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Loan Repayment Basics

Our students repay their loans successfully and you can too. You can read about how loan repayment works and then let our financial aid counselors know if you have questions about your loans. Contact us at any time for help with your repayment questions-while you are in school, as graduation approaches and after you've completed your enrollment at the UW. We know it's important for you to repay your loans as quickly and inexpensively as possible and we are here to help.

Can I prepay my loan?

YES! While you are in school we can help you prepay your loan or cancel an upcoming disbursement of your loan if you no longer need it. Contact one of our financial aid counselors and tell them the amount of the loan and the type of loan you'd like to prepay or reduce.

When do I have to start repaying my loan?

Most loans have a grace period before you have to start repaying. Your grace period starts the day after you leave school, graduate or drop below half-time enrollment before your repayment begins. You don't have to being making payments until your grace period ends. Perkins Loan borrowers have a 9-month grace period and all other federal loans have a 6-month grace period.

Remember that unsubsidized Stafford student loans require monthly payment of the interest while you are in school or you can capitalize the interest (this means you add it to the principal of the loan which is a more expensive option than the monthly payments).

How much do I repay each month?

The amount you repay depends on how much you borrowed, your interest rate and how many years you will repay the loan. You can put this information into the Direct Loan Repayment Calculator to get the amount of your monthly repayment. Generally you will not pay under $50 a month and you will have at least 10 years to repay your loan. The terms of loan repayment are spelled out on the promissory note you received.

Are there different payment plans?

The Stafford Loan programs have different payment plans you can choose from in repaying your loan. Generally, you'll have from 10 to 30 years to repay your loan, depending on the repayment plan that you choose. Your monthly payment amount will be based on how much you borrowed and how long you take to repay. You may choose one of five repayment plans:

  • Standard Repayment Plan - Fixed monthly payments for up to 10 years.
  • Extended Repayment Plan - Fixed monthly payments for 12 to 30 years, depending on the total amount of your Direct Loans.
  • Graduated Repayment Plan - Payments that start off lower, and then gradually increase, usually every two years. You'll repay your loan in full within 12 to 30 years, depending on the total amount of your Direct Loans.
  • Income Contingent Repayment Plan - Your monthly payment is adjusted each year based on your annual income (and your spouse's income, if you're married), your family size, and the total amount of your Direct Loans. After 25 years, any unpaid loan amount will be forgiven.
  • Income Based Repayment is available starting July 1, 2009 for borrowers who have a partial financial hardship in that their monthly loan repayment under the standard repayment plan would exceed 15% of the difference between the borrower's adjusted gross income and 150% of the poverty level adjusted for family size. If you meet this criterion then you could pay a monthly amount that would keep your payment to no more than the 15% calculation above. You have longer than 10 years to repay your loans under this plan. After 25 years in the plan, if you still owe a balance, then some cancellation provisions may apply to your remaining debt.

You can change plans at any time. There's no penalty if you make payments before they are due or pay more than the amount due each month.

Where do I repay my loans?

If you have a Direct Stafford/Ford loan, you repay your loan to the Direct Loan Servicer (a contractor that the government uses to collect repayment). We have linked to the Direct Loan Servicer that most of our students have been assigned, but you may have been assigned one of the new Servicers and you'll need to contact that servicer directly. If you are unsure who services your loan, please check on the National Student Loan Data System for information and links to your Direct Loan Servicer.

Your Perkins Loan, Health Profession Loan, Primary Care Loan, Nursing Loan or UW Institutional loan is always repaid to the school that gave you the loan. If you received one of these loans from the University of Washington then click here for the link to our loan servicer.

Loans taken out from a bank need to be repaid to that bank or the current holder of the loan. You should receive instructions from that bank.

Can I repay my loans with electronic repayment from my bank account?

Yes, and you'll save time and money doing that! The U.S. government offers the option of having your Direct Loan Stafford payments automatically taken out of your bank account. This saves you the trouble of writing a check each month, and ensures that your payment will always be made on time.

Stafford Loans taken out from a bank while you attended another school often offer reduction based on automatic bank deductions from your account. You'll want to check with your lender for further information.

All loans repaid to the University allow for the payment of your loan through electronic repayment as well. You can check with the UW Servicer as well.

What if I have trouble repaying my loans?

The government has a variety of ways to help you if you can't make your monthly loan payment. Although the details for each loan program vary, under some conditions you may receive a deferment or forbearance that allows you to temporarily stop making payments. For example, you may qualify for a deferment if you return to school at least half-time, are unemployed, are called to active duty military during a war, or are experiencing an economic hardship as defined in federal regulations. If you don't qualify for a deferment but are temporarily unable to make loan payments for reasons such as illness or financial hardship, you may be granted a forbearance and not have to make loan payments for a set period of time.

What about repaying my private loans?

If you took out loans from a private lender (not from the government) then you need to check with that private lender for the terms of repayment. Private loans are separate from government loans and have different rules about repayment and where to repay loans.

What happens if I default on my student loans and don't repay them?

If you fail to make a payment on time, you're considered delinquent on your loans. If you do not make payment after a period of time (270 days for Direct Loans) you are considered to be in default. Default has severe and long-lasting consequences, including the following:

  • The Department of Education can immediately demand repayment of the total amount due on the loan.
  • The Department of Education or the UW will attempt to collect the debt and may charge you for the costs of collecting.
  • The default will be reported to national credit bureaus. Your credit rating will be damaged, which will make it difficult for you to make purchases such as a car or house.
  • You are ineligible for Title IV student aid.
  • You are ineligible for deferments.
  • The Internal Revenue Service can withhold your federal income tax refund.
  • Your wages may be garnished.

Very few of our students default on their loans and we'd like to help you avoid this situation as well. If you're having trouble repaying your loans, you can contact a financial aid counselor in our office for help. We can help you understand your options and direct you to the Direct Loan Servicer or the UW's Servicer with the right questions to ask.

Can my loan be discharged or forgiven?

You must repay your loan even if you don't complete or can't find a job related to your program of study, or are unhappy with the education you paid for with your loan. However, sometime you can get your loan discharged (forgiven so you don't have to repay it) if you have your loan discharged in bankruptcy, if you become totally and permanently disabled (additional conditions apply), or if you die. There are also some provisions for Public Service Loan Forgiveness through the Direct Loan Program so you can check with the Direct Loan Servicer to see if you qualify. If you have a Perkins Loan and teach in a designated low-income school, you may qualify for loan forgiveness as well. Always check your promissory note for terms and conditions of possible loan forgiveness for any of your government loans.