Student Loans, Interest Payments, and Taxes – Oh my!

1098-E Tax Form

Student loans, interest payments, and taxes: three things that have scared many people for years now. Read on to learn how these things can benefit you. Just as Dorothy, the Scarecrow, the Cowardly Lion, and the Tin Man learned when they followed the yellow brick road, once you look at the bigger picture you’ll realize you had the resources to face your fears all along!

If you made federal student loan payments in 2015, you may be eligible to deduct a portion of the interest paid on your 2015 federal tax return. This is known as a student loan interest deduction. Don’t miss out on this opportunity to make the money you’ve paid work for you! Below are some questions and answers to help you learn more about reporting student loan interest payments from IRS Form 1098-E on your 2015 taxes and potentially get this deduction.

What is IRS Form 1098-E?

IRS Form 1098-E is the Student Loan Interest Statement that your federal loan servicer will use to report student loan interest payments to both the Internal Revenue Service (IRS) and to you.

Will I receive a 1098-E?

If you paid $600 or more in interest to a federal loan servicer during the tax year, you will receive at least one 1098-E.

The IRS only requires federal loan servicers to report payments on IRS Form 1098-E if the interest received from the borrower in the tax year was $600 or more, although some federal loan servicers still send 1098-Es to borrowers who paid less than that.

If you paid less than $600 in interest to a federal loan servicer during the tax year and do not receive a 1098-E, you may contact your servicer for the exact amount of interest you paid during the year so you can then report that amount on your taxes.

How many 2015 1098-Es should I expect to receive?

That depends on how much you paid in interest, how many federal loan servicers you had, and some other factors. Read through the scenarios below to find where you fit and know how many 2015 1098-Es you should expect.

  1. Your current servicer was your only servicer in 2015: In this case, your current federal loan servicer will provide you with a copy of your 1098-E if you paid interest of $600 or more in 2015. Your servicer may send your 1098-E to you electronically or via U.S. mail.
  2. You had multiple servicers in 2015: In this case, each of your federal loan servicers will provide you with a copy of your 1098-E if you paid interest of $600 or more to that individual servicer in 2015. Your servicer may send your 1098-E to you electronically or via U.S. mail.

If you paid less than $600 in interest to any of your federal loan servicers, you may need to contact each servicer as necessary to find out the exact amount of interest you paid during the year.

How will reporting my student loan interest payments on my 2015 taxes benefit me?

Reporting the amount of student loan interest you paid in 2015 on your federal tax return may count as a deduction. A deduction reduces the amount of your income that is subject to tax, which may benefit you by reducing the amount of tax you may have to pay.

For more information about student loan interest deduction, visit the IRS’s Tax Benefits for Education: Information Center.

Now that you know student loans, interest rates, and taxes aren’t as scary as you may have originally thought, you are ready to report your student loan interest rates on your 2015 federal tax return!

But what if I still need help or have more questions?

While we are not tax advisors and cannot advise you on your federal tax return questions, your federal loan servicer is available to assist you with any questions about your student loans, including questions about IRS Form 1098-E and reporting the student loan interest you’ve paid on your 2015 taxes. If you’re not sure who your loan servicer is, visit My Federal Student Aid to find contact information for the loan servicer or lender for your loans. To see a list of our federal loan servicers, go to the Loan Servicers page on

Noemi Solares is a Management and Program Analyst at Federal Student Aid.

Learn the Secret to Expanding Your Student Loan Repayment Benefits

If you borrowed before July of 2010, you may need to consolidate your loans in order to qualify for certain student loan repayment benefits, such as Public Service Loan Forgiveness and some income-driven repayment plans.

Distraught girl at computer

Why does it matter which type(s) of loans I have?

If you’re interested in the best student loan repayment benefits, you’ll want to have Direct Loans. If you borrowed any federal student loans before July 2010, there’s a good chance that some or all of your federal student loans are not Direct Loans. But that doesn’t mean you can’t qualify for the best repayment benefits—you can. All you’ll need to do is consolidate. If you consolidate, as a student borrower, here are some of the repayment benefits you could access:

What are Direct Loans?

Direct Loans are those that are made to you, though your school, directly by the Department of Education. Since July 2010, almost all federal student loans are made under this program—in full, called the William D. Ford Federal Direct Loan Program.

Though the Direct Loan Program existed long before 2010, there was another bigger federal student loan program that most students relied on to finance their education: the Federal Family Education Loan (FFEL) Program.

Under the FFEL Program, loans were made by banks and ultimately guaranteed by the taxpayer in case you didn’t make your payments. In 2010, this program ended.

Loans from both of these programs are FEDERAL student loans.  The main way the programs differ is in who made you the loan in the first place. Most of the benefits in the Direct Loan Program are available in the FFEL Program. However, FFEL Program loans are not eligible for Public Service Loan Forgiveness or the best income-driven repayment plans. This is where loan consolidation can help. It will effectively convert your FFEL Program loans into Direct Loans.

How do I find out which type(s) of federal student loans I have?

  1. Go to
  2. Log in using your FSA ID (You can’t use your Federal Student Aid PIN anymore!)
  3. Scroll to the loan summary section. Go through each of the loans that are listed. Use the list below to see if you need to consolidate any of your loans to qualify for the best repayment options.

Which loans to consolidate

What should I consider before consolidating?

First, evaluate whether you want any of the benefits that are available only in the Direct Loan Program. Consolidating your loans can increase the amount of interest that accrues on your loans, so if you’re not interested in these programs, you may not want to consolidate. Also, understand that, by consolidating your loans, you will start your forgiveness clock over. For example, if you were already on an income-driven repayment plan and consolidate your loans, then you will lose the any credit you had already earned toward forgiveness.

