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Student Services

Understanding Loan Repayment

Borrowing money to finance your educational dreams is one thing, but repaying it requires careful planning and preparation.

Private Loan Repayment

Stafford Loan Repayment

Student Loan Deferment

Paying Student Loans Off Early

Student Loan Forbearance

Private Loan Repayment

The more you know about how to repay your private college loans, the more you'll save

Methods of private college loan repayment vary widely and most lenders offer a number of repayment options.

It's important to read and understand the language in your loan's promissory note, which governs the terms and conditions of repayment. When it’s time to begin repaying the loan, your lender will generally notify you. However, as the borrower, you're responsible for knowing when those payments are due. Failure to pay in a timely manner can lead to credit problems, or even default.

Private student loan lenders typically offer a choice of repayment plans and you can usually repay your private loans over a period between 10 and 25 years. The following are three standard options most lenders offer to repay college loans:

Full deferral. No principal or interest is due while you are still enrolled at least half-time. Payment begins 6 months after graduation.
Interest-only. You pay only the accrued interest while you are in school.
Immediate repayment. Payment of principal and interest begins as soon as the loan is disbursed.

Stafford Student Loan Repayment

Understand the steps to repay student loans

Federal Direct Stafford Loans offer you flexible repayment terms.

You won't be required to begin repaying your Stafford Loan until six months after you graduate or drop below half-time student status. However, for unsubsidized Stafford Loans, interest will begin accruing right away.

With Direct Stafford Loans, you’ll have a choice of student loan repayment plans. They include:

Standard repayment
Extended repayment
Graduated repayment
Income contingent repayment
Income-based repayment

Standard repayment plan

You are required to pay a fixed amount each month until the loans are paid in full, with up to 10 years to repay. Monthly payments must be at least $50.

Extended repayment plan

You’ll pay a fixed, annual, or graduated repayment amount over a period not exceeding 25 years. The fixed monthly payment is lower than under the standard student loan repayment plan, but the total that is repaid is higher, because interest accumulates for a longer time.

Graduated repayment plan

You’ll make lower payments at first—covering at least the interest that accrues between payment——but your payments are increased every 2 years, during which time your income will presumably be increasing. You’ll pay your student loan back within 10 years.

Income contingent repayment

This plan gives financial flexibility taking into consideration each individual’s financial obligations and income. Each year, monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans. This repayment option is not available for Direct PLUS loans.

Income-based repayment (IBR)

With this more affordable Stafford plan, monthly payments are capped at an amount based on your income and the size of your family.

You are eligible for this plan if the monthly student loan repayment amount under IBR will be less than the monthly amount under a standard 10-year repayment plan. Under this plan, if you pay for 25 years you may be eligible to have your loan balances cancelled.

If you work in public service for 10 years, you may also be eligible for loan cancellation.

Student Loan Deferment and Deferred Interest

Deferred student loans: postponing the inevitable

Repaying a student loan is important. Failure to pay—that is, defaulting on your loan—can have serious consequences for your financial reputation and credit score, just as for any other debt.

Temporary student loan deferment scenarios

Under certain circumstances, you may qualify for a short-term student loan deferment. They include:

Military service, in cases of active duty service in the armed services or National Guard
Economic hardship, including unemployment, might allow you to defer repayment for up to three years, if you qualify
Other forms of payment relief, such as the right to switch repayment options once a year, are guaranteed under some federal aid programs.

If your loan was subsidized, interest will generally not continue to accumulate during the deferment period.

Deferment for teachers: If you plan to teach full-time in a low-income area or in certain critical subject matters (including science, math and certain foreign languages), you may qualify for deferment or even cancellation of your federal student loans. For Federal Stafford Loans, this only applies to loans made on or after October 1, 1998.

To find out more about deferment, check with your lender or loan servicer.

Student Loan Prepayment

Why it makes sense to pay student loans off early

Most students take the maximum period allowable to pay back their student loans, with some even applying for deferments when they run into trouble repaying them. But for some thrifty students, the idea of paying thousands of dollars in interest on top of their loan can be unsettling.

A number of strategies can help you pay off student loans early, thus limiting the amount of interest you'll pay over the life of the loan.

Start before the grace period ends
Pay more than the minimum and apply the extra to the principal
Use financial windfalls, such as a bonus or a raise

All federal loans and most private loans permit you to pay these obligations off before the end of the loan period without penalty.

Begin student loan repayment during the grace period

After graduation, federal direct student loans allow you a grace period during which you don’t have to begin repayment. For Federal Direct Stafford Loans, that grace period is 6 months, and for Federal Perkins Loans, it's 9 months. If you land a job before that grace period ends, why not begin paying your loan right away?

Apply extra to the principal to pay off student loans fast

Remember that the interest on federal student loans accrues, or builds up, on a daily basis. So paying earlier in the monthly cycle will shave a little off what you owe on the principal. You can also pay a little extra each month. Just make sure to note that you want it applied to the principal.

Apply financial windfalls to your student loans

Get money you weren’t expecting? Perhaps you received an inheritance from a grandparent, a bonus at work or an unexpected tax refund. Rather than spending that money, why not consider using it—or at least a portion of it—to pay your loan off more quickly? Some people also divert pay raises to paying down their loans more quickly.

Student Loan Forbearance

One path to receiving student loan help when you need it the most

Forbearance is a temporary postponement or reduction in payments when a borrower has financial difficulties. You still have to pay your remaining loan balance, you are simply delaying it. Some borrowers receive loan forbearance when they aren’t eligible for a deferment.

Unlike deferments, interest will continue to accrue during forbearance whether your loans are subsidized or unsubsidized. You're still responsible for paying that interest, even when you've been granted forbearance.

What student loan forbearance means to you

Forbearance can help the borrower avoid delinquency or default. To qualify, you must apply to your loan servicer and continue to make payments until you've been formally notified that your request for forbearance has been granted.

During forbearance, you’ll continue to receive quarterly statements showing the interest that has accumulated on your loan. If you do not pay that interest, it will be added to your loan's outstanding principal amount.

Do you qualify for mandatory student loan forbearance?

Under certain circumstances, lenders must grant you forbearance of your student loans. Be sure to check with your lender to see if you qualify for a mandatory forbearance.

Helpful Tools & Information
Education Planning & Repayment Calculator	Use this handy tool to determine your borrowing and repayment plan.	View calculator
Prevent Loan Default	Advice on how to avoid defaulting on a student loan.	Learn more
Student Loan Tax Benefits	An explanation of the tax benefits of different federal student loan programs—for you or your parents.	Learn more

Have student loan questions? Call our Student Services team.

1-800-708-6684

Student banking questions?

1-888-400-5670

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Citizens Bank is a brand name of RBS Citizens, N.A. and Citizens Bank of Pennsylvania. Deposit accounts held at RBS Citizens, N.A. and Citizens Bank of Pennsylvania are separately insured.