Student Loans

The cost of attending college has skyrocketed in recent decades at a rate outpacing inflation and increases in worker earnings. Many students and their families must borrow money to pay for college. Student loan debt in the United States now tops $1.6 trillion, and student loan debt is the second largest form of consumer debt—second only to home mortgage debt. In Minnesota alone, over 775 thousand people owe a total of $29.1 billion in student debt.

When students graduate, decent-paying jobs are not always available. As a result, many borrowers report difficulty in repaying their student loans, and loan servicers and debt collectors are not always easy to work with. This guide is a collection of information for students, graduates, parents, and anyone seeking to take out and repay student loans.


Paying For and Selecting a College

A college education is a major investment. In this section you can learn about choosing a school and comparing the cost of attending various colleges. You can explore options for paying for your education. You can also find information about applying for financial aid such as scholarships, grants, and loans and tips on avoiding financial aid scams.

Federal Loans, Private Loans, and How to Tell the Difference

There are a variety of student loan programs for students and their families. There are several federal loan programs. There are also  private student loans available through banks and other financial institutions, states, or schools themselves. Federal loans are generally more affordable than private loans—but students often take out more costly private loans because they do not understand their federal loan options. The information in this section is for anyone who wants to understand the different types of loans that can help pay for a college education.

Repayment Plans

Student loan repayment obligations can be one of the biggest sources of financial burden for former students and their families. This section provides resources for learning about repayment options for both federal and private student loans.

Student Loan Servicers and Ombudsman Offices

Student loan servicers collect payments and administer student loans. Unfortunately, loan servicers have not always been  easy to work with. In this section, you will learn about the role of student loan servicers and debt collectors, and some tips for dealing with them. If you have problems with your loan servicer, federal ombudsman offices, government agencies, as well as other resources often can provide help.

COVID-19 and Student Loan Repayment

If You Can't Repay Your Loan

Circumstances can arise that make it difficult to make your loan payments. If you have trouble making payments, you can request help to try to avoid going into default. Some options for federal loans may include changing your repayment plan, obtaining a forbearance, or getting a deferment. These options may or may not apply to private and non-federal loans.

Loan Consolidation Programs

Many students take out multiple student loans. Consolidating those loans into one loan with one monthly payment can be a good option in some situations. Consolidation is not always the best option, however. Options will differ depending on whether you have federal loans or private loans. Additional options may be available for Minnesota residents. This section provides information you may find useful for exploring your consolidation options.

Loan Cancellation/Forgiveness Programs

Some borrowers may qualify to have their student loans forgiven or cancelled in certain situations. A cancelled or forgiven loan does not have to be repaid. Situations which may make federal loans eligible for forgiveness include total and permanent disability, working in certain public service or teaching positions, closure of your school, or enrollment in an income-driven repayment plan. In certain circumstances involving fraud on the part of your school, both federal and non-federal loans may be eligible for borrower defense to repayment. Fewer options are available for non-federal student loans. This section outlines these options and cautions against scam artists that falsely promise loan forgiveness.

If Your Loan Defaults

Borrowers who do not make their student loan payments for a set period of time are considered to be in default. Consequences of default can have a negative effect on a borrower’s finances, and could include collection actions, a damaged credit rating, wage garnishment, or legal action. Options for getting out of default may include rehabilitation or consolidation. This section discusses these possible options.

Collection Activities

When a loan defaults, the debt may be referred to a collection agency. This section discusses collection actions and dealing with debt collectors.

Additional Information and Assistance

There are several organizations and resources to assist borrowers who have concerns about their student loans. While many of these resources and organizations are legitimate and can be helpful, it is important to be wary of student loan assistance companies that charge fees to do what you can do for free. This section provides contact information for other organizations.


This section provides definitions from the glossary for many of the terms used in this publication and referenced websites. Click on a term in the glossary to go to the section of this publication where the term is discussed.

Index of Resources

This is a listing, with links, of all websites, publications, and contact information referenced in this handbook.