Do you have to pay federal student loans back?

Federal student loans can often have lower interest rates with more flexible repayment options than private student loans. Still, while these loans are often considered favorable, it’s important to remember that they’re still loans and that money needs to be paid back in most cases.

If you received an award package and accepted a federal student loan after filing the Free Application for Federal Student Aid (FAFSA^®), you may be wondering how the repayment terms work for that loan and if there are any circumstances where you may not have to pay the loan back.

Continue reading to learn more about repaying federal student loans and some circumstances when you might not have to repay federal student loans.

Do I have to pay back federal student loans?

Federal student loans need to be paid back based on the terms outlined in your Master Promissory Note, which you sign when you first agree to the loan.

If your federal student loan isn’t forgiven, canceled, or discharged, you’ll remain responsible for repaying your loan. You’re still responsible for repaying a federal student loan even if you obtained and signed a Master Promissory Note when you were under the age of 18.

In addition, if you didn’t complete your degree, aren’t satisfied with the education you received, or couldn’t find a job in your related field of study, you’re still responsible for repaying your federal student loan.

When do I not need to pay back federal student loans?

There are a few exceptions to the general expectation that federal student loans must be repaid. These include if you’re eligible to have some or all of your loans forgiven, canceled, or discharged. Although these three terms have similar meanings, you may see them used differently.

Forgiveness may be available for certain federal student loan holders who enter certain professions after receiving an advanced degree, including public service, education, and the military.

The most common federal student loan forgiveness program is called Public Service Loan Forgiveness (PSLF).

You may qualify to have a portion of your federal student loan canceled if you enroll in an income-driven repayment plan to repay your loan and then have been in repayment for 20 or 25 years, depending on the repayment plan you’re enrolled in. At the end of that period, the remainder of your loan may be canceled.

Discharge is when you don’t have to make any more student loan payments because of a disability, if the school you received your loan for has closed, if you took out a loan to a school that misled you or engaged in other misconduct, or if you declare bankruptcy, among other reasons.

To learn more about the various programs for student loan forgiveness, cancellation, or discharge, visit StudentAid.gov.

In what timeline do I need to pay back federal student loans?

You’ll generally need to start repaying your federal student loans once you graduate, drop below half-time enrollment, or leave school. However, if you have a Direct Subsidized, Direct Unsubsidized, or Federal Family Education Loan, you’ll be given a six-month grace period before you’re required to start making regular payments. Note that interest accrues during the grace period for most loans, and some unsubsidized loans may accrue interest while you’re still in school.

If you have a Perkins loan, you may have a nine-month grace period. If you have a PLUS loan, you’ll need to start repaying your loan as soon as it’s been fully disbursed (paid out).

You'll be placed on an automatic deferment if you’re a graduate and professional student with a PLUS loan. You won’t have to make regular payments on your student loan while in school and for six months after graduating college, leaving school, or dropping below half-time enrollment. If a parent borrower has a PLUS loan, they can request a six-month deferment after their dependent graduates, leaves school, or drops below half-time enrollment.

Keep in mind that when you must begin repayment depends on the federal student loans you have. It could be helpful to make a list of all your loans and research when you’re required to start repaying them so you’re prepared when the time comes.

Final thoughts

Depending on the federal student loans you have, your repayment terms can vary and will be outlined in your Master Promissory Note, so make sure to review the details to know what you’re responsible for and when so you can make sure that you’re timely with your payments and setting yourself up for financial success.