Lastly, understand that some of the loans that we called out for consolidation are those from another federal student loan program called the Federal Perkins Loan Program. Those loans have their own cancellation benefits that are based on your job. If you consolidate these types of loans, you will lose access to those cancellation benefits. Learn more about Perkins Loan cancellation here.

Now I know what type(s) of loans I have. What can I do?

  • I have some loans that I need to consolidate, and some that I don’t. Okay, you’re a little trickier to advise. You’ll definitely have some loans that you’ll want to consolidate, but the real question is, should you consolidate all of your loans? Only consolidate what you need to? You can do either. It will be easier to keep track of your loans if you only have one, but as you can see in the above section, sometimes you’re better off not consolidating if you don’t have to. After you’ve figured this out, you can consolidate your loans and apply for the best income-driven repayment plans. After you’re set up on the plan you want and if you want to apply for Public Service Loan Forgiveness Program, get your employment certified for Public Service Loan Forgiveness.

If you’re confused, need help, or have questions, you can contact the Loan Consolidation Information Call Center at 1-800-557-7392 to get free advice.

Ian Foss is a Program Specialist and Nicole Callahan is a Digital Engagement Strategist at the U.S. Department of Education’s office of Federal Student Aid.

Image by Getty Images

Which Income-Driven Repayment Plan is Right for You?

Guy and girl different paths

You may have heard about income-driven repayment plans. These days, there are a lot of them to choose from.

It might seem difficult to choose an income-driven repayment plan when so many of the basic features of the plans look the same. After reading this post, you’ll be armed with the knowledge you need to choose the best repayment plan for your situation.

Here are the basics:

Let’s start by looking at the basics. All of these plans set your payments based on a percentage of your income, and all of these plans forgive any remaining balance on your loans after a period of time. There are some obvious differences between the plans, sure, but the chart is so general that you don’t have enough information in the chart to make a smart choice.

If you’re interested in an income-driven plan, you probably want to pay as little as possible over the shortest period of time and have accepted that more interest may accrue on your loans as a result. Additionally, you should understand that you have to keep in touch with your loan servicer about your income each year in order to stay on these plans. So, Pay As You Earn would seem to be a natural choice. But there are very specific requirements you must meet to qualify for Pay As You Earn plan. The details matter.

Let’s dive in to the details.

What type of federal student loans do you have?

If you’re interested in an income-driven repayment plan, you will first want to determine whether your federal student loans are Direct Loans. If you borrowed any federal student loans before July 2010, there’s a good chance that some or all of your federal student loans are not Direct Loans.

If your loans aren’t Direct Loans, that doesn’t mean you can’t qualify for the best income-driven repayment plans—almost everyone can. You just need to consolidate first. If you don’t consolidate, the only income-driven repayment plan you might qualify for is the income-based repayment plan, and, as you saw, it wouldn’t give you the lowest payment.

After you have figured out whether you needed to consolidate, and done so, you’re ready to choose a plan.

Let the Department of Education choose the best plan for you

Don’t do difficult work that you don’t have to do. The details matter for these plans. And there are a lot of details. Instead of sorting all of this out yourself, make us, or, more accurately, your loan servicer, do the difficult work. Just go to and start an “Income-Driven Repayment Plan Request”. (That’s the online income-driven repayment application.)

When you get to the “Repayment Plan Selection” section of the application (toward the end), you should not choose an income-driven repayment plan by name. Instead, choose this option:

Choose the Repayment plan you would like to be placed on. "I request that my loan holder (servicer) place me on the plan with the lowest monthly payment amount.

If you do, your loan servicer will evaluate whether you are eligible for all of the income-driven repayment plans and put you on the best plan for you.

If you want to choose a plan on your own, you probably want to choose the Revised Pay As You Earn Repayment Plan.

For most borrowers, the Revised Pay You Earn Plan is the best choice because:

  • all Direct Loan student borrowers are eligible for the plan,
  • there are no date restrictions,
  • there are no income restrictions,
  • it offers the lowest payment of all the income-driven repayment plans,
  • it offers the shortest repayment period for many, and
  • it offers a generous interest benefit to keep your interest balance from growing

However, there are some borrowers who can’t or shouldn’t choose the Revised Pay As You Earn Plan.

Answer the questions below to see if you’re one of those borrowers.

Are you married? How do you file your taxes?

If you are married, you can choose to file a joint or separate income tax return. How you choose to file your taxes can have a large impact on income-driven repayment. There are two factors at play here—whether your spouse’s income will be used to calculate your payment and whether your spouse’s loan debt will be used to adjust your payment downward.

There are two things you need to consider

First, income.

If you file jointly, for all plans, your income + your spouse’s income = income used to calculate payment.

If you file separately, then how your spouse’s income is treated depends on the plan:

For the Income-Contingent, Income-Based, and Pay As You Earn plans, only your income = income used to calculate payment.

For the Revised Pay As You Earn Plan, however, your income + your spouse’s income = income used to calculate payment.

Second, loan debt.

If it seems like using a joint income is going to disadvantage you, this isn’t the end of the story. If your spouse also has federal student loans, then we will figure out what percentage of the total debt is yours and multiply the payment based on a joint income by that percentage. This acknowledges that there are multiple federal student loan debts being repaid with the joint income. If your spouse has no federal student loan debt, however, then 100% of the debt is yours, and so there’s no adjustment to your payment.

What does this all mean? Though the Revised Pay As You Earn Plan is better for most, if you are married, file a separate return from your spouse, and your spouse doesn’t have federal student loan debt, then you will definitely be able to get a better deal under the Pay As You Earn Plan (if you are eligible for it), and, depending on your spouse’s income, you might even get a better deal under the Income-Based or Income-Contingent Repayment Plan. But, to get this better deal, you have to file separately from your spouse, and that might cost you more in taxes.

