Loans

Student Loan Program Update

As a result of the Health Care and Education Reconciliation Act, beginning July 1, 2010, federal student loans will no longer be made by private lenders under the Federal Family Education Loan (FFEL) Program. Instead, all new federal student loans will come directly from the U.S. Department of Education under the Direct Loan Program.

This change does not impact the process of applying for federal grants, loans and work-study or the amount of federal aid that students are eligible to receive. Students interested in receiving federal student aid should continue to complete a Free Application for Federal Student Aid (FAFSA) for each school year that they wish to be considered for aid. If you have any questions about applying for federal student aid, please contact 1-800-4-FED-AID.

Applying for Aid

As with all federal student aid, you apply for Direct Loans by filling out the Free Application for Federal Student Aid (FAFSA). Most students use FAFSA on the Web to complete their applications. The information on your FAFSA is transmitted to the schools that you list on the application, and those schools use the information to assess your financial need for student aid.

The Award Package

Direct Loans are generally awarded as part of a larger "award package," which may contain other types of aid as well, to help you meet the costs of going to college or career school.

The Direct Loan Program offers the following types of loans:

Subsidized: for students with demonstrated financial need, as determined by federal regulations. No interest is charged while a student is in school at least half-time, during the grace period, and during deferment periods.

  •  Unsubsidized: not based on financial need; interest is charged during all periods, even during the time a student is in school and during grace and deferment periods.
  •  PLUS: unsubsidized loans for the parents of dependent students and for graduate/professional students. PLUS loans help pay for education expenses up to the cost of attendance minus all other financial assistance. Interest is charged during all periods.
  •  Consolidation: Eligible federal student loans can be combined into one Direct Consolidation Loan.

Student borrowers are not required to begin making payments until after they drop below half-time attendance. See when you graduate or leave school for more information.

Your school will tell you how much you may borrow and the types of loans you are eligible to receive. The information below will give you an idea of how much you may be eligible to receive.

Note: PLUS loan borrowers cannot have an adverse credit history (a credit check will be done).

Accepting a Loan

Your school will notify you of the loan amounts that it is offering, usually in an "award letter" that lists all of your proposed financial aid awards (your award package).

You should evaluate the aid offer carefully. In the case of loans, keep in mind that whatever amount you borrow must be paid back with interest. If your living expenses are not as high as the standard allowance projected by your school, you may not have to borrow as much as the amount in the award letter.

To get an idea of your monthly loan payments after you graduate, take a look at our repayment calculator.

To get an idea of your college expenses, use our budget calculator.

You have the right to decline the loan or to request a lower loan amount. In the award letter your school will tell you how to do this.

Credit Check & Endorser Alternative

When you apply for a Direct PLUS Loan, the Department will check your credit history. To be eligible to receive a PLUS loan, you must not have an adverse credit history. If you are determined to have an adverse credit history, you may still receive a Direct PLUS Loan if you obtain an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the Direct PLUS Loan if you do not repay the loan. If you are a parent borrowing on behalf of your dependent student, the endorser may not be the student on whose behalf a parent obtains a Direct PLUS Loan. In some cases, you may also be able to obtain a Direct PLUS Loan if you document to our satisfaction that there are extenuating circumstances related to your adverse credit history.

Loan Limits

The maximum amount you can borrow each year in Direct Subsidized and Unsubsidized Loans depends on your grade level and on whether you are a dependent student or an independent student. The following table shows the maximum amount of money you may borrow each academic year in Direct Subsidized and Unsubsidized Loans:

 

 

Dependent student1

Independent student2

1st-year undergraduate

$5,500 (maximum $3,500 subsidized)

$9,500 ($3,500)3

2nd-year undergraduate

$6,500 ($4,500)

$10,500 ($4,500)

3rd- and 4th-year undergraduate

$7,500 ($5,500)

$12,500 ($5,500)

Graduate/professional

NA (All graduate and professional students are considered independent.)

$20,500 ($8,500)

1Except those whose parents are unable to borrow a PLUS loan.
2These limits also apply to dependent students whose parents are unable to borrow a PLUS loan.
3The numbers in parentheses represent the maximum amount that may be subsidized.

The actual loan amount you are eligible to receive for an academic year is determined by your school and may be less than the maximum annual amounts shown in the chart above.

Below are the aggregate (total) limits for Direct Subsidized and Unsubsidized Loans:

  •   $31,000 for dependent undergraduate students excluding those whose parents are unable to borrow a PLUS Loan (no more than $23,000 may be subsidized)
  •   $57,500 for independent undergraduate students and dependent undergraduates whose parents are unable to borrow a PLUS loan (no more than $23,000 may be subsidized)
  •   $138,500 for graduate or professional students (no more than $65,500 may be subsidized; includes loans for undergraduate study)

These aggregate limits include both Direct Subsidized and Unsubsidized Loans and any subsidized and unsubsidized Federal Stafford Loans received through the Federal Family Education Loan (FFEL) Program.

