Loan Repayment

Repaying Student Loans

While you are enrolled at least half-time time (six credit hours as an undergraduate, or four credit hours as a graduate student) your student loans will be in an “in-school deferment” status.  This means you are not required to make payments on your federal loans.  It is a good idea, if you are able, to make payments on your loans while you are enrolled.  This will help reduce your overall indebtedness when you leave school.

Once your enrollment drops to less than half-time, your federal loans will enter a grace period status.  The grace period is a length of time during which you are not required to make payments on your loans.

The length of the grace period depends on the type of loan that you have borrowed.  Direct Loans have a six-month grace period while the Perkins Loan offers a nine-month grace period. Note that not all students will have Perkins Loans.  All student loans must be repaid, per your loan agreement/master promissory note.

Reduce your initial debt by borrowing less

Annual federal loan eligibility may be greater than your eventual earning potential. Those loan maximums might be more than you will be able to repay, damaging your credit rating. That, in turn, may increase the amount you pay in the future for credit, keep you from getting further credit entirely, or could mean higher insurance rates (in some states). So do not borrow more than you need!


Loan exit counseling

Just prior to graduation, or if you drop below half-time enrollment, you will need to complete loan exit counseling. This is an interactive tool that provides the information you need to know about repaying your federal student loans.

Our office will notify you to let you know how to get started with your exit counseling.

Learn more about exit counseling

Exit counseling for a Federal Perkins Loan

Federal Perkins Loans are managed by NMU’s Perkins Loan Collection Office, and the exit counseling process is different.

Complete Perkins exit counseling

Consolidate your loans

If you have more than one federal student loan, you may be able to consolidate them into a single loan with one monthly payment. This payment can be quite a bit lower than your total monthly payments on multiple loans.

Pros and cons of consolidation



  • You have a potential for lower monthly payments.

  • You may lose some discharge (cancellation) benefits if you include a Federal Perkins Loan in a consolidation loan
  • You will have a single monthly payment for multiple loans.

  • If you extend your repayment period, you may pay more interest over time.
  • The interest rate is fixed for the life of the loan.
  • Once a consolidation has been completed, you cannot reverse it—the original loans no longer exist, because they are paid off by the consolidation.
  • You may have flexible repayment options.

Learn more about consolidation

Defaulting on your
Federal Direct or Perkins Loans

Failing to repay a loan according to the terms of the Loan Agreement/Master Promissory Note (MPN) you signed, means you may default on the loan. Default occurs if you do not pay on time or if you do not comply with other terms of your MPN.

What are the consequences of defaulting?

If you default on a federal loan, the government will take actions against you. You may:

  • Lose wages and tax refunds, which will be applied toward your unpaid loans
  • Lose eligibility for future student aid
  • Be unable to get a home, car, or other loan
  • Lose job opportunities or be unable to get a professional license
  • Damage your credit rating when your loan is reported to the national credit bureaus

Northern Michigan University’s Cohort Default Rate (CDR):

The Cohort Default Rate at Northern Michigan University for the 2016 Cohort is 8.5% percent.