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Repaying Student Loans

Most federal loans have a grace period after you leave school, during which you do not have to begin to make payments on the loan.

Tip: You do not have to wait to begin repaying your student loans. You can save a lot of money if you pay the interest on your Direct Unsubsidized or Direct PLUS Loans while you are in school and during your post-graduate grace period. If you do not pay this interest as it accrues, then it will be capitalized, or added to the principal amount of your loans. Going forward, you will then be charged interest based on the increased principal amount.

Tip: Keep track of your grace period so you know when your first payment is due.

Loans with a Six-Month Grace Period:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • FFEL Subsidized Federal Stafford Loans
  • FFEL Unsubsidized Federal Stafford Loans

Loans with a Nine-Month Grace Period:

  • Federal Perkins Loans (if the borrower attends school at least half time)

Photo of smiling student underneath a money thought bubble

Loans with Variable Grace Period:

When it is time to begin repaying your student loans, you should explore your payment plan options and choose the one that best fits your needs. You should direct any student loan payments to your loan servicer, who will handle your loan while it is in repayment.

Tip: To find your federal student loan servicer, visit the National Student Loan Data System (NSLDS).

Try to stay current on your payments. If you have difficulty making your scheduled payments, you have other options to explore.

Tip: You may be eligible for an income-based repayment plan or employment-based loan forgiveness.

Federal Loan Repayment Plans (Pre-Default)

There are a number of different federal loan repayment plans available to Direct and FFEL loan borrowers. Your loan repayment options depend on your loan type, balance, status, and time in repayment. To learn more about your loans, visit the National Student Loan Data System (NSLDS).

Tips:

If you do not choose a repayment plan, your loan is automatically placed into the Standard Plan, which provides a ten-year repayment term and requires payments of at least $50 per month. However, a number of other repayment plans are available if you cannot afford the monthly payment under the Standard Plan. These alternative plans offer their own benefits and drawbacks as compared with the Standard Plan. However, they can be a good choice for someone who cannot afford the monthly payments required under the Standard Plan.

Standard Direct and FFEL Loan Repayment Plan

Applies to:

  • Direct Subsidized and Unsubsidized Loans
  • FFEL Stafford Subsidized and Unsubsidized Loans
  • All PLUS Loans

Payments

  • At least $50 per month
  • Fixed amount

Term

  • Up to 10 years

Considerations

  • Requires the highest monthly payments
  • The borrower will pay less interest over time in comparison with other repayment plans

Some longer-term repayment plans such as the Extended Repayment Plan and the Graduated Repayment Plan allow you to make smaller monthly payments by extending your repayment term. Extending the repayment term generally increases the cost of the loan over time.

Graduated Repayment Plan

Applies to:

  • Direct Subsidized and Unsubsidized Loans
  • FFEL Stafford Subsidized and Unsubsidized Loans
  • Any PLUS Loans

Payments

  • Payments start lower and increase over time, usually every 2 years

Term

  • Up to 10 years

Considerations

  • The borrower pays more for loan over time than under the Standard Plan, but initial payments due are lower than they would be under the Standard Plan

Extended Repayment Plan

Applies to:

  • Direct Subsidized and Unsubsidized Loans
  • FFEL Stafford Subsidized and Unsubsidized Loans
  • Any PLUS Loans

Payments

  • Fixed or graduated

Term

  • Up to 25 years

Considerations

  • Monthly payments are lower than under the Standard Plan, but the borrower will pay more over time than under the Standard Plan

Requirements

  • Direct Loans: More than $30,000 outstanding
  • FFEL Loans: More than $30,000 outstanding

Tip:  Longer Loan Term = Lower Monthly Payments, Higher Total Cost: Loan repayment plans that offer smaller monthly payments by extending your payment term generally cost more in the long run because interest continues to accrue until the loan is fully paid.

Other repayment plans, such as Income-Based Repayment (IBR) and Income-Contingent Repayment (ICR), allow borrowers to make monthly payments based on their income and other relevant financial information.

Income-Based Repayment Plan

Applies to:

  • Direct Subsidized and Unsubsidized Loans
  • FFEL Stafford Subsidized and Unsubsidized Loans
  • Any PLUS Loans made to students
  • Direct or FFEL Consolidation Loans (excluding Direct or FFEL PLUS loans made to parents)

Payments

  • Maximum monthly payment is 15% of discretionary income
  • Payments change as the borrower’s income changes

Term

  • Up to 25 years

Considerations

  • Monthly payments are lower than under the Standard Plan, but the borrower will pay more over time than under the Standard Plan
  • If the borrower makes 25 years of qualifying monthly payments, any outstanding loan balance will be forgiven
    • The borrower may have to pay income tax on any forgiven amount.
  • Your required payment may be lower than the interest that accrues every month. If this is the case, the government will pay the remaining accrued interest for up to three consecutive years from the date that you started the income-based repayment (not including the time that you have an economic hardship deferment).

