Exit Counseling & Student Loan Repayment
Students must complete exit counseling when they withdraw, take a leave of absence, or drop below half-time enrollment. The purpose of exit counseling is to ensure you understand your student loan obligations and are prepared for repayment.
You will need to complete exit counseling for Graduate or Professional Student. Once completed, you will learn what your federal loan payments will look like after school and which repayment plan works best for your financial situation.
Student Loan Repayment
Before repayment begins, develop a plan that puts you on track to pay back your loan on time and in full. Understanding the details of repayment on your federal student loan can save you time and money.
Direct Unsubsidized loans have a six (6) -month grace period that start the day after you complete your program, leave school, or drop below half-time enrollment. You do not have to begin making payments until your grace period ends.
Repayment on Graduate PLUS loans begins sixty (60) days after your loan is fully disbursed. However, your loan can be deferred while you are enrolled in school and for an additional six (6) months after you complete your program or cease to be enrolled.
Also, it is your responsibility to keep your loan servicer updated with your current mailing address, telephone number, and email address.
There are a variety of repayment plans available for federal loans. If you do not contact your loan servicer to select your repayment plan, you will automatically be placed in the Standard Repayment Plan. Students who wish to choose a different repayment plan should contact their loan servicer before their grace period expires to select the plan which best suit your financial needs.
You can change repayment plans at any time. There is no penalty if you make payments before they are due, pay more than the amount due each month, or pay off your loan early.
You may choose one of several repayment plans:
Standard Repayment Plan – fixed monthly payments for up to 10 years (within 10 to 30 years for Consolidation Loans)
Graduated Repayment Plan – payments start off lower at first, and then gradually increase, usually every 2 years. The loan must be repaid in 10 years.
Extended Repayment Plan – fixed or graduated monthly payments over a period of time, not to exceed 25 years. To be eligible for this repayment plan, you must have more than $30,000 in Direct Loan debt.
Revised Pay As You Earn Repayment Plan (REPAYE) – your monthly payments will be 10 percent of discretionary income. Payments are recalculated each year based on your annual income (and spouse’s income or loan debt), your family size, and the total amount of your Direct loans. After 25 years any unpaid loan amount will be forgiven.
Pay As You Earn Repayment Plan (PAYE) – your monthly payments will be 10 percent of discretionary income. Payments are recalculated each year based on your annual income (your spouse’s income or loan debt will be considered only if you file taxes jointly), your family size, and the total amount of your direct loans. After 20 years, any unpaid loan amount will be forgiven. You must be a new borrower on or after October 1, 2007.
Income-Contingent Repayment Plan (ICR) – your monthly payment is adjusted each year based on your annual income (your spouse’s income or loan debt will be considered only if you file taxes jointly), your family size, and the total amount of your Direct loans. After 25 years any unpaid loan amount will be forgiven.
Income-Based Repayment Plan (IBR) – your monthly payment is capped at an amount that is affordable based on your income and family size. Your eligibility is determined annually. After 25 years any remaining balance will be forgiven.
**Repayment plans are subject to change**
For more details on repayment plans, please refer to Studentaid website. Use the Loan Stimulator to get a look at which plans you may be eligible for and see estimates for how much you would pay monthly and overall.
If you are having trouble making payments on your Federal Perkins Loan, immediately contact the school where you received your loan. Meharry borrowers should contact the campus-based loan division at (615) 327-6220 and ask to speak to Mrs. Florence Adom (firstname.lastname@example.org) with the last name L-Z or Ms. Rhoda Summers (email@example.com) with the last name A-K.
For more details on understanding, avoiding, and getting out of default, please refer to the U.S. Department of Education’s Federal Student Aid website.
A deferment or forbearance allows you to temporarily postpone or lower your payments.
If you are granted a deferment, you might still be responsible for paying the interest that accrues during the deferment period.
During a forbearance, principal payments are postponed but interest continues to accrue. Unpaid interest that accrues during the forbearance will be added to the principal balance (capitalized) of your loans, increasing the total amount you owe.
Reasons for a Deferment or Forbearance
To default means you failed to make your payments on your student loan as scheduled according to the terms of your promissory note.
Your loan is considered delinquent the first day you miss a payment. Loan servicers report delinquencies to the three major credit bureaus. Default occurs after failing to make a payment for 270 days.
Some of the consequences of default are:
The entire unpaid balance of your loan and any interest is immediately due and payable;
You lose eligibility for deferment, forbearance, and repayment plans;
You may not be able to renew professional licensure;
You lose eligibility for additional federal student aid;
The loan will be reported as delinquent to credit bureaus, damaging your credit rating. This will affect your ability to buy a car or house or to get a credit card;
Your federal and state tax returns can be withheld, or your wages can be garnished to collect your student loan debt;
Your student loan debt will be increased because of the late fees, additional interest, court costs, collection fees, attorney’s fees, and any other costs associated with the collection process;
It could take years to reestablish your credit and recover from default.
If you are having trouble making payments on a federal student loan, immediately contact your loan servicer.
Cancellation or Discharge
You must repay your loan even if you do not complete your program, cannot find a job related to your program of study, or are unhappy with the education you paid for with your loan. However, the Department of Education will discharge (forgive) your loan if you become totally and permanently disabled, if you die, or if your school closes prior to you completing your program of study.
You may also qualify for forgiveness for some or all of the loan balance after you have made 120 payments on a Direct Loan while employed in certain public service jobs (additional conditions apply).
For more details on loan forgiveness and cancellation please refer for the U.S. Department of Education’s Federal Student Aid website.