Do I have to repay a Federal Student Loan?

By signing the Master Promissory Note (MPN) for a Direct Loan, you promise to repay the loan. The Master Promissory Note is a legally binding agreement. It specifies the terms and conditions of the loan.

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In order to qualify for private student loan refinancing, lenders require a strong credit score with proof of income and employment history. In some cases a cosigner may be required. Also, if you have adverse credit history, including a prior student loan default*, you may not be eligible. * Default = 270 days late/missed payment on a federal loan and typically 90 days late/missed payment on a private loan(contact your lender for exact definition of default).

In particular, the Master Promissory Note includes the following paragraph which requires you to repay the debt even if you do not graduate, are unable to find a job related to your academic major, or are dissatisfied with the quality of education.

“We do not guarantee the quality of the academic programs provided by schools that participate in federal student financial aid programs. You must repay your loan even if you do not complete your education, are unable to obtain employment in your field of study, or are dissatisfied with, or do not receive, the education you paid for with the loan.”

Direct Loans are not subject to the defense of infancy. So, even if you had not yet reached the age of majority for your state of legal residence, you are still obligated to repay the debt. There are also no statutes of limitation on federal student loans.

There are, however, a limited number of situations in which the obligation to repay the debt can be discharged or forgiven, such as:

  • If the student dies or becomes totally and permanently disabled
  • If the school closes while you are enrolled or within 120 days of your withdrawal, and you are unable to complete your education elsewhere
  • If you are able to prove that you were the victim of identity theft or a false certification of eligibility for the federal student loan
  • If you qualify for certain loan forgiveness options, such as Public Service Loan Forgiveness