Requirements

  • Must demonstrate partial financial hardship.
  • Once you qualify, you can continue to pay under the plan even if you no longer have a partial financial hardship. However, when you no longer have a partial financial hardship, any accrued interest is added to your principal balance (capitalized).

Income-Contingent Repayment Plan

Applies to:

  • Direct Loans Only
    • Direct Subsidized and Unsubsidized Loans
    • Direct PLUS Loans made to students
    • Direct Consolidation Loans

Payments

  • Maximum payment is 20% of discretionary income
  • Payments change based on borrower income.
    • Payment amount is recalculated every year.
  • Payments are based on the total amount of the borrower's Direct Loans, adjusted gross income, and family size.

Term

  • Up to 25 years

Considerations

  • The borrower will pay more over time than under the Standard Plan
  • If the borrower makes 25 years of qualifying monthly payments, any outstanding loan balance will be forgiven
    • The borrower might have to pay income tax on any forgiven amount

Pay as you Earn Repayment Plan

Applies to:

  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS Loans made to students
  • Direct Consolidation Loans (excluding Direct or FFEL PLUS loans made to parents) (Note: Direct Consolidation Loans may include eligible FFEL loans that were consolidated into a Direct Consolidation Loan.)

Payments

  • Payments change based on the borrower’s income
  • Maximum monthly payments are 10% of discretionary income

Term

  • Up to 20 years

Considerations

  • The borrower’s monthly payments are lower than under the Standard Plan, but borrower will pay more over time than under the Standard Plan
  • The borrower must submit documentation each year demonstrating income and family size
  • If the borrower makes 20 years of qualifying monthly payments, any outstanding loan balance will be forgiven
    • The borrower might have to pay income tax on any forgiven amount.
  • If the borrower makes 120 on-time full monthly payments while employed full-time at a public service organization, he or she may be eligible to receive forgiveness of any remaining Direct Loan balance.

Requirements

  • The borrower must have partial financial hardship.
  • The borrower must be a new borrower on or after October 1, 2007.
  • The borrower must have received direct loan disbursement on or after October 1, 2011.
  • The borrower must provide supporting documentation of income and family size to the loan servicer every year.

Income-Sensitive Repayment Plan

Applies to:

  • FFEL Subsidized and Unsubsidized Federal Stafford Loans
  • FFEL PLUS and FFEL Consolidation Loans

Payments

  • Payments change as the borrower’s income changes
  • Monthly payment is based on the borrower’s annual income
    • Note that lenders may vary in calculating the monthly payment due under this plan

Term

  • Up to 10 years

Considerations

  • The borrower will pay more over time than under the Standard Plan

Tip - Income Based Repayment Plans: Many borrowers do not take full advantage of available income-dependent repayment options. If you can demonstrate financial hardship, you may be eligible for the income-based repayment plan. If you cannot demonstrate financial hardship, you still may be eligible for other income-dependent repayment plans, such as the income-contingent repayment plan. Under these plans, you may be able to have your loan forgiven after a certain number of years in repayment.

For more information about which federal loan repayment plan is right for you, visit StudentAid.gov.

To calculate your estimated monthly payments and interest under different federal loan repayment plans, visit the Federal Loan Repayment Plan Calculator.

Loan Repayment Issues – Federal Student Loans

If you are having trouble repaying your federal student loans, you can try to avoid default by taking a permitted break from payments or attempting to work out an affordable repayment plan with your loan servicer.

Your options might include changing your repayment plan or obtaining a deferment or forbearance.

Perkins Loans Repayment Options

Perkins Loans repayment plans are different than those for other federal loans. They have a standard repayment period of 10 years, which can be extended in certain circumstances. You can speak with your school about your Perkins loan repayment options. To learn more about repaying your Perkins Loans, visit StudentAid.gov.

Private Loan Repayment Plans

Private loan repayment terms vary by lender and by contract. Check your loan agreement for the repayment terms of your private student loans.

Tip: While most private loans go into default after 120 days of non-payment, check your private loan agreement or call your loan servicer to discuss your repayment options and how you can avoid default.

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