With a Direct PLUS Loan, a graduate/professional student or the parent of a dependent student can borrow up to the cost of the student's attendance minus other financial aid the student receives.

Entrance Counseling

Except for parent Direct PLUS Loan borrowers, if you haven't previously received a loan, you must complete entrance counseling before your school can make the first disbursement of your loan. This helps you to understand your responsibilities regarding your loan. Your school may require in-person counseling or you may be able to complete this counseling online.

The Master Promissory Note

To take out a Direct Loan for the first time, you must complete a Master Promissory Note (MPN). The MPN will be provided either by your school or the Department. You can complete the MPN online at the StudentLoans.gov website. The MPN is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the Department. It also explains the terms and conditions of your loan(s).

To complete an MPN online, you will be required to use your Department of Education-issued PIN. If you do not have a PIN, you may request one from the official PIN site. A parent borrower must also request a PIN number from the PIN site to use when completing a PLUS MPN.

In most cases, once you've submitted the MPN and it's been accepted, you won't have to fill out a new MPN for future loans you receive. Unless your school does not allow more than one loan to be made under the same MPN, you can borrow additional Direct Loans on a single MPN for up to 10 years. If you are applying for a Direct PLUS for the first time as a graduate/professional student, you'll need to complete and sign a PLUS MPN that is separate from the one that you use for your Direct Subsidized and Unsubsidized Loans.

You'll receive a disclosure statement that gives you specific information about any loan that the school plans to disburse under your MPN, including the loan amount, fees, and the expected disbursement dates and amounts.

While You're in School

How the Loans are Disbursed (Paid Out)

Generally, your loan will cover a full academic year and your school will make at least two disbursements to you, for example, at the beginning of each semester or quarter, or at the beginning and midpoint of your academic year.

In most cases your school will disburse your loan money by crediting it to your school account to pay (tuition and fees, room and board, and other authorized charges). If the loan disbursement amount exceeds your school charges, the school will pay you the remaining balance of the disbursement directly by check or other means. You will also receive a notice from us confirming the disbursement. You should read and keep all correspondence received concerning your loan.

Using the loan for education expenses: You may use the loan money you receive only to pay for your education expenses at the school that is giving you the loan. Education expenses include school charges such as tuition, room and board, fees and indirect expenses such as books, supplies, equipment, dependent child care expenses, transportation and rental or purchase of a personal computer.

Enrollment Status & Other Changes

It's important to keep the Direct Loan Servicing Center informed of any changes in your status, so that your loan information is up-to-date. This is your responsibility.

You must notify the Direct Loan Servicing Center if you:

  •   Change your local address, permanent address or telephone number
  •   Change your name (for example, maiden name to married name)
  •   Do not enroll at least half-time for the loan period certified by the school
  •   Do not enroll at the school that certified your loan
  •   Stop attending school or drop below half-time enrollment;
  •   Transfer from one school to another school
  •   Graduate

Until you graduate or leave school, you must also keep your school's financial aid office informed of these changes.

A scheduled break in enrollment, such as the summer session at many traditional 4-year schools, is not considered an interruption in your enrollment if you are planning to return to school during the next regularly scheduled enrollment period.

When you graduate, drop below half-time, or withdraw from your academic program, you will receive a six-month grace period for your Direct Subsidized and Unsubsidized Loans. Once your grace period ends, you must begin repaying your loan(s). See when you graduate or leave school.

Paying Interest While in School

You may choose to pay interest on your Direct Unsubsidized or Direct PLUS loans while you are in school. If you choose not to pay the interest while you're in school, we will add it to the unpaid principal amount of your loan.

This is called "capitalization," and it can substantially increase the amount you repay, especially if you are receiving multiple loans for a multi-year program. Capitalization increases the unpaid principal balance of your loan, and we will then charge interest on the increased principal amount.

It will save you some money in the long run if you pay the interest as it accrues on your loan while you're in school or during the grace period. This is also true if you pay any interest that accrues during periods of deferment or forbearance after you leave school.

If you've already taken out at least one Direct Loan, you can check your interest statements and use the online calculators to find out how much you'll pay over the life of the loan if the in-school interest is added to your loan balance.

