As you know, all student loans, whether federal or private loans,
must be repaid. Once you have taken any loan, there are some important
things for you to keep in mind:
When you take a federal student loan you
are agreeing to pay back the amount you borrow (loan principal)
and any accumulated interest.
The first payment will be due six months
after you graduate, enroll less than half-time, or withdraw from
If you have trouble repaying your federal
student loan, for reasons such as low income, loss of job, etc.
you may be eligible for a period of deferment or forbearance,
during which no principal payments are due. In certain cases, the
interest will accrue and capitalize, in others the interest will
be paid by the Federal Government.
If you fail to make payments on your
Federal student loan for nine months (twelve months if your lender
is Direct Loans), you will be considered in default. If you
default, you will be turned over to a collection agency and
reported to a credit bureau, potentially impairing your ability to
apply for credit and preventing you from obtaining future student
aid. In addition, the entire loan balance will become due
immediately and any future income tax refund may be withheld to
satisfy the debt to the government.