Federal Student Loan Repayments: What You Need to Know

Ascent hosted an engaging webinar recently to address what’s on many people’s minds – federal student loan repayment. Embarking on this journey can be overwhelming, but you’re not alone. According to NerdWallet, “nearly 44 million borrowers with student loans” are entering repayment. Ascent is committed to supporting individuals every step of the way. 

The recent webinar, ‘Federal Student Loan Repayment De-Mystified,’ covered several topics ranging from how to prepare for repayment to understanding your repayment plan and exploring the invaluable resources available for those making budget adjustments. 

You can watch the full webinar below, but Ascent also wanted to offer resources and address some important audience questions that we didn’t have time to cover in the webinar. You can see responses to those questions below.

There are some great options for student loan repayment. What are the potential downsides to an Income Driven Repayment plan (IDR)?

Income Driven Repayment (IDR) plans may be a good option for students that are unable to make their required payments under a standard, graduated or extended repayment plan, have low income or are enrolled in the Public Service Loan Forgiveness program, among other reasons. However, it is not always the best option for all students. Some of the disadvantages of IDR’s include:   

• You might not qualify for a lower payment than under a standard repayment plan 
• Depending on which IDR plan, loan balances may increase as well as total cost of the loan due to unpaid interest 
• It will generally take longer to fully repay the debt obligation 
• Monthly payments may increase as your income increases 
• There may be tax consequences for forgiven loan balances, and you may want to consult a tax professional 

What if my monthly payment is too high? How can I reduce this to a manageable amount?

According to StudentAid.gov, “Most federal student loans are eligible for at least one income-driven repayment plan. If your income is low enough, your payment could be as low as $0 per month.” 

Start by exploring the new SAVE plan and use the Loan Simulator. This tool will help you explore repayment options that fit your needs. 

You can also reach out to your Loan Servicer to explore options for reducing your monthly payment.  

To find your Loan Servicer: Log into StudentAid.gov, view your Dashboard and access their information on the right-hand side panel. 

What is PSLF and how can I qualify?

The Public Service Loan Forgiveness is a program for individuals employed by a government or non-profit organization that forgives the remaining balance on your direct loans: 

• If you are working full time for an eligible employer 
• After you’ve made the equivalent of 120 qualifying monthly payments under an accepted repayment plan 

The PSLF Help Tool is a great place to start and will help you: 

• Search for qualifying employers 
• List what actions you may need to take to become eligible  
• Generate a PSLF form (tip: You must complete the form in a single session) 

Need more info? Check out this helpful FAQ about PSLF 

What types of student loan repayment options are there for Parent Plus Loans?

Parent PLUS borrowers are eligible for the following repayment plans: 

• Standard Repayment Plan
• Graduated Repayment Plan
• Extended Repayment Plan

According to StudentAid.gov, “Parent borrowers can become eligible for an additional repayment plan—the Income-Contingent Repayment Plan—by consolidating their parent PLUS loans into a Direct Consolidation Loan.” 

If you have concerns about making payments, reach out to your Loan Servicer to discuss your options.  

Need more info? Check out these Parent Plus FAQs

The conversation is far from over

The conversation is far from over. It’s ever evolving, and we recognize the importance of this topic for enrolled and unenrolled students, graduates and cosigners. We’re dedicated to delving deeper and bringing more insights, advice, and conversations in the coming weeks. 

Stay tuned and keep sharing your questions, concerns, and personal experiences as it helps shape these discussions and strengthens our Ascent community.  

As current and former students, Ascent provides free resources to help you throughout your education, which may include links to third-party websites (where security and privacy policies may differ from Ascent’s). For our full disclaimer, please click here.