the military or work for a government or nonprofit organization, learn about public service loan forgiveness
- Have another type of loan? Review options again for more advice
What’s the best plan to finish paying off my federal student loans?
Congratulations on your progress so far! You may have options to make debt repayment easier and cheaper for you in the long term.
First, review your debt repayment strategy
Check to make sure that you’re not missing any opportunities to save time and money. Starting with the easiest and quickest:
- Enroll in direct debit. Your interest rate will be reduced by 0.25% if you have your payment taken directly from your bank account each month.
- If you make extra payments (or “prepayments”) or plan to in the future, . This will maximize the benefits of prepayments: getting out of debt sooner and with less interest.
- If you are still on Standard Repayment Plan and the payments are too high to be affordable, check out your other options. You can use the to compare plans. It may help to make a budget first, so you know what you can afford.
- Before using the simulator, check if you qualify for any .
- Did you know that contributions to a 401(k) decrease your payment on income-driven repayment (IDR) plans? Use these IDR tips to maximize your savings.