Did you borrow a federal student loan for graduate school?

Let’s talk about borrowing for graduate school. If you did, then the Revised Pay As You Earn Plan might not be for you.

Under the Revised Pay As You Earn Plan, the forgiveness clock runs for 20 years if you only borrowed for undergraduate study, and for 25 years if you borrowed even one loan for graduate study.

By contrast, the Pay As You Earn Plan has a 20-year forgiveness clock for all borrowers, undergraduate and graduate alike. So, if you qualify for Pay As You Earn and are a graduate borrower, it’s probably a better option for you. If you don’t qualify for Pay As You Earn, however, the Revised Pay As You Earn Plan is still better for you than the Income-Based or Income-Contingent Repayment Plans.

How recently did you start borrowing?

The Pay As You Earn Plan has many, but not all of the benefits as Revised Pay As You Earn, and, for some borrowers, it’s a better option. However, it’s also the plan that is available to the fewest number of borrowers. Specifically, to qualify for Pay As You Earn, you need to be a “new borrower” on or after October 1, 2007 who received a loan on or after October 1, 2011. That excludes a lot of people who have loans today.

Are you are a parent borrower?

Parent borrowers who want to repay their Parent PLUS Loans under an income-driven repayment plan can’t use the Revised Pay As You Earn Plan or any other income-driven repayment plan except for the Income-Contingent Repayment Plan.

The Income-Contingent Repayment Plan is the only plan that a borrower with this loan type can opt for. However, eligibility is not automatic. To become eligible, parent borrowers must consolidate their outstanding Parent PLUS Loans into a Direct Consolidation Loan. If you’re a parent borrower, you can do that by visiting

Let’s sum up.

The Revised Pay As You Earn is the best plan for most borrowers. However, if it’s not good for you for one of the reasons I mentioned above, then you should consider Pay As You Earn. If that doesn’t work for you, consider the Income-Based Repayment Plan. Finally, consider the Income-Contingent Repayment Plan.

Ian Foss has worked at the Department of Education since 2010. He just saved 33% on his student loan payments by switching from the Income-Based Repayment Plan to the Revised Pay As You Earn Repayment Plan.

Image by Getty Images

Your Federal Student Loans Just Got Easier to REPAYE

girl at computer

Beginning today, Federal Direct Loan borrowers can take advantage of a new repayment plan: REPAYE (the Revised Pay As You Earn Plan).

Some of you may be familiar with the Pay As You Earn (PAYE) Repayment Plan, which caps payments at 10% of a borrower’s monthly income and forgives any remaining balance on your student loans after 20 years of qualifying repayment. But this plan is only for recent borrowers.

REPAYE solves this problem. Like the name implies, REPAYE has some similarities to PAYE. First and foremost, REPAYE, like PAYE, sets payments at no more than 10% of income. However, REPAYE—unlike PAYE— is available to Direct Loan borrowers regardless of when they took out their loans.

Should I switch to REPAYE?

If you can’t afford your monthly payment under your current repayment plan, you should consider REPAYE or one of the other income-driven repayment plans. These plans can offer needed relief by ensuring that you will never pay more than a certain percentage of your income. If you can afford to pay more on your loan, you should, since this will save you more on interest costs over the life of your loan.

If you’re pursuing Public Service Loan Forgiveness, you should consider REPAYE. REPAYE is an eligible repayment plan for the Public Service Loan Forgiveness (PSLF) Program. If you’re working toward PSLF and considering consolidating your loans in order to qualify for REPAYE, you should read this first.

If you’re currently on Income-Based Repayment (IBR) because you weren’t eligible for PAYE, you should consider whether REPAYE might be a better option for you. REPAYE could lower your payments by one-third, from 15% to 10% of income.

Before making your decision, use our repayment estimator to compare what your monthly payment would be under REPAYE and all of our other plans.

Under any income-driven repayment plan, you’ll need to “recertify” your income and family size each year.

How is REPAYE different from the other income-driven repayment plans?

So, you already know that your payment under an income-driven plan is a percentage of your income. But REPAYE is different from the other plans. Here are a few differences:

There’s no income requirement to enter the plan: Unlike with the PAYE and IBR plans, borrowers don’t have to show that that their income is low compared to their federal student loan debt in order to enter REPAYE. In simple terms, that means that the amount of your debt and your income level won’t keep you from qualifying.

Borrowers with only undergraduate loans will have a different repayment period than those with graduate loans: Income-driven repayment plans forgive any remaining loan balance after a specific number of years of qualifying repayment—either 20 or 25 years, depending on the plan. REPAYE is a little different than the other income-driven repayment plans. With REPAYE, if you’re only repaying loans you received as an undergraduate student, you’ll repay your loans for up to 20 years. However, if you’re repaying even one loan that you received as a graduate or professional student, you’ll repay your loans (including any loans you received as an undergraduate) for up to 25 years. Of course, this difference doesn’t matter if you later qualify for Public Service Loan Forgiveness, since your loans would be forgiven after 10 years of qualifying payments.

Married borrowers’ payments are calculated differently: The other income-driven repayment plans use the combined income of you and your spouse to set your payment amount only if you file a joint federal income tax return. If you and your spouse file separate tax returns, your payment amount is based on only your income. REPAYE (with limited exceptions) uses the combined income of you and your spouse to set your monthly payment amount, regardless of whether you file a joint tax return or separate returns. This could increase your monthly payment amount. For more information, read our Q&A.

