Debt Management

Federal student loans are real loans, just like car loans or mortgage loans. You must repay a student loan even if your financial circumstances become difficult.

  • Federal student loans usually can't be written off in bankruptcy.
  • They can't be cancelled because you didn't get the education or job you expected, and
  • They can't be cancelled because you didn't complete your education.

You will have a relationship with your loans for many years. Borrow wisely.

Things to Remember

  • Student loans are an investment in your future.
  • Make a budget and stick with it. Be careful with credit card spending.
  • Borrow only what you need.
  • If you don't understand something, call your servicer or your financial aid counselor.
  • Keep all student loan documents in a file.
  • Open all your mail and read everything pertaining to your student loans.
  • Keep in contact with your servicer.
  • Make all regularly scheduled payments.
  • Ask your servicer for help if you start to have difficulty making payments. There are alternative options available.
  • Borrowing is an investment in your future.

Loans add up! Watch your finances carefully!

Loans accumulate over the two to four years or more that you will attend school. Estimating the full cost of attendance for the total number of years you plan to attend school will help you understand how much you may have to borrow. Once you have an idea of the total amount of federal student loans you may be taking out, you can see how much your monthly payments could be.

To estimate your monthly payments go to A loan calculator is available. You will also see different payment plans available at repayment. Estimating future payments helps to keep borrowing at a minimum. 

Keep track of how much you're borrowing.

To keep track of all your U.S. Department of Education loans, access the National Student Loan Data System (NSLDS) at, the central database for federal student aid. You'll need to use your PIN to access your information.

Keep good records. Repaying your student loan(s) is a very serious matter, and it's important to keep accurate, accessible records. You should set up a file folder for each loan and file all paperwork. Your file should include:

  • Financial aid award letters.
  • Loan counseling materials (entrance and exit counseling).
  • Promissory note(s).
  • Amount of your student loans, including the amount that is disbursed each semester or year. (You may access this information at

Don't ignore debt. It won't go away.

There are many ways to get help if you are struggling, including changing your payment due date, switching repayment plans, and asking about deferment or forbearance.

What if I can't make my monthly payments?

Your student loan debt is a legal obligation and can be a 10- to 30- year financial commitment.

If you don't make a payment on time or if you start missing payments—even one—your loan is considered delinquent and late fees can be assessed. If you are making late or partial payments, contact your loan servicer immediately for help. If you don't make payments for more than 270 days, your loan will go into default and your credit rating could suffer.

Don't default.

You've made a commitment to yourself and your future. Be a responsible borrower, because loan default has serious consequences:

  • Your entire loan balance (principal and interest) will be due in full immediately.
  • Your college records may be placed on hold.
  • You'll lose your student loan deferment options.
  • You won't be eligible for additional federal student aid.
  • Your account may be turned over to a collection agency and you'll have to pay additional charges, late fees and collection costs, all of which becomes part of your debt.
  • Your credit rating will be damaged for several years because defaulted loans are reported to national credit bureaus.
  • You'll have difficulty qualifying for credit cards, a car loan, a mortgage or renting an apartment. (Credit checks are required even to rent an apartment.)
  • Your federal and state income tax refunds can be withheld and applied to student loan debt. This is called a tax offset.
  • You may have a portion of your wages garnished (withheld).
  • You may not be able to obtain a professional license or get hired by any employer that performs credit checks on its prospective employees.

Additional help and information provides a beginning point for questions you have regarding Direct Loans.

Students and borrowers may call for assistance to fill out electronic prom notes, appeal a denied credit decision and get help with the endorser application sometimes required for the parent or Grad PLUS loans. Contact a Direct Loan applicant services representative at 800-557-7394.

"Your Federal Loans: Learn the Basics and Manage Your Debt" is a booklet that covers what you should consider when you're planning on borrowing money to pay for your education; such as, what types of federal student loans are available, how much to borrow, the difference between private and federal student loans, and other helpful hints on how to manage your debt.

The above information is from "Your Federal Loans: Learn the Basics and Manage Your Debt" published by the Department of Education.