When You Graduate or Leave School

 Leaving School: Graduating, Withdrawing, or Dropping Below Half-time

Once you are no longer enrolled at least half time in an eligible program, you'll receive a 6-month grace period (see below) on your Direct Subsidized and Unsubsidized Loans during which you are not required to make loan payments. You must begin repayment at the end of your grace period.

If you have an in-school deferment on a Direct Subsidized or Unsubsidized Loan that entered repayment at an earlier date before you returned to school and you graduate, drop below half-time enrollment, or withdraw from school, you will be required to immediately begin making payments on the loan because the 6-month grace period has already been used up; there is no second grace period.

Make sure that both your school and the Direct Loan Servicing Center know that you are no longer enrolled. If you don't begin making payments when required, there is the possibility that you will lose repayment incentives you may have received or even go into default.

Your school is required to ensure that you receive Exit Counseling before you graduate or withdraw. Check with your school to see how exit counseling is conducted, whether as a personal or group exit interview or as a session that you can complete online, for example, at the NSLDS website.

Grace Periods

When you graduate, drop below half-time, or withdraw from your academic program, you will receive a six-month grace period for your Direct Subsidized and Unsubsidized Loans. Your grace period begins the day after you stop attending school on at least a half-time basis. Once your grace period ends, you must begin repaying your loan(s).

If you re-enroll in school at least half time before the end of your 6-month grace period, you will receive the full 6-month grace period when you stop attending school or drop below half-time enrollment.

There is no grace period for Direct PLUS Loans—the repayment period for each Direct PLUS Loan you receive begins 60 days after your school makes the last disbursement of the loan. However, if you're a graduate or professional student PLUS borrower (or if you're a parent PLUS borrower who is also a student), you can defer repayment while you're enrolled in school at least half time and (for Direct PLUS Loans first disbursed on or after July 1, 2008) for an additional 6 months after you graduate or drop below half-time enrollment.

If you're a parent PLUS borrower, you can defer repayment of Direct PLUS Loans first disbursed on or after July 1, 2008, while the student for whom you obtained the loan is enrolled at least half time, and for an additional 6 months after the student graduates or drops below half-time enrollment.

Remember, if you choose to defer payment on a Direct PLUS Loan, any interest that accumulates during the deferment period will be added to the unpaid principal amount of your loan. This is called "capitalization," and it increases your debt because you'll have to pay interest on this higher principal balance.

Reservists Called to Active Duty: If you are called or ordered to active duty for more than 30 days from a reserve component of the U.S. Armed Forces, the period of your active duty service and the time necessary for you to re-enroll in school after your active duty ends are not counted as part of your grace period. However, the total period that is excluded from your grace period may not exceed three years. If the call or order to active duty occurs while you are in school and requires you to drop below half-time enrollment, the start of your grace period will be delayed until after the end of the excluded period. If the call or order to active duty occurs during your grace period, you will receive a full 6-month grace period at the end of the excluded period.

If you are a reservist called to active duty with the U.S. Armed Forces for more than 30 days, contact the Direct Loan Servicing Center to let us know your status.

Choosing a Repayment Plan

You'll have the choice of several plans, and the Direct Loan Servicing Center will notify you of the date your first payment is due. If you do not choose a repayment plan, we will place you on the Standard Repayment Plan. Most Direct Loan borrowers choose to stay with the Standard Repayment Plan, but there are other options for borrowers who may need more time to repay or who need to make lower payments at the beginning of the repayment period.

Consolidation

If you have multiple federal education loans, you can consolidate them into a single Direct Consolidation Loan. This may simplify repayment if you are currently making separate loan payments to different loan holders, as you'll only have one monthly payment to make. There may be tradeoffs, however, so you'll want to learn about the advantages and possible disadvantages of consolidation before you consolidate. To learn more, visit our Direct Consolidation Loan website.

While You're in Repayment

 Generally, you'll have from 10 to 25 years to repay your loan, depending on which repayment plan (there are several) you choose.

The Direct Loan Servicing Center will notify you of the date your first payment is due. If you do not choose a repayment plan, we will place you on the Standard Repayment Plan, with fixed monthly payments for up to 10 years. Most Direct Loan borrowers choose to stay with the Standard Repayment Plan, but there are other options for borrowers who may need more time to repay or who need to make lower payments at the beginning of the repayment period.

You can change repayment plans at any time by going to the Direct Loan Servicing Center's website and logging in to your account.

Automated Payments (Electronic Debit)

When we send your first bill, we'll tell you how to you sign up for our electronic debit account (EDA) option and have your bank automatically make your monthly loan payments for you from your checking or savings account. You won't have to write checks, use stamps, or worry if your payment will get to us by the due date. In addition, Direct Loans offers a 0.25% reduction in the interest rate on your loans during any period when your payments are made through EDA.

