Types of Financial Aid


Once you are no longer enrolled at least half-time in an eligible program, you will receive a six-month grace period on your Direct Subsidized and/or Unsubsidized Loans before repayment is required. Repayment must begin at the end of the grace period. The period of repayment is typically between 10 and 25 years. You will have the choice of several plans, and your loan servicer will notify you of the date the first payment is due. If you are having trouble making payments on your loans, contact you loan servicer as soon as possible. If you stop making payments and don't get a deferment or forbearance, your loan could go into default, which has serious consequences.

Grace Period

If you have previously had an in-school deferment on a Direct Subsidized or Unsubsidized Loan that entered repayment at an earlier date, you will be required to immediately begin making payments on the loan, because the six-month grace period has already been used. There is no second grace period.

If you re-enroll in school at least half-time before the end of the six-month grace period, you will receive the full six-month grace period when you stop attending school or drop below half-time enrollment.

Interest Rates and Calculators

Please see the Direct Loans Calculators and Interest Rates website for information on current and historic interest rates.  Calculators are also provided for each of the repayment plan options.

Interest Rate Reduction

Automated payments (electronic debit)

When your loan servicer  sends your first bill, they will inform you how to sign up for the electronic debit account (EDA) option and have your bank automatically make the monthly loan payments from your checking or savings account. No writing checks, using stamps, or worrying if payments will get applied by the due date. In addition, Direct Loans offers a 0.25% reduction in the interest rate on loans during any period when payments are made through EDA.

Repayment Plans

The amount of time to repay the Direct Loan depends on the amount of funds that were received and the type of repayment plan that was selected. The period of repayment is typically between 10 and 25 years. You will have the choice of several plans and the Direct Loan Servicing Center will notify you of the date your first payment is due. If a repayment plan is not chosen, Direct Lending will use the Standard Repayment Plan. Most Direct Loan borrowers choose to stay with the Standard Repayment Plan, but there are other options for borrowers who may need more time to repay or who need to make lower payments at the beginning of the repayment period.

Repayment Options:

Standard Repayment: You have a fixed payment each month until the loans are paid in full. Minimum payments are $50 and you have up to 10 years to repay.

Extended Repayment: You must have more than $30,000 in Direct Loan debt and not have an outstanding balance in order to qualify for this repayment plan, and you have 25 years to repay. There are two payment options - fixed or graduated. Fixed payments are the same amount each month, while graduated payments start low and increase every two years.

Graduated Repayment: Payments on this plan will start out low and increase every two years. You have up to 10 years to repay. Payments will never be less than the amount of interest that accrues between payments.

Income Contingent Repayment (ICR): Payments on this plan are calculated on the basis of your adjusted gross income (plus your spouse’s income if you are married), family size, and the total amount of your Direct Loans. Under the ICR plan, you will pay each month the lesser of:

  1. the amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or
  2. 20% of your monthly discretionary income*

*Monthly discretionary income equals your AGI minus the poverty level for your state of residence and family size, divided by 12. For the current poverty level, see the Poverty Guidelines Chart, which is issued annually by the U.S. Department of Health and Human Services.

The maximum repayment period is 25 years. If loans are not fully repaid after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged. Taxes may, however, need to be paid on the amount that is discharged.

Income-based Repayment: Under this plan, the required monthly payment will be based on your income during any period of a partial financial hardship. Monthly payment may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If certain requirements are met over a specified period of time, you may qualify for cancellation of any outstanding loan balance.

For more detailed information on repayment options, visit the Direct Loan Repayment Plans website.

Deferment and Forbearance

If you are in default on a loan, you are not eligible for a deferment or forbearance.

A deferment is a postponement of payment on a loan, during which interest does not accrue if the loan is subsidized.

You may qualify for a deferment if you are:

  • Enrolled at least half-time in an eligible postsecondary school or studying full-time in a graduate fellowship program or an approved disability rehabilitation program.
  • Unemployed or meet the rules for economic hardship (limited to 3 years).
  • Serving on active duty during a war or other military operation or national emergency or performing qualifying National Guard duty during a war or other military operation or national emergency, and if you are serving on or after Oct 1, 2007, for the 180-day period following the demobilization date for your qualifying service.
  • A member of the National Guard or other reserve component of the U.S. Armed Forces (current or retired) and are called or ordered to active duty while enrolled at an eligible school, or within six months of having been enrolled. You are also eligible for a deferment during the 13 months following the conclusion of your active duty service, or until you return to enrolled student status, whichever is earlier.

In most cases, you need to submit a deferment request to the Direct Loan Servicing Center along with documentation of eligibility for the deferment. If you have gone back to school and the Direct Loan Servicing Center receives enrollment information that shows you are enrolled at least half-time, they will automatically put your loans into deferment and notify you. You do have the option of cancelling the deferment and continuing to make payments on the loans.

If you cannot make scheduled loan payments, but do not qualify for a deferment, you may be eligible for forbearance. Forbearance allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments. Some common reasons for getting forbearance are illness, financial hardship, or serving in a medical or dental internship or residency. More information can be found by calling your loan servicer.

Under certain circumstances, forbearance is automatic, for instance, during processing of a deferment, forbearance, cancellation, change in repayment plan or consolidation, or if you are involved in a military mobilization or a local or national emergency.

Loan Forgiveness

There are certain circumstances in which your Stafford loans can be forgiven:

Teacher Service: If you are a new borrower* and are a full-time teacher in a low-income elementary or secondary school for 5 consecutive years, you may be able to have as much as $17,500 of their subsidized or unsubsidized loans cancelled. For more information, see Student Aid on the Web or call the Direct Loan Servicing Center at 1-800-848-0979.

* Students are considered new borrowers if they did not have an outstanding balance on an Federal Family Education Loan (FFEL) or Direct Loan on Oct. 1, 1998, or on the date they obtained an FFEL or Direct Loan after Oct. 1, 1998.

Public Service: If you are employed in certain public service jobs and have made 120 payments on your Direct Loans (after Oct. 1, 2007), the remaining balance that is owed may be forgiven. Only payments made under certain repayment plans may be counted toward the required 120 payments. You must not be in default on the loans that are forgiven.


If you have multiple federal education loans, you can consolidate them into a single Direct Consolidation Loan. This may simplify repayment if you are currently making separate loan payments to different loan holders, because consolidation will allow for a single monthly payment. Consolidation generally extends the repayment period, resulting in a lower monthly payment. This may make it easier for you to repay your loans. However, you will pay more interest if you extend your repayment period through consolidation since you will be making payments for a longer period of time. There may be tradeoffs, however, so you will want to learn about the advantages and possible disadvantages before consolidating. To learn more, visit the Direct Consolidation Loan website. The Direct Loans Consolidation website also has an online calculator to estimate monthly payments if loans are consolidated.


If you're in a dispute about your federal student loan, contact the Federal Student Aid Ombudsman Group as a last resort.

The Ombudsman Group is dedicated to helping resolve disputes related to Direct Loans, Federal Family Education Loan (FFEL) Program loans, Guaranteed Student Loans, and Perkins Loans. you can contact the Federal Student Aid Ombudsman through one of the following methods:

Via on-line assistance: http//studentaid.gov/repay-loans/disputes/prepare

Postal Mail

U.S. Department of Education
FSA Ombudsman Group
P.O. Box 1843
Monticello, KY 42633