REPAYE payments are not capped at the 10-year standard payment amount: Generally, your payment amount under an income-driven repayment plan is a percentage of your discretionary income. However, this isn’t always the case with the PAYE and IBR plans. Under PAYE and IBR, your payment will never be higher than what it would have been under the 10-year Standard Repayment Plan, no matter how much your income increases. With REPAYE, there’s no cap on your monthly payment amount. Your payment will always be 10% of your discretionary income, no matter how high your income grows. This means that if your income increases significantly, your REPAYE payment could be higher than what you would have to pay under the 10-year Standard Repayment Plan.

REPAYE provides a more generous interest benefit: If your payment doesn’t cover all of your interest, REPAYE pays more of the remaining interest than PAYE or IBR. This can help prevent your loan balance from ballooning and limit the total cost of your loans.

What else should I consider before applying?

Determine whether you have Direct Loans before attempting to switch to REPAYE. If you’re not sure which type of loans you have, you can log in to to find out. Loans labeled “Direct” qualify for REPAYE, loans without the “Direct” label don’t qualify for REPAYE unless you consolidate them. You can apply for a Direct Consolidation Loan on

Special considerations for borrowers who are currently on IBR:

  • If you don’t have Direct Loans, but you’ve been repaying your other loans under IBR for a while and you’re thinking of consolidating to take advantage of REPAYE, it’s important to understand that you’ll lose any credit toward IBR loan forgiveness that you received before consolidating—you’ll have to start over with a new 20- or 25-year repayment period on the Direct Consolidation Loan. So, carefully consider whether having a lower monthly payment amount matters more than the additional time you may spend repaying your loans.
  • Any outstanding interest will be capitalized (added to your loan principal balance) when you leave IBR.

How do I apply for REPAYE?

You can apply for REPAYE—or any other income-driven repayment plan—on We’ve made some improvements to the way the electronic application works, so give it a spin.

Looking for the lowest monthly payment? With four income-driven repayment plans, it’s easy to overlook a plan or confuse a feature of one plan with another. Let us do the hard part for you. If you’re looking for the lowest monthly payment, there’s a box you can check on the application to request that your loan servicer evaluate you for all income-driven repayment plans, and put you on the plan with the lowest initial payment.

Where can I get more information?

There’s more to know about REPAYE than what you see in this blog post.

Have a question that our resources can’t answer? Contact your servicer. They’re the best option for individualized advice.

Don’t Pay for Student Loan Debt Relief

Have student loans? You’ve probably seen social media ads, received emails, or even opened a piece of mail from companies promising to reduce your monthly loan payments or cancel your loans.

But here’s the catch. These companies are doing something you can do yourself, but they’ll charge you a fee.

The U.S. Department of Education provides FREE assistance to help you:

  • Lower or cap your monthly loan payment;
  • Consolidate your federal loans;
  • See if you qualify for loan forgiveness;
  • Get advice on getting out of default

Help get the word out, and help protect your friends and family from student loan scams. Watch and share the video below, and visit to learn more.

3 Important Financial Considerations for College Students


The U.S. Department of Treasury recently released a report entitled “Opportunities to Improve the Financial Capability and Financial Well-being of Postsecondary Students.”  I read this report because I am an intern in the office of Federal Student Aid at the Department of Education, and I am working on various projects related to financial literacy for college students. I actually found this report to be a worthwhile read as a college student embarking on the daunting journey of funding my college education and managing my money while in school.

Despite the heavy financial burden, most of us understand the necessity of a college degree. Report after report make evident that education is one of the most significant factors in upward economic mobility. Still, college students face not only education loans but also consumer debt. There are so many important decisions that college students have to make in support of the ultimate goal to become financially independent. And, as tuition, books, housing and more only rise, the dream of financial independence has only become more difficult, and stressful.

Although I am no expert in financial literacy and financial aid, learning about responsible borrowing, careful budgeting, and repaying loans on time has helped lower my financial stress. The following are some simple tips I’ve learned that can alleviate financial stress and help college students manage their money.

1. Borrow responsibly. 

Federal Student Aid offers resources to help students understand the borrowing process. 

First, know how to read the financial aid package your school offers you. Be sure you can differentiate among grants, loans, scholarships, and work-study offers. You can do this by talking to the staff at your school’s financial aid office. Next, talk to your parents or those contributing to your education. Review the financial aid offer from your school, and look at your family’s finances, to decide which aid to accept or turn down. This is important in calculating how much you need to borrow in order to afford your education. You do not need to accept the full amount of loan money that’s offered to you; and understanding that concept will leave you with less debt in the future.

2. Budget carefully.

Budgeting is vital to lowering stress. By adopting responsible budgeting habits, you’ll learn planning skills to help manage multiple priorities and prepare for the future. Healthy budgeting practices provide dual opportunities for money-saving and time-management techniques. Budgeting is a great financial foundation and can be a stepping-stone to handling greater financial responsibility, leaving lifelong benefits.

3. Repay on time.

Repayment is the final step of the student loan process and lasts long after you graduate. If you do your research, the repayment process can go a lot more smoothly.

One way to reduce your stress is to understand the different repayment plans. You might find that you meet the criteria for making payments based on your income. Use the Repayment Estimator to help you understand the different repayment plans and decide which one is best for you. Then contact your loan servicer to see how to apply for the plan that best fits your situation.

Another thing to be aware of is that there are certain loan forgiveness options, including one for those who work full-time in public service. Knowing who qualifies and how to apply can ease the stress you feel about your debt as well.

Lastly, know that forbearance and deferment (ways to postpone or reduce your payments) are options if special circumstances arise. Understanding what’s best for your situation and applying in a timely manner is something you need to be aware of and talk to your servicer about.