Trouble Making Payments

If you're having trouble making payments on your loans, contact the Direct Loan Servicing Center as soon as possible. The Direct Loan Servicing Center staff will work with you to determine the best option for you. Options include:

  •  Changing repayment plans.
  •  Deferment, if you meet certain requirements. A deferment allows you to temporarily stop making payments on your loan.
  •  Forbearance, if you don't meet the eligibility requirements for a deferment but are temporarily unable to make your loan payments. Forbearance allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments. Read more about deferments and forbearance.

If you stop making payments and don't get a deferment or forbearance, your loan could go into default, which has serious consequences—see below.

Your loan first becomes "delinquent" if your monthly payment is not received by the due date. If you fail to make a payment, we'll send you a reminder that your payment is late. If your account remains delinquent, we'll send you warning notices reminding you of your obligation to repay your loans and the consequences of default.

If you are delinquent on your loan payments, contact the Direct Loan Servicing Center immediately to find out how to bring your account current. Late fees may be added, and your delinquency will be reported to one or more national consumer reporting agencies (credit bureaus), but this is much better than remaining delinquent on your payments and going into default.

Consequences of Default

If you default:

  • We will require you to immediately repay the entire unpaid amount of your loan.
  • We may sue you, take all or part of your federal and state tax refunds and other federal or state payments, and/or garnish your wages so that your employer is required to send us part of your salary to pay off your loan.
  •  We will require you to pay reasonable collection fees and costs, plus court costs and attorney fees.
  •  You may be denied a professional license.
  •  You will lose eligibility for other federal student aid and assistance under most federal benefit programs.
  •  You will lose eligibility for loan deferments.
  •  We will report your default to national consumer reporting agencies (credit bureaus).

For more information and to learn what actions to take if you default on your loans, see the website for the Department's Default Resolution Group.

Loan Cancellation (Forgiveness or Discharge)

Under certain conditions, you can have all or part of your loan cancelled or discharged. Read more about loan cancellation.

What's Next?

Stay in touch with the Direct Loan Servicing Center—let them know if you've changed your name or permanent address, and make sure that they know when you've completed your educational program or transferred to another school.

Repayment Information
What you need to know about repaying student loans...

After you graduate, leave school, or drop below half-time enrollment, you have a period of time before you have to begin repayment. This “grace period” will be:

  •   Six months for a Federal Stafford Loan(Federal Family Education Loan ProgramSM or Federal Direct Student Loan ProgramSM)
  •   Nine months for Federal Perkins Loans

The repayment period for all PLUS loans begins on the date the loan is fully disbursed, and the first payment is due within 60 days of the final disbursement. However, a graduate student PLUS loan borrower (as well as a parent PLUS borrower who is also a student) can defer repayment while the borrower is enrolled at least half time, and, for PLUS loans first disbursed on or after July 1, 2008, for an additional six months after the borrower is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the borrower.

Parent PLUS loan borrowers whose loans were first disbursed on or after July 1, 2008, may choose to have repayment deferred while the student for whom the parent borrowed is enrolled at least half-time and for an additional six months after that student is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the borrower.

 Exit Counseling

You'll receive information about repayment, and your loan provider will notify you of the date loan repayment begin. We can't emphasize enough the importance of making your full loan payment on time either monthly (which is usually when you'll pay) or according to your repayment schedule. If you don't, you could end up in default, which has serious consequences (scroll down to the Default discussion below). Student loans are real loans—just as real as car loans or mortgages. You have to pay back your student loans. Find out about your obligations in this section so you can stay on top of your loans.

Get Your Loan Information

The U.S. Department of Education's National Student Loan Data System (NSLDSSM) allows you to access information on loan and/or federal grant amounts, your loan status (including outstanding balances), and disbursements made. Go to www.nslds.ed.gov.

Paying Back Your Loan(s)

You have a choice of repayment plans. How much you pay and how long you take to repay your loans will vary depending on the repayment plan you choose. There are several repayment plans available: Standard, Extended, Graduated, Income Based Repayment (IBR), Income Contingent Repayment (ICR) (available to borrowers with Direct Loans), and Income-Sensitive Repayment (available to borrowers with FFEL Loans).

Go to Repayment Plans and Calculators for more information about the various repayment plans and to calculate your estimated repayment amount under each of the different plans.

The Publication Funding Education Beyond High School: The Guide to Federal Student Aid provides additional information on repayment options, with examples of monthly payments for different loan amounts, and covers other topics you need to consider when managing your loans. You can see the entire publication here.

