Managing Your Student Loans

Preparing for Graduation

As you prepare for graduation, you should ensure that you have a firm command of all of your student loan data. Much of this information is found at the Federal Student Aid website. Make sure you have a comprehensive list of all your loans (from both undergraduate and graduate/professional studies), as well as your lenders, your account numbers, and the type of loan. Generally, your federal loans will have a six-month grace period for repayment after graduation. You should ensure that you know when your first payment is due for each loan. If you are not contacted around graduation time regarding repayment, you should contact your servicer. You should make certain that your servicer always has your most up-to-date contact information. Failure to receive the bill is not a valid defense against defaulting on your loans. You can contact either your servicer or the Office of Student Financial Aid at 608-262-3060 for assistance in determining your full debt load.

Remember, you are ultimately responsible for repaying your student loans. Failing to do so in a timely manner may result in damage to your credit score and other long-term consequences.

Loan Repayment Plans

There are various federal loan repayment plans that may be available to you, depending on your individual loan portfolio. You can choose the option that best meets your needs based on your financial goals and what you can afford to pay each month. You can change your repayment plan by contacting your servicer. View a full list of federal student loan repayment plans and associated calculators. If you have questions about your loan repayment options, you can contact the Office of Student Financial Aid at 608-262-3060 or the Law School Office of Admissions & Financial Aid at 608-262-5914.

Understanding Your Rights and Responsibilities

As a borrower, you have both rights and responsibilities, including the responsibility to repay your loans and the right to postpone repayment, if needed. If you have difficulty making your payments once your post-graduation grace periods have ended, you should speak to your lender about the following two options after you have exhausted your options through various loan repayment plans (see link in [Loan Repayment Plans]). 

Deferment

A deferment is a temporary period during which no payments are made on your loan.  While you are in deferment, the government pays the interest on any subsidized loans, but interest accrues on your unsubsidized loans.  However, you do not have to pay interest while in deferment; if you do not pay the interest on your loan during deferment, the accrued interest may be capitalized (added to the principal balance of your loan) when you leave deferment. Find out more about Federal Student Aid Deferment.

Several types of deferment may be available for individuals with certain types of federal loans, including: 

1. Education-related
2. Economic hardship
3. Unemployment
4. Military service
5. Post-active duty

If you are unable to make payments on your loans due to economic hardship, unemployment, or other factors, please contact OSFA or your loan servicer to determine whether an income-based repayment plan may be an option for you.

Forbearance

Forbearance can help you meet your loan repayment obligations by allowing a temporary cessation of payments, an extension of the time available for making payments, or smaller payments than previously scheduled. During forbearance, interest will accrue on all types of federal student loans. You can apply for a forbearance if you cannot make your monthly loan payments, but do not qualify for deferment. There are several types of forbearance on federal loans. Your loan servicer will grant forbearance only if they believe that you intend to repay your federal loans, but that you are currently unable to make payments due to poor health or other acceptable reasons, including financial hardship.  Forbearance can be given up to one year at a time. Contact your loan servicer for more information and to obtain any needed forms to apply for forbearance.  Find out more about Federal Student Aid Forbearance. 

If you are unable to make payments on your loans due to economic hardship, unemployment, or other factors, please contact OSFA or your loan servicer to determine whether an income-based repayment plan may be an option for you.

Repayment Incentives

Lenders and servicers may offer repayment incentives on federal and/or private loans to encourage timely repayments.  These may include interest rate reductions to responsible borrowers who make a certain number of consecutive monthly payments, or who elect to have their payments automatically withdrawn from their checking or savings accounts. Please contact your servicer for more information about repayment incentives.

Consequences for Delinquent or Defaulted Loans

There are severe consequences if you do not make your loan payments on time or at all.  Remember, you are responsible for contacting your lender/servicer immediately if you anticipate having any difficulty making payments.  Some potential consequences of delinquent or defaulted loans are listed below: 

1. Information is reported to loan and national credit agencies.
2. Your credit rating could be affected for as long as seven years.  This may affect your ability to obtain credit cards, mortgages, car loans and most types of federal loans. 
3. Your wages could be garnished and your assets seized.
4. You may lose the ability to establish a payment schedule or the ability to qualify for a deferment and/or cancellations.
5. Your loan(s) may be referred to a collection agency, and you may be held liable for litigation and costs.
6. Your professional license(s) may not be granted or renewed.
7. Your federal and state income tax refunds may be withheld by the government to be applied to the balance of your loans.

Repayment Assistance

Public Service Loan Forgiveness

In 2007, Congress created the Public Service Loan Forgiveness Program (PSLF) to encourage individuals to work full time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance due on their eligible federal student loans after they have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers. Find out more about PSLF and other types of loan cancellation or discharge. 

The University of Wisconsin Law School Loan Repayment Assistance Program

The Law School sponsors a Loan Repayment Assistance Program (LRAP), which provides small grants to students who accept permanent public interest jobs after graduation. Since its inception in 2002, the LRAP has provided loan repayment in the form of a lump sum payment upon acceptance of a "qualifying position." The size of the award may vary depending on the applicant pool and your debt obligations. "Qualifying positions" include legal positions at a nonprofit organization or government agency with a specific maximum annual salary. Please contact the Office of Career and Professional Development at 608-262-7856 for more information.

Bar Loans

A bar loan can help with bar exam expenses, including bar review course fees, bar exam deposit and/or fees and living expenses. Bar loans are private, credit-based, and interest rates are usually variable. These loans are not eligible for federal loan repayment plans or public service loan forgiveness.

To inquire about bar loans, contact your local lender.