If you’re facing a large amount of debt, you might be tempted to skip or postpone some of your student loan payments. Instead, you should immediately contact your loan servicer (or in the case of Federal Perkins and MIT Technology Loans, your MIT loan counselor) to discuss other repayment plan options, and to find out whether you’re eligible for a deferment or a forbearance. They’ll work with you to help you avoid the serious consequences of delinquency and default. However, remember that you must apply for and receive permission from your loan servicer to get a deferment or other alternative arrangement.
If your Direct Loan is on a standard or graduated repayment plan, you may be able to switch to a different plan such extended repayment, income-contingent repayment or income-based repayment. More information can be found on the SFS Get a Loan page, or at FinAid.org (federal loans only).
A deferment lets you temporarily stop making payments on your loan. Deferments are granted for a limited amount of time. You are not responsible for paying the interest on subsidized loans during a period of deferment. However, you are responsible for paying the interest on your unsubsidized loans during deferment. If you are in default on your loan, you are not eligible for a deferment.
If you can’t make your scheduled loan payments but don’t qualify for a deferment, you may be eligible for a forbearance. A forbearance lets you stop making payments or make smaller payments on your loan for a specified period, or extend the time for making payments. Interest is charged on both subsidized and unsubsidized loans during forbearance. You may qualify for a forbearance due to illness, financial hardship, or service in a medical or dental internship or residency. If you are in default on your loan, you are not eligible for a forbearance.
For details on the qualifications for a deferment or forbearance, see the financial aid guide published by the U.S. Department of Education.
A cancellation (also known as discharge) releases you from all obligations to repay your loan. You may qualify for cancellation of all or part of your loan if you die or are totally and permanently disabled.
Borrowers who work in public service professions – including in the military, law enforcement, firefighting, nursing, public defender, library or public education fields – can have any balance on their Federal Direct Loan or Federal Direct Consolidation Loan or graduate PLUS Loan forgiven after 120 monthly loan repayments and 10 years of full-time employment in the profession.
Not everyone in public service jobs will have a loan balance remaining after 10 years; borrowers with low debts or with higher incomes for the entire 10 years will not ultimately benefit. For more information and a list of applicable professions, see FinAid.org or the Q&A by the Project on Student Debt.
Income Based Repayment (or IBR) was created by the College Cost Reduction and Access Act of 2007, and its goal is to keep all career options open to college graduates by preventing payments on federal student loans from exceeding 15 percent of a borrower's disposable income. IBR borrowers can also have their loans forgiven after 25 years of repayment, or after 10 years in a public service career.
Any Stafford, Grad PLUS or Consolidation loan made under either the Direct Loan or FFEL program is eligible for repayment under IBR, EXCEPT loans that are currently in default, parent PLUS Loans, or consolidation loans that repaid a parent PLUS Loan. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training).
For more information on this repayment option, please visit The Department of Education's website.
If you have defaulted on a Perkins, Direct or FFEL loan , all is not lost. After making 9 consecutive on-time monthly payments in amounts agreed to by your lender, you may be granted rehabilitation. This means your loan will be returned to regular repayment status, the default will be removed from your credit history and you will again be eligible to borrow education loan funds. Contact your MIT loan counselor or loan servicer for details.
If you have defaulted on an MIT Technology loan, contact your MIT loan counselor to discuss rehabilitation.
Loan exit counseling
If you borrowed a Federal Direct Stafford Loan, Federal Perkins Loan or Federal Direct Graduate PLUS Loan, you are required by federal law and MIT policy complete an exit interview online before graduation. If you borrowed an MIT Technology Loan, contact your loan counselor to schedule an exit interview. Required reading: the SFS loan exit counseling guide.
Loan entrance counseling
For Federal Direct Loans visit StudentLoans.gov to complete loan entrance counseling and sign a master promissory note. For Federal Perkins Loans visit iPROMise to complete loan counseling and sign a master promissory note.
Campus Partners handles billing and payment for Federal Perkins Loans and MIT Technology Loans.
StudentLoans.gov handles billing and payment for Federal Direct Loans and Graduate PLUS Loans.
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