Federal Family Education Loans (FFELSM) and Federal Perkins Loans

After you've looked at Funding Education Beyond High School: The Guide to Federal Student Aid, if you have specific questions about repaying these types of loans, please contact your loan provider. (In the case of Perkins Loans, this will be the school that made you the loan). Don't know who your loan provider is? Go to www.nslds.ed.gov to find out.

Stafford Loan Interest Rates

For all unsubsidized Stafford loans first disbursed on or after July 1, 2006, the interest rate is fixed at 6.8 percent. The interest rate for subsidized Stafford loans first disbursed on or after July 1, 2010 is fixed at 4.50 percent. This change from a variable to a fixed interest rate does not affect a borrower's variable interest rate on loans made before July 1, 2006.

For Stafford Loans first disbursed between July 1, 1998 and June 30, 2006, the interest rate is variable (adjusted annually on July 1st) but will not exceed 8.25 percent. (You'll be notified any time the variable rate changes.) The interest rate for these loans in 2010-11 is 2.47. (These rates apply to loans in repayment status; the rate may be lower during grace and deferment periods.) Click here for the 2010-11 interest rates.

For the new interest rate calculations in effect from July 1, 2010 through June 30, 2011 for variable rate Federal Subsidized Consolidation Loans, Federal Unsubsidized Consolidation Loans, Federal PLUS Consolidation Loans, Federal Subsidized Loans, Federal Unsubsidized Loans, and Federal PLUS Loans click here.

Click here for the Direct Loan interest rates as of July 1, 2009.

How can I calculate the monthly amount of interest on my own?

To determine the amount of interest you will be required to pay each month, use the following formula called the Simple Daily Interest formula:

Simple Daily Interest Formula
Number of days since last payment
x
Principal Balance Outstanding
x
Interest Rate Factor
=
Interest Amount

Practice Example: Let's say the remaining balance on your loan is $9,500.00. You sent in a payment of $160.00, 32 days after your previous month's payment. Your interest rate is 8.25% (interest rate factor is .00022587).

32 (days) x $9,500.00 (PBO) x .00022587 (interest rate factor)

You would pay $68.66 toward interest and $91.34 toward the principal balance. This would leave you with a loan balance of $9,408.66 after the $160.00 payment was applied.

Interest Rate Factor

The interest rate factor is used to calculate the amount of interest that accrues on your loan. It is determined by dividing your loan's interest rate by 365.25 (the number of days in a year). See the following table to see some examples of interest rate factors.

Interest
Rate

Converted
to Decimals

Divide by
365.25

Interest
Rate Factor

8.99%

.0899

.0899/
365.25

.00024613

8.25%

.0825

.0825/
365.25

.00022587

7.59%

.0759

.0759/
365.25

.00020780

Why does the amount of interest I pay vary from month to month?

Interest accrues on a daily basis on your loans. Factors such as: the number of days between your last payment, the interest rate, and the amount of your loan balance, determine the amount of interest that accrues each month.

You can calculate how much will accrue on your loan by using the Simple Daily Interest Formula.

Direct Loan Servicing Online

If you have questions about your Direct LoansSM, you can go online to find the answers. With your PIN, you can view your detailed account information, complete exit counseling, make an online payment, enroll in any of our electronic services, and much more. For the payment address to send your Direct Loan payments, click here.

 Electronic Payment

In some cases, you might be able to reduce your interest rate if you sign up for electronic debiting. Find out more about electronic payment and debiting here.

Trouble Making Payments

If you're having trouble making payments on your loans, contact your lender as soon as possible. Your lender will work with you to determine the best option for you. Options include:

  •  Changing repayment plans.
  •  Deferment - if you meet certain requirements. A deferment allows you to temporarily stop making payments on your loan.
  •  Forbearance - if you don't meet the eligibility requirements for a deferment but are temporarily unable to make your loan payments. Forbearance allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments. Read more about deferments and forbearance options.

If you stop making payments and don't get a deferment or forbearance, your loan could go into default, which has serious consequences. Contact your lender regarding options for postponing repayment if you are having trouble making payments.

Default

If you default, it means you failed to make payments on your student loan according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan. In other words, you failed to make your loan payments as scheduled. Your school, the financial institution that made or owns your loan, your loan guarantor, and the federal government all can take action to recover the money you owe. Here are some consequences of default:

  •  National credit bureaus can be notified of your default, which will harm your credit rating, making it hard to buy a car or a house.
  •  You would be ineligible for additional federal student aid if you decided to return to school.
  •  Loan payments can be deducted from your paycheck.
  •  State and federal income tax refunds can be withheld and applied toward the amount you owe.
  •  You will have to pay late fees and collection costs on top of what you already owe.
  •  You can be sued. 

