Student Loans

What happens with your student loan after graduation?

Adult Student LoansCongrats, you made it! Now, you have a six-month grace period on your federal student loans before your first payment is due. The first thing to do is to contact your servicer/lender in order to update your contact information. You should also request information on the various repayment options and entitlements available.

Need more help? COSTEP is here for you. We are a non-profit organization based in McAllen, Texas that provide free financial literacy. Feel free to reach out and set an appointment with us.

What are my entitlements?


Deferment is a period during which repayment of the principal and interest of your loan is temporarily suspended.

There are several deferment types but borrowers must demonstrate eligibility. Government pays the interest on subsidized loans and the borrower is responsible for accruals on un-subsidized loans.

  • In-school
  • Educational
  • Temporary Total Disability
  • Public Service
  • Unemployment
  • Parental Leave
  • Hardship
  • Military Service

During a deferment, you do not need to make payments. BUT, if you don’t pay the accrued interest on the un-subsidized portion of your loans, upon entering repayment the accrued interest may be added to the principal or “capitalized”.


During forbearance, you stop making payments or reduce your monthly payment for up to 12 months at a time. However, interest will continue to accrue and may be added to the outstanding principal balance which is referred to as “capitalizing” the interest. You may qualify at lenders discretion if you can’t make your scheduled loan payment or if you don’t qualify for a deferment

What are my repayment options?

These are several repayment options that your lender might offer. Such as:

  • Standard repayment schedule = 10 years
  • Graduated repayment schedule = 10 years, payment amount starts low and will gradually increase.
  • Extended repayment schedule = 25 years for new borrowers after October 7, 1998. Balance has to be> =$30,000 (can be standard or graduated).
  • Income based repayment/income sensitive repayment/income contingent/pay as you earn are all repayment options that are based on the borrowers adjusted gross income or monthly gross income. In some instances, the borrower must be experiencing a partial financial hardship.

How do I consolidate my loan?

adult-student-loan-2First, you need to consider whether or not loan consolidation is the best option for you. It will definitely simplify your monthly payments by converting all your loans into one main one. Therefore, you will only have to make one school loan payment instead of several per month. Loan consolidation can also help you lower your monthly payments by giving you up to 30 years to repay your student loan. Just remember that if you increase the length of your repayment period, you’ll end up paying more in interest. Also, once you consolidate your loan, there’s no turning back. Make sure you weigh your pros and cons before making your decision.

Want to consolidate? Click here.

You might be wondering what are the consequences of not re-paying your loans. Well,

  • Added collection costs up to 28%
  • There will be a bar placed on state licenses
  • Wage garnishments
  • Seizures on tax refunds
  • Damage to your credit scores
  • And, student loans are not dischargeable in bankruptcy

How can I rehabilitate my defaulted loan?

To qualify for a Federal Family Education Loan (FFEL) or Direct Loan (DL) rehabilitation, you have to make nine monthly payments within 20 days of the due date during a period of 10 consecutive months.  After you have made 9 out of 10 consecutive, voluntary, on-time, monthly payments on a defaulted student loan, the loan may be rehabilitated and the default removed from your credit history.

An interruption in this consecutive period is allowed only for qualifying military service members or affected civilians. They may resume their rehabilitation payments after their service is completed.

To access information on Federal Family Education Loans Rehabilitation click here.

To access Direct Loans Rehabilitation click here.

Access your student loan account

Click here to access your COSTEP student loan account. If you have student loans with other servicers contact your other servicer(s).

Student Loan Forms

The following link can be used as a resource to access forms used under the Federal Family Education Loan Program (FFELP) or the Federal Direct Loan Program (FDLP:

Bankruptcy Facts

If you are considering bankruptcy, please seek immediate legal help.

The United States designed the bankruptcy law to ensure that nobody faces a tremendous burden because of his/her debts. If your debts are unbearable, you may declare bankruptcy and some or possibly all debt may be forgiven so you can start over. Before you declare bankruptcy, make sure you keep in mind the following:

  • Bankruptcy laws are federal laws and the cases are brought in federal court. You have to petition for bankruptcy with a judge.
  • Not all debts are forgiven when you file Chapter 13 bankruptcy.
  • Student loans and tax debt usually can’t be eliminated in any bankruptcy.
  • You may be able to keep your home, even when you declare bankruptcy.
  • Bankruptcy stays on your credit report for up to 10 years after filing.

Access your student loan account

If you have student loans with other servicers contact your other servicer(s). Locate your other federal loans (National Student Loan Data System) at