When you received your school’s financial aid offer it most likely included a federal student loan offer. If you accepted a federal student loan, you signed a binding legal document which states you agree to repay this loan, regardless if you complete your degree or not. Being expelled from school does not absolve you of your duty to pay back your loan.
The Repayment Process
Before Leaving School -
1. If you received a federal student loan, you are required to complete exit counseling before you leave school. Exit counseling is a mandatory information session that explains your loan repayment responsibilities and when repayment begins. Contact your school’s financial aid office to learn how to complete exit counseling.
2. For each federal student loan you received, your school or loan servicer provided you with information (often by email) about it, including the amount you borrowed and the interest rate. Review this information to prepare for repayment.
Your Grace Period -
1. For most federal student loan types, after you leave school you have a six (6) month grace period (sometimes nine (9) months for Perkins Loans) before you must begin making payments. This grace period gives you time to get financially settled and to select your repayment plan.
When your loan enters repayment, your servicer will automatically place you on the Standard Repayment Plan. You can request a different repayment plan at any time.
Making Payments -
Make sure that you keep in contact with your loan servicer. They will be able to advise you if you want to pay back your loan early; are having trouble making payments; or if you miss a payment.
NOTE: Unless you qualify to have your loans forgiven, canceled, or discharged, you are responsible for repaying your loan. It does not matter if you did not complete your education, find a job related to your program of study, or are happy with the education you received with your loan.
- Wahm: How Student Loans Work - What if Your Child Drops Out?
- U.S. Department of Education, Federal Student Aid: Deferment and Forbearance
- American Education Services: Postpone Payments With a Deferment or Forbearance
- Citi Student Loans: Postpone Your Payments
- MTI Business College: Tuition Policies
- State University of New York at Rutgers: Refund Policy
Based on the West Coast, Mary Jane Freeman has been writing professionally since 1994, specializing in the topics of business and law. Freeman's work has appeared in a variety of publications, including LegalZoom, Essence, Reuters and Chicago Sun-Times. Freeman holds a Master of Science in public policy and management and Juris Doctor. Freeman is self-employed and works as a policy analyst and legal consultant.