Paying back your loans

Your obligation to repay becomes legally binding when you sign the Master Promissory Note and authorise the transfer of funds to your student account.

Students must complete exit counselling before leaving university. Counselling will include information on your obligations, rights and options under the terms of your loan. The session will cover repayment options, deferments and other important information you may need during your repayment term.

For valuable information about repayment and managing your loans, visit:

What the US Department of Education expects from you

Repay your loan

Your obligation to repay becomes legally binding when you sign the Master Promissory Note and authorise the transfer of funds to your student account.

Your requirement to repay does not go away because you:

  • do not complete your educational programme
  • cannot find employment
  • were not satisfied with the education or other services at the University
  • were notified that your loan was sold to another party by your lender.

Pay on time

You must make your repayments on time unless you have made special arrangements with your loan servicer.

Make a minimum payment

A minimum monthly loan payment is required. This minimum amount varies depending on the amount you borrow and your chosen repayment plan.

Student debt on graduation

Students attending Victoria University of Wellington have a variety of differing educational experiences and the debt levels of each student reflect individual choices and knowledge about the usage of the loan programme options.

We are committed to ensuring that students leave this institution with the lowest amount of debt possible and we will actively work with you to ensure this. Through your life cycle as a student utilising US financial aid we will be actively tracking your debt and benchmarking it with others who have studied in the same method and course as you.

Additional debt management information is available to all Victoria University’s student borrowers.

Deferment—postponing repayment

One advantage of borrowing through the Federal Loan Program is the option of postponing repayment for a period of time under certain conditions. However, it is important to note how interest must be paid or not paid on various loans.

You must continue making repayments until you have been notified that the deferment is granted. Keep copies of all forms and correspondence related to your deferment.

Information about your deferment options and how to apply is on the Federal Student Aid website.

Forbearance—postponing repayment

Borrowers in temporary financial difficulty with no deferment option available to them may request forbearance from their lender or servicer. Forbearance is granted at the loan servicer’s discretion and allows borrowers to have months added to the term of their loan, temporarily reduce the amount of their monthly payment or temporarily suspend monthly payments.

There are several forbearance options available, but the two most common types are:

  • Economic Hardship Forbearance—May be granted if the borrower’s education loan payments exceed 20 percent of their total monthly income. It is given in 12-month increments for a maximum of three years.
  • Administrative Forbearance—May be granted by the lender if the borrower is delinquent on payments prior to entering a period of deferment.

Interest continues to accrue on your loan during forbearance. Interest must be repaid, which can result in higher monthly payments once the forbearance has ended. The Federal Government does not pay the interest on Stafford subsidised loans while your loans are in forbearance.

Delinquency and default

When your monthly payment is 30 days or more overdue you are considered delinquent. Most loan holders will contact you about delinquent payments and begin collection activity. Delinquency may be reported to a Credit Bureau which may damage your credit rating.

If you expect to have a problem making a monthly payment, contact your loan holder immediately. It is always easier to discuss alternatives before the due date rather than after a payment is late. For information on how to get support for paying your loans on time, go to the Federal Student Aid website.

Borrowers who are 270 days behind on a scheduled payment are legally in default on the loan agreement. The loan holder can assume that you are not going to repay and may declare the entire amount you owe, including interest, as immediately due and payable.

Defaults are reported to Credit Bureaux and stay on your credit record whether or not you eventually pay off the loan. Consequences of default are severe.

  • Borrowers are liable for late charges which can be added to the principal of the loan and interest will accrue.
  • When the loan is in default, US Federal income tax refunds may be withheld to repay the loan.
  • Wages may be garnished (a portion withheld for repayment).
  • Payment of attorney fees and court costs may be required.
  • Borrowers may lose eligibility for all Federal and state financial aid until satisfactory repayment arrangements on the defaulted loan are made.

In a profession that requires a licence to practice, that licence can be denied renewal until you make satisfactory payment arrangements on your student loan.

Returning funds to your lender

It is your responsibility to cover any shortfall in the exchange rate when your funds are returned to your lender/US Department of Education.


Calculate My Future Employment Salary

For those of you who want an idea of what salary your future job may need to provide in order to help you determine your loan and repayment amounts, you can access a few calculators at:

Cost of living (USA) calculator wizard: