Federal Student Loans: Do You Have to Pay Back Student Loans if You Were Expelled From School?

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.