Direct Loan Repayment

Direct Loans

Direct Loans are loans borrowed from the Department of Education. You must begin to repay, with interest, after you graduate or stop attending at least half-time (6 credits). A variety of repayment plans, consolidation options and loan forgiveness programs may be available to you.

End of Student Loan Repayment Pause

Congress recently passed a law preventing further extensions of the student loan payment pause. Loans will begin accruing interest again on September 1, 2023 and borrowers will resume repayment in October 2023. Loan servicers will notify borrowers at least 21 days before payments resume.
The one-time Federal Student Loan Debt Relief announced in Fall 2022 has been blocked by the Supreme Court and will not move forward. Those who applied and were “approved” will not have their loans discharged.

Preparing for Repayment

  1. Identify your loan servicer by logging in to your profile
  2. Update your contact information and communication preferences in your profile on your loan servicer's website and in your profile.
  3. Review your auto-debit enrollment or sign up for the first time on your loan servicer's website.   Auto-debit will not resume until it is confirmed or updated.
  4. Choose your repayment plan and budget for your monthly payments. Check out Loan Simulator to find a repayment plan that meets your needs and goals or to decide whether to consolidate. You can also visit the Federal Student Aid website for a detailed overview of loan repayment plans. If you are concerned about the amount of your loan payment, consider applying for an income-driven repayment (IDR) plan. An IDR plan can make your payments more affordable, depending on your income and family size.

Grace Periods & Servicers

You are offered a one-time 180-day grace period after you graduate or drop below half-time (6 credits) before you are required to begin making your monthly loan payments.

A servicer is the agency who collects the loan payments on your behalf. You can identify who your servicer is by logging on to If you have additional questions, please email the Clark College financial aid loans team at

Standard & Income Driven Repayment Plans

The Standard Repayment plan is the repayment plan you are automatically enrolled in when you begin repayment. Your payments are divided into 120 payments over a 10-year period.

If you cannot afford payments under the Standard Repayment plan, it is best to contact your servicer about an Income Driven Repayment Plan (IDR) and other options that may be available. To determine if you’re eligible and which plan might work best for you, see the Loan Repayment Estimator.

Notes on Public Service Loan Forgiveness

If you are employed by a U.S. federal, state, local, or tribal government or not-for-profit organization, you might be eligible for the Public Service Loan Forgiveness Program.

For further information and FAQs, please see

Deferment, Forbearance, & Consolidation

Consider Another Repayment Plan First

Because of the impact on interest and potential loan forgiveness, it might be worth exploring another repayment plan before you consider deferment or forbearance. For example, your payments could be more affordable if you change to an income-driven repayment plan. Contact your loan servicer to find out if another repayment plan might be the best option for you.

Deferment is a temporary postponement of payment on a loan that is allowed under certain conditions.  Any unpaid interest accrued during the deferment period may be added to the principal balance (capitalized) of the loan(s). If you are interested in pursuing deferment, be sure to speak with your loan servicer.

Forbearance may be requested if you are temporarily unable to make your scheduled monthly payments.  Interest will still accrue on your loans so, while it is preferable to being late on your payments, it is often best to avoid forbearance if you can.

Consolidation is when you combine multiple Direct Loans into a new consolidated loan. Consolidation might not be the best option for everyone, so it is important to speak with your servicer before making the decision to consolidate.

Delinquency & Default

Your federal student loans become delinquent if you miss a required payment. Delinquency hurts your credit rating.

If you are delinquent for 270 or more days, you enter default. Defaulting is very serious and can lead to:

  • Losing your financial aid eligibility
  • Damage to your credit history
  • Garnishment of wages and/or seizure of benefits or tax refunds
  • Loss of eligibility for certain types of employment
  • Other repercussions

Fresh Start Initiative
The U.S. Department of Education announced an initiative that would eliminate the negative effects of student loan default for borrowers who defaulted prior to the start of the COVID-19 pandemic student loan payment pause (March 13, 2020).  This initiative, called “Fresh Start”, enables borrowers with defaulted federal student loans to regain federal student aid eligibility.  The Fresh Start initiative will remain available to previously defaulted borrowers, as identified above, for one year after the end of the pandemic payment pause.

Please contact for additional details and next steps.

If you are not eligible for the Fresh Start Initiative, you will need to contact Default Management & Collection Services at 1-800-621-3115. In general, have three (3) options:

  • Pay the amount in full or make a negotiated payment
  • Consolidate the defaulted loan into a new loan
  • Rehabilitate the loan by making 9 consecutive on-time payments
    (After six payments, you will become eligible for federal aid again. However, your loan will still be considered in default status until all 9 on-time payments are made).
Of the three (3) options, rehabilitation is preferable because it clears the default from your credit history.

Cohort Default Rate

What is a cohort default rate?

For schools having 30 or more borrowers entering repayment in a fiscal year, the school’s cohort default rate (CDR) is the percentage of a school’s borrowers who enter repayment on certain Federal Family Education Loans (FFELs) and/or William D. Ford Federal Direct Loans (Direct Loans) during that fiscal year and default within the three-year cohort default period.

The phrase “cohort default period” refers to the three-year period that begins on October 1 of the fiscal year when the borrower enters repayment and ends on September 30th of the second fiscal year following the fiscal year in which the borrower entered repayment. This is the period during which a borrower’s default affects the school’s cohort default rate.

Cohort default rates are based on federal fiscal years. Federal fiscal years begin October 1 of a calendar year and end on September 30th of the following calendar year. Each federal fiscal year refers to the calendar year in which it ends.

Please refer to the Department of Education’s Cohort Default Rate Guide for a more in-depth description of cohort default rates and how the rates are calculated.

Clark College CDRs:
FY 2020 – 0%
FY 2019 – 2.2%
FY 2018 – 8.8%

Private Loans and Repayment

Private Education Loans can have a much higher interest rate than Direct Loans. Clark College does not recommend lenders or use preferred lender lists. Choose your lender and complete their Private Loan application process.

Avoiding Loan Scams

There are agencies and organizations that may attempt to take advantage of student borrowers by fraudulently obtaining your personal information. The Department of Education and your loan servicer will never ask you for your FSA ID or ask you to pay an upfront cost for assistance.  For more information, please see Avoiding Loan Scams or the Federal Trade Commission’s Consumer Information page.

If you have already provided your personal information or paid a student loan debt relief company, it is recommended that you take the following actions:

  • Log in and change your FSA ID. Do not share your new FSA ID password with anyone.
  • Contact your loan servicer to revoke any power of attorney or third-party authorization agreement that your servicer has on file. You should also make sure no unwanted actions were taken on your loans.
  • Contact your bank or credit card company and request that payments to the student loan debt relief company be stopped.
  • Report your complaint to the Federal Trade Commission.

File a report of suspicious activity through the Federal Student Aid Feedback System.

Loan Dispute Resolution

If you and your loan servicer disagree about the balance or status of your loan, you should first identify your loan issue and then contact your loan servicer.

If you have already contacted your servicer, but your issue has still not been resolved, submit a complaint.

Helpful Links

Contact Information

U.S. Department of Education
FSA Ombudsman Group
P.O. Box 1854
Monticello, KY 42633
Phone: 1-877-557-2575
Fax: 1-606-396-4821