Student Loans – Know Your Options

​Whether you obtain a federal student loan, private student loan, or both, you’re obligated to repay the money borrowed, plus interest, regardless of if you graduate or not.

Since 2010, federal student loans are made and funded directly by the U.S. Department of Education through the William D. Ford Federal Direct Loan Program. Private loans are funded by banks, credit unions, and other types of lenders. Since private lenders consider various personal factors (including credit score, job history, and school) before approving a loan, you must apply to each individual lender. Additionally, private student loans may not offer the same benefits, flexibility, and repayment terms as federal student loans.

Borrowers can have several different types of federal loans, including Direct Loans, Federal Family Education Loans (FFELs), and Perkins Loans. Some federal loans are owned by the U.S. Department of Education while others are owned by private companies. Borrowers may have a mix of federally and privately owned federal loans. To find out what type of loan you have, log on to your FSA account https://studentaid.gov/fsa-id/create-account/launch and you will find your “Loan Types” in your account dashboard.

Please note that private loans will not appear on your studentaid.gov account. You can check your credit report to confirm your lender.

California is one of only 12 states that has a Student Borrower Bill of Rights. The Bill of Rights says that student loan servicers have to

• provide clear and accurate information;
• minimize fees;
• keep records;
• and not engage in deceptive or abusive practices.

You can file a complaint against your servicer if they are not providing accurate and timely information about your repayment options, Public Service Loan Forgiveness count or to report a scammer.

Consider an Income-Driven Repayment (IDR) plan which can reduce your monthly payment to as low as $0. You can use the Department of Education’s https://studentaid.gov/loan-simulator to estimate payments and choose the right plan for you. Please remember that payment pauses known as deferment and forbearance, accrue interest and capitalization and will increase your principal balance and monthly payments in the long run.

You can contact your loan servicer to discuss your options.

What is Income-Driven Repayment (IDR) Plan?

An income-driven repayment (IDR) plan is an affordable monthly student loan payment based on your income and family size. There are four income-driven repayment plans:

• Saving on a Valuable Education (SAVE) Plan—formerly the REPAYE Plan
• Pay As You Earn Repayment Plan (PAYE Plan)
• Income-Based Repayment Plan (IBR Plan)
• Income-Contingent Repayment Plan (ICR Plan)

Your payment amount under an IDR plan is a percentage of your discretionary income. The percentage is different depending on the plan. A borrower is required to “recertify” income and family size annually. Find out if an IDR plan is the best option for you.

https://studentaid.gov/manage-loans/repayment/plans/income-driven

The SAVE repayment plan is an Income-Driven Repayment (IDR) plan that was created in July 2023 to replace the Revised Pay-As-You-Earn (REPAYE) plan. The plan is currently enjoined due to a federal court injunction and will be formally eliminated in the upcoming months. As a result, all borrowers enrolled in SAVE were automatically placed on an administrative forbearance effective July 2024.

Borrowers on the SAVE administrative forbearance are not required to make payments, will not accrue interest and will not receive credit towards PSLF or IDR forgiveness. Please check your account to ensure that your account is not accruing interest and that your recertification date has been extended accordingly. Borrowers may choose to remain on the SAVE administrative forbearance until ED provides updated guidance for borrowers.

Servicers recently began processing IDR applications and borrowers may decide to apply for another IDR plan and continue making payments which also count towards forgiveness progress.

More information can be found here.  https://studentaid.gov/announcements-events/idr-court-actions

The PSLF Program was created in 2007 to encourage individuals to enter and remain in public service jobs. Under the program, a borrower may qualify for forgiveness of the remaining balance of their federal loans if they have made 120 monthly qualifying payments under a qualifying repayment plan while working full-time for a qualifying employer.

Important*: You must be working for a qualifying employer at the time you submit the form for forgiveness and at the time the remaining balance on your loan is forgiven.

Any loan received under the William D. Ford Federal Direct Loan (Direct Loan) Program qualifies for PSLF.

Parent Plus Loans may become eligible if consolidated into a Direct Consolidation Loan. Please note eligibility is based on the parent’s (loan holder) employment.

Borrowers with Federal Family Education Loan (FFEL) Program and Federal Perkins Loan (Perkins Loan) Program are not eligible for PSLF.  However, they may become eligible if   consolidated into a Direct Consolidation Loan.

If you consolidate to qualify for PSLF, you may lose credit for qualifying months and may receive the weighted average or no credit towards your progress. Please evaluate your options to determine if consolidation is best for you.

Private loans do not qualify for PSLF.

https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/questions#eligible-loans

Qualifying employment for the PSLF Program isn’t about the specific job that you do for your employer. Instead, it’s about who your employer is. Any employment after October 2007 with the following types of organizations qualifies for PSLF:

• Government organizations at any level (U.S. federal, state, local, or tribal) – this includes the U.S. military
• Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
• Serving as a full-time AmeriCorps or Peace Corps volunteer also counts as qualifying employment for the PSLF Program.

The following types of employers don’t qualify for PSLF:

• Labor unions
• Partisan political organizations
• For-profit organizations, including for-profit government contractors

Other types of not-for-profit organizations: If you work for a not-for-profit organization that is not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, it can still be considered a qualifying employer if it provides certain types of qualifying public services.

Search employer eligibility for Public Service Loan Forgiveness (PSLF) on the FSA website.

For PSLF, full-time employment is working for a qualifying employer(s) for a weekly average, alone or when combined, equal to at least 30 hours:

• during the period being certified;
• throughout a contractual or employment period of at least 8 months in a year, such as elementary and secondary school teachers, in which case the borrower is deemed to have worked full time for the entire year; or
• determined by multiplying each credit or contact hour taught per week by at least 3.35 in non-tenure track employment at an institution of higher education.