For more information and to learn what actions to take if you default on your loans, see the Department of Education’s Default Resolution Group Web site.

Loan Discharge (Cancellation)

In certain circumstances, your loan can be discharged/canceled. Read about cancellation provisions here.

Cancellation and Deferment Options for Teachers

If you're a teacher serving in a low-income or subject-matter shortage area, it may be possible for you to cancel or defer your student loans. Let us help you find out if you qualify.

Loan Forgiveness for Public Service Employees

Under the Loan Forgiveness for Public Service Employees Program, the borrower must be employed full-time in a public service job during the same period in which the qualifying payments are made and at the time that the cancellation is granted. The amount forgiven is the remaining outstanding balance of principal and accrued interest on an eligible Direct Loan for a borrower who is not in default and who makes 120 monthly payments on the loan after October 1, 2007.

Loan Consolidation

A Consolidation Loan allows you to combine all the federal student loans you received to finance your college education into a single loan. Read this section to help you decide whether consolidation is right for you.

Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness Program was created to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, you may qualify for forgiveness of the remaining balance due on your eligible federal student loans after you have made 120 payments on loans under certain repayment plans while employed full time by certain public service employers.

Only non-defaulted loans made under the William D. Ford Direct Loan ProgramSM are eligible for loan forgiveness. The Direct Loan Program includes the following types of loans:

  •   Federal Direct Stafford Loans (Direct Subsidized Loans)
  •   Federal Direct Unsubsidized Stafford Loans (Direct Unsubsidized Loans)
  •   Federal Direct PLUS Loans (Direct PLUS Loans)- for parents and graduate or professional students
  •   Federal Direct Consolidation Loans (Direct Consolidation Loans)

Although loan forgiveness under this program is available only for loans made and repaid under the Direct Loan Program, loans made under other federal student loan programs may qualify for forgiveness if they are consolidated into a Direct Consolidation Loan. Therefore, only payments made on the Direct Consolidation Loan will count toward the required 120 monthly payments.

The 120 required payments must be made under one or more of the following Direct Loan Program repayment plans:

 Public Service Loan Forgiveness Program Questions and Answers (Q&As)

For additional information on PSLF, check out the Public Service Loan Forgiveness Program Q&As. The Q&As are grouped into four categories: General Information, Eligible Loans, Qualifying Payments, and Qualifying Employment. The answers are dated and, as new questions are added or a previous response is updated, we will include a new date.

Go to the Public Service Loan Forgiveness fact sheet for more information on the terms and conditions of the program and to understand what types of public service jobs qualify.

A Federal Perkins Loan is a low-interest (5 percent) loan for both undergraduate and graduate students with exceptional financial need. Federal Perkins Loans are made through a school's financial aid office. Your school is your lender, and the loan is made with government funds. You must repay this loan to your school.

Your school will either pay you directly (usually by check) or apply your loan to your school charges. You'll receive the loan in at least two payments during the academic year. 

How much can I borrow?

You can borrow up to $2250 for each year of undergraduate or graduate studies.  The amount you receive depends on when you apply, your financial need, and the funding level at the school.

Other than interest, is there a charge for this loan?

No, there are no other charges. However, if you skip a payment, if it's late, or if you make less than a full payment, you might have to pay a late charge plus any collection costs.

When do I pay it back?

If you're attending school at least half time, you have nine months after you graduate, leave school, or drop below half-time status before you must begin repayment. This is called "grace period." If you're attending less than half time, check with your college or career school to find out how long your grace period will be. For more information on repaying and your obligations as a borrower, click on the "Repaying" section of this Web site.

Stafford Loan Forgiveness Program for Teachers

The Teacher Loan Forgiveness Program is intended to encourage individuals to enter and continue in the teaching profession. Under this program, individuals who teach full time for five consecutive, complete academic years in certain elementary and secondary schools that serve low-income families and meet other qualifications may be eligible for forgiveness of up to a combined total of $17,500 in principal and interest on their FFEL and/or Direct Loan program loans. (Note: As of August 14, 2008, an otherwise eligible borrower may qualify for forgiveness if the borrower has provided qualifying teaching services at one or more locations that are operated by an educational service agency.