As the report says, “Postsecondary education is essential to the economic health of our nation and to the economic opportunity of many Americans,” and each of our personal financial decisions contributes to that!

Megan McCusker is a sophomore at Loyola University Maryland studying History and Spanish. She served an intern for U.S. Department of Education’s Office of Federal Student Aid.

3 Options to Consider if You Can’t Afford Your Student Loan Payment

Frustrated man - 3 Things You Should Do If You Can't Afford Your Student LoansThe U.S. Department of Education offers a number of affordable repayment options for borrowers who are struggling to pay back their student loans. The important thing to remember about all the options below is that it’s completely free to apply! Also, if you ever have questions or need FREE advice about your student loans, you can always contact your Department of Education loan servicer.

1. Switch Your Repayment Plan

You may be able to lower your monthly student loan payment by switching to a different repayment plan. Use this calculator to compare what your monthly payment amount could be if you switched your plan.

If you don’t pick a different plan when entering repayment, you are automatically enrolled in the 10-year Standard Repayment Plan. However, many borrowers don’t realize that you can switch your plan at any time by contacting your loan servicer.

One of the most popular options for borrowers who are looking to lower their payments is the income-driven repayment plans.

We offer three income-driven repayment plans:

  1. Pay As You Earn
  2. Income-Based
  3. Income-Contingent


  • Your monthly payment will be a percentage of your income. Depending on the plan, that may be 10% or 15% of your discretionary income, or something else. What you ultimately pay depends on the plan you choose and when you borrowed, but in all cases, it should be something you can afford.
  • Your monthly payment amount will be lower than it would be under the 10-Year Standard Repayment Plan if you qualify to make payments based on your income. In fact, it could be as low as $0 per month!
  • Any remaining balance on your loans is forgiven if your federal student loans are not fully repaid at the end of the repayment period (20 or 25 years).

Income-driven repayment plans are a great option if you need lower monthly payments. However, like all benefits, there are also costs. All of these benefits will ultimately increase the amount of interest you pay over time. The income-driven repayment plans also have tax consequences for any forgiveness received.

Apply for an income-driven repayment plan now

If one of the income-driven repayment plans is not a good option for you, we offer other options. Your servicer can help you identify the best plan to fit your needs.

2. Consolidate your Student Loans

Loan consolidation can simplify your payments by combining multiple federal student loans into one loan. Consolidation can also lower your monthly payment.


  • Can lower your monthly payment by extending your repayment period (spreading your payment out over more years). The repayment term ranges from 10 to 30 years, depending on the amount of your consolidation loan, your other education loan debt, and the repayment plan you select.
  • Will allow you to qualify for additional repayment options. If you have FFEL or Direct PLUS Loans, consolidating your loans into a Direct Consolidation Loan will allow you to qualify for additional repayment plans, such as the Pay As You Earn or Income-Contingent Repayment Plans, that you wouldn’t have qualified for if you hadn’t consolidated.
  • Your variable interest rate loans will switch to a fixed interest rate. It’s important to note that consolidation will lock-in interest rates on variable-rate loans, but will not lower them further. This would be a benefit if, like now, interest rates are low.

The benefits listed could provide relief to some borrowers. However, it’s important that you also weigh the costs before consolidating. For example, because you’re restarting and possibly extending your repayment period, you’ll pay more interest over time. Additionally, you may lose borrower benefits, such as interest rate discounts and loan cancellation benefits, offered with the original loans.

Apply for a direct consolidation loan now

3. Postpone your Payments

Under certain circumstances, you can receive a deferment or forbearance that allows you to temporarily postpone or reduce your federal student loan payments.

Deferment and forbearance may be a good option for you if you are temporarily having a difficult time paying back your student loans. Deferment and forbearance are not good long-term solutions. If you think you’ll have trouble paying back your loans for more than a year or you’re uncertain, you should consider an income-driven repayment plan or consolidation.


  • You do not need to make student loan payments during a deferment or forbearance.
  • The federal government may pay the interest on your loan during a period of deferment. This depends on the type of loans you have.

Again, deferment and forbearance are not good long-term solutions for borrowers who are struggling to pay back their student loans. Some reasons why:

  • With a deferment, interest will continue to be charged on your unsubsidized loans (or on any PLUS loans).
  • With a forbearance, interest will continue to be charged on all loan types, including subsidized loans.
  • The interest you accrue during periods of deferment or forbearance may be capitalized (added to your principal balance), and the amount you pay in the future will be higher.

If you can, you should consider making interest payments on your loans during periods of deferment or forbearance

To request a deferment or forbearance, contact your loan servicer

If you need help deciding which of these options is best for you, contact your loan servicer. They can help you weigh the different options based on your unique situation.

Nicole Callahan is a Digital Engagement Strategist at Federal Student Aid.

Federal Student Aid PIN (1998 -2015)

Federal Student Aid PIN tombstone

Federal Student Aid PIN, known as PIN to his many friends, died on May 10, 2015, after a long life of public service. Born in Washington, D.C. in 1998, PIN immediately made his presence felt across the country as he helped students complete their FAFSAs electronically on the World Wide Web. For 17 years, PIN reduced the completion time of federal student aid applications by millions of hours. Success with the FAFSA led to an extended career spanning the entire student aid life cycle, ranging from the aforementioned FAFSA and the IRS Data Retrieval Tool, entrance and exit counseling, and signing Master Promissory Notes, all the way to loan history access on the National Student Loan Data System and—more recently— PIN is survived by one child, FSA ID.

