Loan Repayment and Debt Management

Loan Repayment

Understanding the repayment options for your student loans can go a long way toward building a solid financial foundation. Remember, student loans are real loans, just like car loans or mortgages. You must repay a student loan even if your financial circumstances become difficult. Your student loans cannot be canceled because you didn't get the job you expected or because you didn't complete your education. The path to financial well-being is to borrow conservatively; manage your debt effectively and repay your loans wisely.

Debt Management

Establishing a budget and managing your debt isn't easy, but it's the best way to be in control of your finances and make sure you have the funds available to pay your expenses. Here are a variety of tools available to make the whole process easier.

The information provided below will be useful in relieving some of the stress that comes with managing your student debt:

Student Loan Grace Periods

Federal student loans, including Federal Direct loans carry a 6-month grace period. This means that payment may not be required until 6 months after graduation. Be aware that you are only eligible for one grace period; therefore, if you took a leave of absence and used it, it may not be available. The U.S. Department of Education may grant a deferment on the Graduate Plus loan payment to align with the Direct Loan payment deadline. Contact your lender or the Direct Loan Program to inquire about this option.

The USD Law Access Loan and the USD Tuition Credit loan carry a 12-month grace period. Any questions regarding these two types of loans may be addressed to the University of San Diego Loan Administration department.

Deferment and Forbearance of Payments

In addition to the grace period, borrowers of federal loans can qualify for a period of deferment and/or forbearance of all payments for up to 3 years (on 12 month increments) provided they meet criteria for "partial economic hardship." If you are unable to find employment and you have begun your repayment period, we encourage you to contact your loan holder and request relief via a deferment or forbearance. For more information, please contact your lender, the financial aid office or visit the Direct Loan website.

Repayment Options

Federal student loans provide a variety of repayment options to suit your needs. A list of the options is provided by the Direct Loan website. The College Cost Reduction and Access Act of 2007 (Pub.L.110-84) created a new program for student loan borrowers, the Income Based Repayment option, which becomes available starting July 1, 2009. This program allows graduates with high levels of debt and lower incomes for substantially reduced monthly payments and includes a forgiveness provision of any remaining balances in 10 years for employees in the public interest or public service arenas or after 25 years for everyone else. Be aware that it is general practice to place graduates in the 10 year standard repayment plan. You must contact your lender or the Direct Loan Servicing Center to request a different plan.

Useful Resources and Information

  • You must contact your direct loan servicer to request a different plan.
  • Loan Repayment Estimator - Direct Loan Program's IBR calculator helps you determine your projected payment based on your loan debt and income information.
  • NSLDS - The National Student Loan Data System for Students gives you access to the current status of your federal student loans. The information includes loan balances, loan holders, and payments due.
  • Public Service Loan Forgiveness Program - The PSLF Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer
  • USD Law's LRAP Program - Information on USD's LRAP program including requirements, application deadlines, etc.