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Repayment Strategies

The Financial Literacy Office at Penn State has collected the top 8 frequently asked questions by college graduates as reported by the U.S. Department of Education to help you manage your student loan debt efficiently and effectively. (Please click on the questions for more information)

Where do I find repayment information on my Federal student loans?

The National Student Loan Data System (NSLDS) is the U.S. Department of Education’s (ED’s) central database for student aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan program, and other Department of ED programs. NSLDS Student Access provides a centralized, integrated view of Title IV loans and grants so that recipients of Title IV Aid can access and inquire about their Title IV loans and/or grant data.

Where do I fulfill my Loan Exit Counseling requirement?

Loan Exit Counseling is located on the Department of Education’s website. Click on Exit Counseling and then click the Go button under Loan Exit Counseling to take you from the NSLDS Student Access website to, where you can fulfill your Loan Exit Counseling requirement.

When do I have to start repaying my student loans?

You are entitled to one 6-month grace period after you stop attending school less than half of the required time. During this grace period, the lender or loan servicer will contact you and tell you how much your payments will be and how to make them. If you decide to go back to school, you can obtain a deferment so you can temporarily postpone payments.

Who should I mail my loan payments to?

Your lender or a loan servicer is responsible for billing and receipt of payments. Many times a lender will hire a company to perform the billing functions for its loans, and this company is referred to as a loan servicer. You can contact your lender or loan servicer for information.

What interest rate will I be paying?

The interest on your educational loans was set by Federal Law and is recorded on your signed promissory note. You can find the type of interest rate, fixed or variable, for each of your loans on this website by clicking on a loan and reviewing the details. For lender-held loans, contact the lender or lender servicer for your loans to find out the actual interest rate.

Does the amount of principal and interest listed equal the payoff amount?

No. Due to the reporting time frames, the payoff amount can include other charges, fees, and/or costs on your account. You must contact the loan holder/servicer to obtain the payoff amount.

Which repayment plan am I eligible for?

To find out more about repayment options before receiving a Direct Loan, borrowers may contact their school’s financial aid office or the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243). If you currently have a Direct Loan and would like the exact payment amount on your loan, you can find it out by contacting your loan servicer. Parent Direct PLUS Loan borrowers may only choose from the standard, extended, or graduated options, but student Direct PLUS Loan borrowers may also choose the income contingent repayment plan or the income-based repayment plan.

The Direct Loan Program offers loan repayment plans designed to meet the needs of most borrowers. Direct Loans are funded by the U.S. Department of Education through your school and are managed by a loan servicer, under the supervision of the Department. The Direct Loan Program allows you to choose your repayment plan and to switch your plan if your needs change.

What happens if I don’t pay back my student loan?

Borrowers who default on their student loans are reported to credit bureaus, so your credit rating and future borrowing ability will be negatively impacted. In addition, legal action can be taken to require payment through garnishment of wages and withholding of tax refunds. It is important to keep a good working relationship with your loan servicer to benefit from their many services especially in managing any unforeseeable circumstance. Your loan servicer can help you avoid making costly financial mistakes such as defaulting on your student loan payment and avoid impacting your credit history and credit rating. The following tips can help you formulate a strategy to successfully manage your student loan repayment:

  1. Increase your emergency fund from 10% to 20% of your net income
  2. Start paying into the fund as soon as you start earning income (3 months payments)
  3. Pay off credit card debt before you enter student loan repayment
  4. Remain in touch with your servicer and notify them of any financial problems, do not default at any cost
  5. Depending on your income level, speed pay your student loans so you can free money for other future commitment