Does A Stafford Loan Have Any Other Charges, Other Than Interest?
You'll pay a fee of up to 4 percent of the loan amount, which is
deducted proportionately from each loan disbursement. Also, if you
don't make your loan payments when scheduled, you may be charged
collection costs and late fees.
When Do I Start Paying Back A Stafford Loan?
Once you graduate, leave school, or drop below half time status,
you'll have six months before you begin repayment. This six-month
period of time is called a "grace period".
During the grace period on a subsidized loan, you don't have to
pay any principal, and you won't be charged interest. During the
grace period on an unsubsidized loan, you don't have to pay any
principal, but you will be charged interest. You can either pay
the interest or it will be capitalized, and added onto your outstanding
Is It Ever Possible To Postpone Repayment Of My Stafford Loan?
Yes, under certain conditions, you can receive a "deferment" or
"forbearance" on your loan, as long as the loan isn't in default.
A deferment allows you to temporarily postpone payments on your
loan. If you have a subsidized loan, you won't be charged interest
during the deferment. If your loan is unsubsidized, you'll be responsible
for the interest during the deferment. In that case, if you don't
pay the interest as it accrues (accumulates), it will be capitalized
and the amount you'll have to pay will increase.
Deferments are possible for the following types of reasons:
- Unable to find full-time employment
- Economic hardship
- You've enrolled in an approved graduate fellowship program
or in an approved rehabilitation training program for the disabled
- You've enrolled at least half-time at a post secondary school
If you're temporarily unable to meet your repayment schedule, but
you're not eligible for a deferment, your lender might grant you
forbearance for a limited and specified period. During forbearance,
your payments are postponed or reduced, or your repayment period
might be extended. Whether your loans are subsidized or unsubsidized,
you'll be charged interest during a period of forbearance. If you
don't pay the interest as it accrues, it will be capitalized.
Forbearance may be granted for the following types of reasons:
- Inability to pay due to poor health or other unforeseen personal
- You're serving in a medical or dental internship or residency
- You're serving in a position under the National Community Service
Trust Act of 1993
- You're obligated to make payments (on certain federal student
loans) that are equal to or greater than 20 percent of your monthly
Deferment and forbearance are not automatic. If you have a FDSLP
Stafford Loan, you must contact your Direct Loan Servicing Center
to request either option. If you have a FFELP Stafford Loan, you
must contact the lender or agency that holds your loan, and may
have to provide documentation to support your request. You must
continue making scheduled payments until you're notified that the
deferment or forbearance has been granted.
Is It Ever Possible To Have My Stafford Loan Discharged (Cancelled)?
Yes, in certain circumstances. A discharge releases you from all
obligations to repay the loan.
A Stafford Loan may be discharged for the following reasons:
- The school you're attending closes down before you could complete
your program of study
- Bankruptcy (but this is decided by the Bankruptcy Court)
- Borrowers total and permanent disability or death
- If you become a full-time teacher for 5 consecutive years in
a designated elementary or secondary school serving students from
Another type of repayment assistance (not a discharge) is available
through the U.S. Department of Health and Human Services' Nursing
Education Loan Repayment Program (NELRP). This program will help
repay student loans for registered nurses in exchange for their
service in eligible facilities located in areas experiencing a shortage
of nurses. All NELRP participants must enter into a contract agreeing
to provide full-time employment in an approved eligible health facility
(EHF) for 2 or 3 years. In return, the NELRP will pay 60 percent
of the participant's total qualifying loan balance for two years
or 85 percent.