On May 10, 2015, we changed the way you log in to Federal Student Aid websites. Students, parents, and borrowers are now required to use an FSA ID, instead of a Federal Student Aid PIN, to log in. If you haven’t logged in to a Federal Student Aid website (such as or since May 10, you will need to create an FSA ID before you can log on in the future.

Create an FSA ID here:

Q: What is an FSA ID and why do I need one?

A: An FSA ID is a username and password you use to access your personal information on Federal Student Aid websites and to sign important documents.

Q: What happened to the Federal Student Aid PIN?

A: On May 10, 2015, after 17 years of dedicated service, the PIN was retired to make way for the more modern and secure FSA ID.

Q: If I already submitted my FAFSA this year, do I already have an FSA ID?

A: The FSA ID replaced the PIN on May 10, 2015. If you submitted your FAFSA before that, you used a PIN. In order to do anything with your FAFSA or any other Federal Student Aid websites, you will now need an FSA ID. You can create one at

Q: Who needs an FSA ID?

A: Students, parents, and borrowers who need to log in or interact with Federal Student Aid websites need an FSA ID.

Q: Can I make an FSA ID for someone else, such as my child or my parent?

A: No. Only the FSA ID owner should create and use the FSA ID. Why? The FSA ID is a legal signature that should be used only by its owner. If you don’t create your own FSA ID, then you may not be able to access the websites you need to get your financial aid!

Q: How do I get an FSA ID?

A: Go to to create an FSA ID. If you have a PIN, then you can enter your PIN during the FSA ID registration process so that you won’t need to wait for the Social Security Administration to verify your information. But, if you don’t have a PIN or don’t have it handy, you can still create an FSA ID.

Q: Do I have to wait before I use my FSA ID?

A: You can use your FSA ID to sign and submit a new FAFSA right away. For other tasks, if you didn’t link your PIN when you created your account, you’ll need to wait one–three days for us to confirm your identity with the Social Security Administration. You’ll get an e-mail when this process is complete.

Q: What if I forget my FSA ID username or password?

A: Don’t worry. On our log-in pages, you’ll find links that give you the option of retrieving your username or password through your verified e-mail address or by successfully answering your challenge questions.

For answers to other frequently asked questions about the new FSA ID, go here:

For Corinthian Colleges Students: What You Need to Know about Debt Relief

Earlier today, the U.S. Department of Education announced new steps to protect students from abusive for-profit colleges, as well as a new debt relief process for students at Corinthian Colleges – which operated schools under the names Everest, Heald, and Wyotech.

Information for borrowers is available at the Federal Student Aid (FSA) website, at our new toll-free number for Corinthian students at (855) 279-6207, and from your loan servicer.

Background on what happened at Corinthian 

Corinthian Colleges, Inc. has been the target of consumer and taxpayer protection enforcement efforts by the federal government and other authorities. The Department of Education investigated and found that between 2010 and 2014, Heald College misrepresented the job placement rates of many of its programs. Investigations by other entities are ongoing. Over the past year, Corinthian sold off many of its schools, and the remaining campuses closed shortly before Corinthian went bankrupt.

We’re committed to making the debt relief process as simple, streamlined, and fair as possible. That’s why we’re taking several steps to help borrowers, including appointing a “special master” to help us create a straightforward process for debt relief and implement steps to reduce the burden on borrowers. 

Options for Debt Relief

Our Department is committed to helping students affected by the closure of these schools, or who believe they were victims of fraud by their school. Today, we announced next steps to support students who attended Corinthian schools. Here are answers to some common questions about debt relief, depending on your situation.

I attended a Corinthian school that closed

On April 27, Corinthian College closed its 30 remaining locations (see the list of those closed schools). Students who attended any of these closed schools any time after June 20, 2014 have two options:

  1. Apply for a closed school loan discharge
  2. Transfer earned credit to another institution to continue his or her education in a comparable program. (Students who select this option may still qualify for defense to repayment of previous loans – more information can be found below.)

A closed school discharge means that 100 percent of the federal student loans you took out to attend the school that closed may be forgiven, including a reimbursement of amounts you already paid back. You can find instructions and a form for seeking closed school debt relief here, or by contacting your loan servicer.

A closed school loan discharge may be an option for you if:

  • You did not finish your program at a Corinthian school
  • You did not already transfer your Corinthian credits to another school in a similar program (for instance, if you were taking a criminal justice program and you transferred to another criminal justice program, that would be similar)
  • You were attending the school when it closed, or withdrew no later than June 20, 2014. A closed school discharge normally only applies to students who withdrew (without completing their program) within 120 days of the school’s closing date, or were attending when the school closed. But for Corinthian students, the Secretary of Education has extended the timeframe to include any Corinthian student who withdrew from one of its closed schools on or after June 20, 2014

Please note that if you choose closed-school debt relief, you can’t transfer your credits to a comparable program at another institution.

Visit for more information on closed-school loan discharge.

What if I want to transfer my credits?

If you transfer your credits to a similar program at another institution, you cannot request closed-school debt relief. However, if you believe you have a claim against your school under state law, such as fraud, you may still pursue debt relief based on borrower defense to repayment, as described below – even if you transfer your credits to another school

What if I need help? 

Visit the contact us page on the FSA website, or use any of the options listed above. Or, for further help, the Department is working with an independent group of organizations and institutions that are setting up a volunteer advising corps to help Corinthian students navigate the different options. Contact them to talk to a volunteer counselor. (Note that as the Department is not managing this initiative, it cannot endorse any advice that a student may receive.)

I believe I was a victim of fraud or another violation of state law at a Corinthian school (whether that school closed or not)

If you were a student at a Corinthian School—Everest, Heald, or Wyotech—and you believe you were a victim of fraud or other violations of state law by the school, you can make a claim for debt relief under a legal rule called “borrower defense to repayment.” This rule applies to all public, private and for-profit schools across the country, and requires students to show that they have a legal claim against their college.

If you were a student at a Corinthian school and you apply, or intend to apply, for borrower defense, you have the option to place your federal loans into forbearance (a special permission to stop payments) while your claim is being resolved, to ensure you do not fall behind on your loan. For students in default, you may request a stop to collection activity. However, interest will continue to accrue during the forbearance or stopped collections period. You may also decide to opt out of forbearance or stopped collections.

Visit for more information on filing a borrower defense claim and on putting your loans into forbearance

For Certain Heald College Students

The Department has carried out an investigation and determined that Corinthian misrepresented job placement rates for a majority of programs at its Heald College campuses between 2010 and 2014. In an effort to simplify and speed up the process of applying for loan forgiveness, the Department has established that if you relied on those incorrect placement rates, you may be entitled to a discharge of their Federal Direct Student loans you took out to attend those programs through a streamlined process. That process can be done by filling out a straightforward attestation form. In addition, you may request to have your federal loans placed into forbearance or, for defaulted loans, to have collections stopped while your claim is reviewed.

Visit for more information about how the Heald College findings may affect you.

Additional Information:

If you are a Corinthian student seeking debt relief of any type and didn’t get your question answered, please visit the FSA website or call our toll-free number, (855) 279-6207, and a staff member will provide the information you need.

7 Common Myths about Financial Aid

College application deadlines are fast approaching and you may be wondering if you can even afford to go to college. What you might not know is that the federal government provides almost $150 billion a year to help students just like you pay for college. Right now, you’re probably thinking of all of the reasons why you won’t qualify for financial aid. Please don’t waste your time worrying- you could be using this time to complete the Free Application for Federal Student Aid (FAFSA®). Here are some common myths about financial aid that you shouldn’t believe.

Myth #1: My family makes too much money for me to qualify for aid.

There is no income cut-off for federal student aid. Your eligibility for financial aid is based on a number of factors and not just your income. Plus, many states and schools use your FAFSA data to determine your eligibility for their aid. If you’re not sure what you will get, the best way to know for sure is to complete the application!

Myth #2: I need to file taxes before completing the Free Application for Federal Student Aid or (FAFSA).

You can use estimated information on your FAFSA so you’ll be able to submit it before you file taxes. In fact, many states and schools have financial aid deadlines well before the tax deadline. So completing your FAFSA earlier is a good idea. You might want to base your estimates on last year’s tax return, and once you file your taxes, you can log back in and update the information. You may even be able to use the IRS Data Retrieval Tool to automatically import your tax information into your FAFSA. 

Myth #3: The FAFSA is too hard to fill out.

This is a very common misconception, but the FAFSA has come a long way! It’s easier than ever to complete online. The form uses “skip logic,” so you are only asked the questions that are relevant to you. And if you’ve filed your taxes, you can transfer your tax return data into your FAFSA automatically. As a result of improvements like these, the average time to complete the FAFSA is now less than 21 minutes. If you do get stuck, help is available by Web chat, e-mail and phone.

Myth #4: My grades aren’t good enough for me to get aid.

Eligibility for most federal student aid programs is not linked to your academic performance. However, you will need to maintain grades that your school considers satisfactory in order to continue receiving financial aid. 

Myth #5: My ethnicity or age makes me ineligible for aid.

There are basic eligibility requirements, but ethnicity and age are not considered.

Myth #6: I support myself, so I don’t have to include parent info on the FAFSA.
This is not necessarily true. Even if you support yourself and file taxes on your own, you may still be considered a dependent student for federal student aid purposes. You can determine your dependency status by answering these questions. If you are independent, you won’t need to include your parents’ information on your FAFSA. But if you are dependent, you must provide your parents’ information.

Myth #7: I already completed the FAFSA so I don’t need to complete it again.
You need to complete the FAFSA every year you plan to attend college or career school. Don’t worry; it will be even easier the second or third time around since a lot of your information will be pre-populated on the application.

Millions of students complete the FAFSA each year and receive financial aid to help pay for college. Don’t let these myths stop you from achieving your goals. Take the first step by completing the FAFSA at

Tara Marini is a communication analyst at the Department of Education’s office of Federal Student Aid.

7 Common FAFSA Mistakes

This post has been updated. Please view the latest version:
12 Common FAFSA Mistakes

  1. Not Completing the FAFSA®

I hear all kinds of reasons: “The FAFSA is too hard,” “It takes to long to complete,” I never qualify anyway, so why does it matter.” It does matter. By not completing the FAFSA, you are missing out on the opportunity to qualify for what could be thousands of dollars to help you pay for college. The FAFSA takes most people 21 minutes to complete, and there is help provided throughout the application. Oh, and contrary to popular belief, there is no income cut-off when it comes to federal student aid.

  1. Not Being Prepared

The online FAFSA has gotten a lot easier over the last few years. We’ve added skip logic, so you only see questions that are applicable to you. There is also an option to import your tax information from the IRS directly into the FAFSA application. But, the key to making the FAFSA simple is being prepared. You’ll save yourself a lot of time by gathering everything you need to complete the FAFSA before you start the application.

  1. Not Reading Carefully

You’re on winter break and probably enjoying a vacation from reading for a couple weeks. I get it. But when it comes to completing the FAFSA, you want to read each question carefully. Too many students see delays in their financial aid for simple mistakes that could have been easily avoided.

