US loan repayments

You have a six-month grace period for your Direct Subsidised and Unsubsidised loans when you graduate, drop below half-time, or withdraw from your course before repayment starts.

There is no grace period for Direct PLUS but you can defer repayment whilst enrolled at least half-time and for an additional six months after you graduate or drop below half-time enrolment. However, if you choose to defer payment, any interest that accumulates during deferment is added to your loan amount.

You have a choice of several repayment plans and the Direct Loan Servicing Centre will notify you of the date your first payment is due. If you do not choose a repayment plan, you will be placed on the Standard Repayment Plan.

Direct Consolidation Loan

By the time you finish university, you may have a number of loans. The National Student Loan Data System (NSLDS) provides data on all your federal student loans to help you keep track of the amounts borrowed. You can consolidate all your federal student loans into a single Direct Consolidation Loan to have a single monthly payment.

Deferment

A deferment is to postpone the payment of your loan. You may qualify if you meet certain conditions.

Forbearance

If you are in financial difficulty with no deferment option, you may postpone payments with forbearance. This allows you to stop making payments temporarily, make smaller payments, or extend the time of making payments.

Delinquency and default

Failure to make your monthly payment within 30 days will result in delinquency and this could damage your credit rating.

After several months of delinquency, your loan status can go into default with serious consequences, including:

• having a portion of your wages withheld to repay the loan
• being sued and paying for all costs
• having to pay 15-18% more interest on the loan if a collection agency is involved
• having your US federal income tax refunds withheld to repay the loan
• having your drivers licence cancelled (occurs in a number of US states)
• losing eligibility for all federal and state financial aid until you have made satisfactory repayment arrangements
• having your license renewal denied (for professions that require a licence to practice) until you make satisfactory payment arrangements.

Cohort default rate

The US Department of Education calculates a cohort default rate annually to determine the percentage of Federal loan borrowers at each university who default on their loan repayments. Monash University currently has a 10% cohort default rate.