Routine paid vacation or paid leave time provided by an employer, and leave taken under the Family and Medical Leave Act of 1993 (29 U.S.C. 2612(a)(1)) is to be included when determining if you are working full-time.

You may also submit a PSLF form by downloading the PDF after going through the PSLF Help Tool. While in tool, choose manual signature and on the next page select the View in My Activity button. From the My Activity page, download your form, print it, sign it, and have your employer(s) sign your form.

If you prefer not to use the PSLF Help Tool, you can download and print a blank PDF of the form, complete all sections, sign it, and have your employer(s) sign it.

If you choose to complete a downloaded PDF of the PSLF form, remember digital signatures from you or your employer must be hand-drawn (from a signature pad, mouse, finger, or by taking a picture of a signature drawn on a piece of paper that you then scan and embed on the signature line of the PSLF form) to be accepted.

A qualifying monthly payment is a payment that you make:

• after Oct. 1, 2007;
• under a qualifying repayment plan (an income-driven repayment plan or the standard 10-year repayment plan);
• for the full amount due as shown on your bill;
• no later than 15 days after your due date; and
• while you are employed full-time by a qualifying employer.

You can’t make a qualifying monthly payment while your loans are in:

• an in-school status;
• the grace period;
• a deferment; or
• a forbearance* COVID-19 forbearance months count towards PSLF and TEPSLF as long as you meet all other requirements.

Yes, if you are a borrower enrolled in an Income-Driven Repayment (IDR) Plan you are entitled to forgiveness after 20 or 25 years depending on your loan type. You do not need to apply for IDR forgiveness; however, you must ensure you are enrolled in an IDR plan.

Last year, the ED announced the One-Time IDR Adjustment, where they reviewed borrower accounts and gave borrowers credit towards IDR Forgiveness, regardless of payment plan. You can check your studentaid.gov to confirm your progress on the IDR tracker.

You are considered in default when you don’t make your scheduled student loan payment for at least 270 days. Defaulting on a student loan may result in the withholding of tax refunds and federal benefits also known as “Treasury Offset”. Your wages may also be garnished, and you may not be eligible for additional federal student aid.

Recently the ED announced that it would restart the Treasury Offset Program in May 2025 after a five year pause. This means that borrowers who were in default prior to March 2020 will now be subject to immediate negative credit reporting, Treasury Offset and wage garnishment (Summer 2025). It is important that you act now.

Aside from paying the defaulted loan in full, there are two main ways to get out of default, by rehabilitating your loan(s) and consolidating your loan(s). Read about those options here. https://studentaid.gov/manage-loans/default/get-out  .

To confirm that your loan is in default status, log on to https://studentaid.gov/. Your loan may be on forbearance, deferment or on a $0 payment and still be considered in good standing. If you are several months past due on your payment, you may be in delinquency status and can easily avoid default by enrolling in an IDR plan, requesting a forbearance or deferment. Contact your student loan servicer immediately for assistance. 

If you are in default, you will be receiving information from FSA urging you to take action and necessary steps. ED will make every effort to communicate with borrowers so please ensure your contact information is current to avoid serious consequences.

Although it is important to be aware of scammers, if you are in default you may receive a call from your guaranty agency or servicer to discuss options. Please verify the authenticity of the caller before engaging with the caller. 

California borrowers in default can receive assistance through the Student Loan Empowerment Network. https://studentloanhelp.dfpi.ca.gov/help/ 

https://www.ed.gov/about/news/press-release/us-department-of-education-begin-federal-student-loan-collections-other-actions-help-borrowers-get-back-repayment

The DFPI assists with complaints from student borrowers and enforces violations of the underlying law, the California Student Borrower Bill of Rights. If you are a California resident and are experiencing issues with your loan servicer, contact the DFPI’s Consumer Services Office via email at [email protected], call toll-free at (866-275-2677), or file a complaint online.

If an unknown caller or email sender offers debt relief or immediate loan forgiveness, do not respond or provide any personal information, including your Federal Student Aid (FSA) login information, or bank account or credit card information. It may be a scammer.

No one can promise immediate and total student loan forgiveness or cancellation. You should never pay fees to enroll in federal forgiveness programs.

Your loan servicer and the Department of Education (ED) will not contact you over the phone multiple times a day or offer “urgent” or “special” access to a repayment or forgiveness plan. If you have questions about forgiveness options or need help making payments log on to https://studentaid.gov/h/manage-loans or contact your servicer directly.

If you believe you have been a victim of fraud or scam you can file a complaint with DFPI. https://dfpi.ca.gov//file-a-complaint and to the Federal Trade Commission (FTC) https://reportfraud.ftc.gov

California residents with any amount of current student loan debt are eligible to access resources through The California Department of Financial Protection and Innovation (DFPI) has launched the Student Loan Empowerment Network (SLE Network), a network of community-based and legal aid organizations that will provide free assistance to Californians struggling to understand and pay off their student loan debts. Borrowers looking for assistance through SLE Network can fill out an intake form at https://studentloanhelp.dfpi.ca.gov/ or call (888) 774-2227. From there, borrowers will be connected to a network coordinator who will refer them to a SLE Network organization based on their assistance concerns and location. Network organizations include:

• BALANCE
• National Consumer Law Center
• MyPath
• East Bay Community Law Center
• International Rescue Committee (IRC) in Sacramento
• The Cambodian Family
• Koreatown Youth & Community Center
• Lutheran Social Services of Southern California
• Housing and Economic Rights Advocates (HERA)
• Bay Area Legal Aid
• Legal Aid Foundation of Los Angeles
• Legal Aid Society of San Bernardino
• Legal Aid Society of San Diego
• Public Counsel

Additional information can be found at https://studentloanhelp.dfpi.ca.gov/ or (888) 774-2227.