Don’t rush through these questions:

  • Your Number of Family Members (Household size): The FAFSA has a specific definition of how your or your parents’ household size should be determined. Read the instructions carefully. Many students incorrectly report this number.
  • Amount of Your Income Tax: Income tax is not the same as income. It is the amount of tax that you (and if married, your spouse) paid on your income earned from work. Your income tax amount should not be the same as your adjusted gross income (AGI). Where you find the amount of your income tax depends on which IRS form you filed.

Tip: If you use the IRS Data Retrieval Tool, this number will be pulled for you, directly from your income tax return.

  • Legal Guardianship: One question on the FAFSA asks: “As determined by a court in your state of legal residence, are you or were you in legal guardianship?” Many students incorrectly answer “yes” here. For this question, the definition of legal guardianship does not include your parents, even if they were appointed by a court to be your guardian. You are also not considered a legal guardian of yourself.
  1. Inputting Incorrect Information

The FAFSA is an official government form. You must enter your information as it appears on official government documents like your birth certificate and social security card. Examples:

  • Entering the Wrong Name (Yes, I’m serious): You wouldn’t believe how many people have issues with their FAFSA because they entered an incorrect name on the application. It doesn’t matter if you’re Madonna, or Drake, or whatever Snoop Lion is calling himself these days. You must enter your full name as it appears on official government documents. No nicknames.
  • Entering the Wrong Social Security Number (SSN): When we process FAFSAs, we cross check your social security number with the Social Security Administration. To avoid delays in processing your application, triple check that you have entered the correct SSN. If you meet our basic eligibility criteria, but you or your parents don’t have a SSN, follow these instructions.
  1. Not Reporting Parent Information

Even if you fully support yourself, pay your own bills, file your own taxes, you may still be considered a dependent student for federal student aid purposes, and therefore, you’ll need to provide parent information on your FAFSA. Dependency guidelines for the FAFSA are determined by Congress and are different from those of the IRS. Find out whether or not you need to provide parent information by answering these questions.

Bonus: Who is my parent when I fill out the FAFSA?


  1. Not Using the IRS Data Retrieval Tool

For many, the most difficult part about filling out the FAFSA is entering in the financial information. But now, thanks to a partnership with the IRS, students and parents who are eligible can automatically transfer the necessary tax info into the FAFSA using the IRS Data Retrieval Tool. This year, the tool will launch on February 1, 2015. In most cases, your information will be available from the IRS two weeks after you file. It’s also one of the best ways to prevent errors on your FAFSA and avoid any processing delays.

Tip: If you used income estimates to file your FAFSA early, you can use the IRS Data Retrieval Tool to update your FAFSA two weeks after you file your 2014 taxes.

  1. Not Signing the FAFSA

So many students answer every single question that is asked, but fail to actually sign the FAFSA with their PIN and submit it. This happens for many reasons, maybe they forgot their PIN, or their parent isn’t with them to sign with the parent PIN, so the FAFSA is left incomplete. Don’t let this happen to you. If you don’t have or don’t know your PIN, apply for one. If you would like confirmation that your FAFSA has been submitted, you can check your status immediately after you submit your FAFSA online.

Nicole Callahan is a Digital Engagement Strategist at the U.S. Department of Education’s office of Federal Student Aid.

Parents: Tips To Help Your Child Complete the FAFSA


If you’re a parent of a college-bound child, the financial aid process can seem a bit overwhelming.  Who’s considered the parent? Who do you include in household size?  How do assets and tax filing fit into the process? Does this have to be done every year?  Here are some common questions that parents have when helping their children prepare for and pay for college or career school: 

Why does my child need to provide my information on the FAFSA®?

While the federal government provides nearly $150 billion in financial aid each year, dependency guidelines for the FAFSA are determined by Congress. Even if your child supports himself, he may still be considered a dependent student for federal student aid purposes. If your child was born on or after January 1, 1992, then he or she is most likely considered a dependent student and you’ll need to include your information on the Free Application for Federal Student Aid (FAFSA).

Who’s considered a parent when completing the FAFSA?

If your child needs to report parent information, here are some guidelines to help:

  • If the child’s legal parents (biological and/or adoptive parents) are married to each other, answer the questions about both of them.
  • If the child’s legal parents are not married to each other and live together, answer the questions about both of them.
  • If the child’s parent is widowed or was never married, answer the questions about that parent.
  • If the child’s parents are divorced or separated, follow these guidelines.

More information on who’s considered the parent can be found here:

Who’s considered part of the household?

When completing your child’s FAFSA, you should include in the household size: parents, any dependent student(s), and any other child who lives at home and receives more than half of their support from you.  Also include any people who are not your children but who live with you and for whom you provide more than half of their support.

Do we need to wait to apply until I file my income taxes?

Deadlines in some states are before the tax filing deadline so you’ll want to ensure your child files his or her FAFSA as soon as possible after January 1st to maximize financial aid. You do not need to wait until you file your federal tax return.  If you haven’t done your taxes by the time your child completes the FAFSA, you can estimate amounts based on the previous year if nothing has drastically changed.  After you file your taxes, you’ll need to log back in to the FAFSA and correct any estimated information.  If you’ve already filed your taxes, you can use the IRS Data Retrieval Tool to automatically pull in your tax information directly from the IRS into the FAFSA. The IRS Data Retrieval Tool will be available February 1, 2015.

Do I need to do this every year?

Yes, you and your child need to complete the FAFSA each year in order for your child to be considered for federal student aid.  The good news is that each subsequent year you can use the Renewal Application option so you only have to update information that has changed from the previous year!

What else do I need to know before I begin?

You’ll need to get a PIN and have all the necessary documents before you begin.  Here’s a handy checklist:

Susan Thares is the Digital Engagement Lead at the Department of Education’s Office of Federal Student Aid.