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US loan repayments

Federal Stafford subsidized and unsubsidized loans have a 6-month grace period after you leave school before repayment starts.

Parent PLUS and Graduate PLUS do not have a grace period and repayment starts within 60 days after you receive the loan payment. Contact your lender to choose a repayment plan that is suitable for you.

Loan consolidation and status

By the time you finish university, you may have a number of loans. The National Student Loan Data System provides data on all your federal student loans to help you keep track of the amounts borrowed. You should consolidate all your federal student loans into one loan with a fixed rate and a single, lower monthly payment. To be eligible for a consolidation loan, you must be in a grace period, repayment, deferment, or forbearance. Contact your lender directly.

Deferment

You can contact your lender and ask to postpone repayment if you meet certain conditions. You may also renew a deferment up to the maximum time allowed.

Forbearance

If you are in temporary, financial difficulty with no deferment option, you can ask your lender or servicer to postpone payments with forbearance. The lender has discretion to add months to the term of your loan, temporarily reduce your monthly payment amount or monthly payments.

Delinquency and default

Failure to make your monthly payment within 30 days will result in delinquency and you may be reported to a credit bureau. This could damage your credit rating. You must contact your lender immediately if you are unable to make a monthly payment on time.

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 licence 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 Stafford loan borrowers at each university who default on their loan repayments. Monash University currently has a 0% cohort default rate.