 Eligibility Requirements

  •  You must not have had an outstanding balance on a FFEL or Direct Loan program loan as of October 1, 1998, or on the date that you obtained a Direct Loan Program loan or a FFEL Program loan after October 1, 1998.
  •  If you are in default on a FFEL and/or Direct Loan program loan(s), you are not eligible for forgiveness of that loan(s) unless you have made satisfactory repayment arrangements with the holder of the defaulted loan(s).
  •  The loan(s) for which you are seeking forgiveness was made prior to the end of your five academic years of qualifying teaching service.
  •  You have not received benefits through the AmeriCorps Program under Subtitle D of Title I of the National and Community Service Act of 1990 for the same teaching service for which you are seeking forgiveness on your FFEL and/or Direct Loan program loan(s).
  •  You must have been employed as a full-time teacher for five consecutive, complete academic years, at least one of which was after the 1997-1998 academic year, in an elementary or secondary school that:
    •  Is in a school district that qualifies for funds under Title I of the Elementary and Secondary Education Act of 1965, as amended;
    •  Has been selected by the U.S. Department of Education based on a determination that more than 30 percent of the school’s total enrollment is made up of children who qualify for services provided under Title I; and
    •  Is listed in the Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits. If this directory is not available before May 1 of any year, the previous year’s directory may be used. Note: All elementary and secondary schools operated by the Bureau of Indian Education (BIE) or operated on Indian reservations by Indian tribal groups under contract with the BIE qualify as schools serving low-income students. These schools are qualifying schools for purposes of this loan forgiveness program.

Note: If your school meets the above requirements for at least one year of your teaching service, but does not meet these requirements during subsequent years, your subsequent years of teaching at the school may be counted toward the required five consecutive, complete academic years of teaching.

If your five consecutive, complete years of qualifying teaching service began before October 30, 2004

  • You may receive up to $5,000 in loan forgiveness if, as certified by the Chief Administrative Officer of the school where you were employed, you were:
    • 1.  A full-time elementary school teacher who demonstrated knowledge and teaching skills in reading, writing, mathematics, and other areas of the elementary school curriculum; or
    • 2.  A full-time secondary school teacher who taught in a subject area that was relevant to your academic major.
  •   You may receive up to $17,500 in loan forgiveness if, as certified by the Chief Administrative Officer of the school where you were employed, you were:
    • 1.  A highly qualified full-time mathematics or science teacher in an eligible secondary school; or
    • 2.  A highly qualified special education teacher whose primary responsibility was to provide special education to children with disabilities, and you taught children with disabilities that corresponded to your area of special education training and have demonstrated knowledge and teaching skills in the content areas of the curriculum that you taught.

If you’re five consecutive, complete years of qualifying teaching service began on or after October 30, 2004:

  •   You may receive up to $5,000 in loan forgiveness if you were a highly qualified full-time elementary or secondary school teacher.
  •   You may receive up to $17,500 in loan forgiveness if, as certified by the Chief Administrative Officer of the school where you were employed, you were:
    • 1.  A highly qualified full-time mathematics or science teacher in an eligible secondary school; or
    • 2.  A highly qualified special education teacher whose primary responsibility was to provide special education to children with disabilities, and you taught children with disabilities that corresponded to your area of special education training and have demonstrated knowledge and teaching skills in the content areas of the curriculum that you taught.

If you were unable to complete an academic year of teaching, that year may still be counted toward the required five consecutive, complete academic years if:

  •   You completed at least one-half of the academic year; and
  •   Your employer considers you to have fulfilled your contract requirements for the academic year for the purposes of salary increases, tenure, and retirement; and
  •   You were unable to complete the academic year because:
    • 1.  You returned to postsecondary education, on at least a half-time basis, in an area of study directly related to the performance of the teaching service described above; or
    • 2.  You had a condition covered under the Family and Medical Leave Act of 1993 (FMLA*); or
    • 3.  You were called or ordered to active duty status for more than 30 days as a member of a reserve component of the Armed Forces**.

Note: Absence due to a period of postsecondary education, a condition covered under the FMLA, or active duty service, including the time needed for you to resume teaching no later than the beginning of the next regularly scheduled academic year, does not constitute a break in the required five consecutive, complete years of qualifying teaching service.

Low-Income School Search

Each year, the U.S. Department of Education publishes a list of low-income elementary and secondary schools. To find out if a school is classified as a low-income school, check our online database for the year(s) you have been employed as a teacher. Questions about the inclusion or omission of a particular school must be directed to the state education agency contact in the state where the school is located and not to the U.S. Department of Education.

How to apply

You apply for teacher loan cancellation after you have completed the five-year teaching requirement. Click here to print a copy of the Teacher Loan Forgiveness Application. The Chief Administrative Officer of the school at which you performed your qualifying teaching service must complete the certification section. If you taught at more than one school during the same academic year, the Chief Administrative Officer from one of the schools may complete the certification section. If you taught at different schools during different academic years, the Chief Administrative Officers from all of the schools must certify your eligibility. If you need more than one Chief Administrative Officer’s certification, the additional certifications may be provided on a separate piece of paper and submitted with your completed form. Return the completed form to the address shown in Section 9 of the application. If you are applying for forgiveness of loans that are held by different loan holders, you must submit a separate form to each loan holder.

