Loan Repayment

Managing student loan debt is a key component of the decisions students need to make about their future.


Choosing a Repayment Plan

There are several repayment options available to federal loan borrowers. Your servicer will contact you to choose your repayment plan before repayment begins. If you do not choose, repayment will automatically be set to the standard repayment plan.

The payment amount and length of repayment will vary depending on the plan selected.

See the tables below to compare repayment plans. A loan calculator is provided to further assist you in selecting a repayment plan.

Standard Repayment Plan

  • Repayment term: up to 10 years.
  • Minimum monthly payment of $50.
  • Pay a fixed amount each month until all loans are paid in full.

    The standard plan is good for borrowers who can handle higher monthly payments because they’ll repay their loans more quickly. Monthly payments under this plan will be higher than other plans but, these borrowers pay the least in interest.

Extended Repayment Plan

  • Repayment term: up to 25 years.
  • Borrowers must have more than $30,000 in federal student loan debt to qualify.
  • Borrowers must not have had an outstanding balance on their federal loans as of 10/07/1998 to qualify.
  • Pay a fixed amount each month until loans are paid in full.

    This is a good plan if for those who need to make smaller monthly payments. Because the repayment period will be 25 years, monthly payments will be less than with the standard plan. However, these borrowers pay more in interest because they are taking longer to repay the loans.

Graduated Repayment Plan

  • Repayment term: 10-25 years.
  • Payments start off lower and increase every 2 years.
  • Payments must cover at least the interest that is accruing on the loans.
  • No single payment will be more than 3 times greater than any other payment.

    The graduated plan may be a good option for borrowers who expect their incomes to increase steadily over time. Because payments start off smaller, these borrowers will pay more in interest than those who chose repayment at the same length with a fixed monthly payment.

Income Contingent Plan

  • Repayment term: up to 25 years.
  • Payments based on AGI, family size and total amount of DL loans.
  • Payments change with income changes; if not repaid in 25 years unpaid portion will be forgiven (at present, borrowers may need to pay taxes on forgiven amount).

Income-Based Repayment (IBR) Plan

  • Repayment term: up to 25 years.
  • Monthly payment amounts will be 15 percent of your discretionary income.
  • Loan payments are adjusted annually based on the borrower’s Adjusted Gross Income and family size.
  • Payments can be as low as $0.
  • To qualify for this repayment plan, the payment calculated under IBR must be smaller than the one calculated under the standard, 10-year repayment. Generally speaking, if income is less than student loan debt at the start of repayment, borrowers are likely to be eligible for this plan.
  • If, after 300 payments (25 years), there is still a principal or interest balance on these loans, this remaining amount can be canceled. Additionally, if borrowers work in public service, the remaining balance on these loans can be forgiven after 120 payments (10 years). The forgiveness of the remaining balance under income-contingent repayment and income-based repayment after 25 years in repayment is considered taxable income. For more information see Loan Forgiveness, Cancellation and Repayment Assistance.

Pay as You Earn (PAYE) Plan

  • Repayment term: up to 25 years.
  • Only new borrower as of Oct. 1, 2007 are eligible.

You are a new borrower if and only if you:

  1. didn’t owe any money on any federal student loan as of Oct. 1, 2007, and
  2. received a disbursement of a Direct Loan on or after Oct. 1, 2011.
  • Monthly payment amount will be 10 percent of your discretionary income.
  • Payments can be as low as $0.
  • To qualify for this repayment plan, the payment calculated under PAYE must be smaller than the one calculated under the standard, 10-year repayment. Generally speaking, if income is less than student loan debt at the start of repayment, borrowers are likely to be eligible for this plan.
  • If, after 240 payments (20 years), there is still a principal or interest balance on these loans, this remaining amount can be canceled. Additionally, if borrowers work in public service, the remaining balance on these loans can be forgiven after 120 payments (10 years). The forgiveness of the remaining balance under income-contingent repayment and income-based repayment after 20 years in repayment is considered taxable income. For more information see Loan Forgiveness, Cancellation and Repayment Assistance.

Sample Repayment

Amounts based on:
Loan Debt- $100,000
AGI- $75,000
Household Size- 1

Repayment Plan

Monthly Payment

# of Payments

Standard

$1,173

120

Extended

$721

300

Graduated*

$712

120

Extended Graduated*

$583

300

Income Contingent

$1,069

120

Income Based

$720

120

Pay as You Earn

$485

120

Based on interest rate of 6.8% for first $61,500, 7.9% for any amount above $61,500.
*The amount listed is the initial monthly payment due; payments on graduated plans increase every 2 years.
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