Postponing repayment while under consideration for cancellation

You can get forbearance for up to 60 days while you're completing the loan discharge application which includes the time it takes for the lender and guarantor to review it..

The loan holder or guaranty agency must notify you within 135 days of their decision on your application.  If your application is approved, new repayment terms based on any remaining loan balances will be provided to you. The lender may cancel up to $17,500 of the aggregate loan amount that is outstanding after you've finished your fifth year of teaching. (The aggregate loan amount includes both principal and interest.) However, the lender cannot refund the payments you made before you completed the fifth year of teaching service.

Your lender can grant forbearance for each year of your qualifying teaching service if the expected cancellation amount will satisfy the anticipated remaining outstanding balance on the loan at the time of the expected cancellation. Unless you give your lender or loan servicing agency other instructions, your unsubsidized Stafford Loan balance will be cancelled first, followed by any outstanding subsidized Stafford Loan balance, and then any eligible outstanding Consolidation Loan balance. The lender may cancel only the outstanding portion of the Consolidation Loan that was used to repay subsidized or unsubsidized Stafford Loans that qualified for loan forgiveness.

 Definitions:

  •   "Academic year" means one complete school year at the same school, or two complete and consecutive half years at different schools, or two complete and consecutive half years from different school years (at either the same school or different schools). Half years exclude summer sessions and generally fall within a 12-month period. For schools that have a year-round program of instruction, 9 months is considered an academic year.
  •   "Elementary school" or "secondary school" means a public or nonprofit private school that provides elementary education or secondary education as determined by state law (or by the U.S. Department of Education if the school is not in a state).
  •   "Full-time employment as a teacher" is determined by the state's standard. For a borrower teaching in more than one school, the determination of full time is based on the combination of all qualifying employment.
  •   "Teacher" means a person who provides direct classroom teaching or classroom-type teaching in a non-classroom setting, including Special Education teachers.
  •   To be a highly qualified teacher a public elementary or secondary school teacher must: 
    • 1.  have obtained full State certification as a teacher (including certification obtained through alternative routes to certification) or passed the State teacher licensing examination, and holds a license to teach in that State, except that when used with respect to any teacher teaching in a public charter school, the term means that the teacher meets the requirements set forth in the State's public charter school law; and
    • 2.  have not had certification or licensure requirements waived on an emergency, temporary, or provisional basis.
    • In addition —
    • An elementary school teacher who is new to the profession is considered highly qualified if s/he also:
    • 1.  holds at least a bachelor’s degree; and
    • 2.  has demonstrated, by passing a rigorous State test, subject knowledge and teaching skills in reading, writing, mathematics, and other areas of the basic elementary school curriculum (which may consist of passing a State-required certification or licensing test or tests in reading, writing, mathematics, and other areas of the basic elementary school curriculum).
    • A middle or secondary school teacher who is new to the profession is highly qualified if the teacher also:
    • 1.  holds at least a bachelor’s degree, and
    • 2.  has demonstrated a high level of competency in each of the academic subjects in which the teacher teaches by-
      • passing a rigorous State academic subject test in each of the academic subjects in which the teacher teaches (which may consist of a passing level of performance on a State-required certification or licensing test or tests in each of the academic subjects in which the teacher teaches); or
      •  successful completion, in each of the academic subjects in which the teacher teaches, of an academic major, a graduate degree, coursework equivalent to an undergraduate academic major, or advanced certification or credentialing.
      • An elementary, middle, or secondary school teacher who is not new to the profession is highly qualified if the teacher also:
      • 1.  holds at least a bachelor’s degree; and
      • 2.  meets the applicable standards of an elementary, middle, or secondary school teacher who is new to the profession; or
      • 3.  demonstrates competence in all the academic subjects in which the teacher teaches based on a high objective uniform State standard of evaluation that-
        •  is set by the State for both grade appropriate academic subject matter knowledge and teaching skills;
        •  is aligned with challenging State academic content and student academic achievement standards and developed in consultation with core content specialists, teachers, principals, and school administrators;
        •  provides objective, coherent information about the teacher’s attainment of core content knowledge in the academic subjects in which a teacher teaches;
        •  is applied uniformly to all teachers in the same academic subject and the same grade level throughout the State;
        •  takes into consideration, but is not based primarily on, the time the teacher has been teaching in the academic subject;
        •  is made available to the public upon request; and may involve multiple, objective measures of teacher competency.