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Repayment

Your student loan is a debt you owe for your education, and you should treat your loan as you would any other kind of debt - for example, a loan used to buy a car or a house. As with any debt, you are responsible for repaying your loan - in full - even if you did not:

  • complete school
  • cannot find a job in your field of study, or
  • feel you did not receive the educational or other services you purchased.

Repay your Unsubsidized Federal Stafford and Direct Graduate Plus Loans

  • After you stop attending school at least half time, you have 6 months to start repaying your loans back.
  • You may prepay your loan at any time without penalty. Prepayment may substantially reduce your interest costs.

 

Repayment Plans


Repayment Plan

Eligible Loans

Monthly Payment and Time Frame

Eligibility and Other Information

Standard Repayment Plan

 

  • Unsubsidized Federal Stafford Loans
  • all PLUS loans
  • all Consolidation Loans (Direct)

Payments are a fixed amount.

Up to 10 years (up to 30 years for Consolidation Loans).

 

All borrowers are eligible for this plan.

You’ll pay less over time than under other plans.

Graduated Repayment Plan

 

  •  Unsubsidized Federal Stafford Loans
  • all PLUS loans
  • all Consolidation Loans  (Direct)

Payments are lower at first and then increase, usually every two years.

Up to 10 years (up to 30 years for Consolidation Loans).

All borrowers are eligible for this plan.

You’ll pay more over time than under the 10-year Standard Plan.

Extended Repayment Plan

 

  •  Unsubsidized Federal Stafford Loans
  • all PLUS loans
  • all Consolidation Loans (Direct)

Payments may be fixed or graduated.

Up to 25 years.

 

  • If you're a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans.
  • Your monthly payments will be lower than under the 10-year Standard Plan or the Graduated Repayment Plan.
  • You’ll pay more over time than under the 10-year Standard Plan.

Revised Pay As You Earn Repayment  Plan (REPAYE)

  • Direct Unsubsidized Loans
  • Direct PLUS loans made to students
  • Direct Consolidation Loans that do not include PLUS loans (Direct) made to parents
  • Your monthly payments will be 10 percent of discretionary income.
  • Payments are recalculated each year and are based on your updated income and family size.
  • If you're married, both your and your spouse’s income or loan debt will be considered, whether taxes are filed jointly or separately (with limited exceptions).
  • Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 or 25 years.
  • Any Direct Loan borrower with an eligible loan type may choose this plan.
  • Your monthly payment can be more than the 10-year Standard Plan amount.
  • You may have to pay income tax on any amount that is forgiven.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF).

Pay As You Earn Repayment Plan (PAYE)

  • Direct Unsubsidized Loans
  • Direct PLUS loans made to students
  • Direct Consolidation Loans that do not include (Direct) PLUS loans made to parents
  • Your maximum monthly payments will be 10 percent of discretionary income.
  • Payments are recalculated each year and are based on your updated income and family size.
  • If you're married, your spouse's income or loan debt will be considered only if you file a joint tax return.
  • Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 years.

 

  • You must be a new borrower on or after Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011.
  • You must have a high debt relative to your income.
  • Your monthly payment will never be more than the 10-year Standard Plan amount.
  • You’ll pay more over time than under the 10-year Standard Plan.
  • You may have to pay income tax on any amount that is forgiven.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF).

Income-Based Repayment Plan (IBR)

 

  • Direct Unsubsidized Loans
  • Unsubsidized Federal Stafford Loans
  • all PLUS loans made to students
  • Consolidation Loans  (Direct) that do not include  Direct or PLUS loans made to parents
  • Your monthly payments will be 10 or 15 percent of discretionary income.
  • Payments are recalculated each year and are based on your updated income and family size.
  • If you're married, your spouse's income or loan debt will be considered only if you file a joint tax return.
  • Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 or 25 years.
  • You may have to pay income tax on any amount that is forgiven.
  • You must have a high debt relative to your income.
  • Your monthly payment will never be more than the 10-year Standard Plan amount.
  • You’ll pay more over time than under the 10-year Standard Plan.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF).

Income-Contingent Repayment Plan (ICR)

  • Direct Unsubsidized Loans
  • Direct PLUS Loans made to students
  • Direct Consolidation Loans
  • Your monthly payment will be the lesser of
    •  20 percent of discretionary income, or
    • the amount you would pay on a repayment plan with a fixed payment over 12 years, adjusted according to your income.
  • Payments are recalculated each year and are based on your updated income, family size, and the total amount of your Direct Loans.
  • If you're married, your spouse's income or loan debt will be considered only if you file a joint tax return or you choose to repay your Direct Loans jointly with your spouse.
  • Any outstanding balance will be forgiven if you haven't repaid your loan in full after 25 years.
  • Any Direct Loan borrower with an eligible loan type may choose this plan.
  • Your monthly payment can be more than the 10-year Standard Plan amount.
  • You may have to pay income tax on the amount that is forgiven.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF).
  • Parent borrowers can access this plan by consolidating their Parent PLUS Loans into a Direct Consolidation Loan.

 

Income-Sensitive Repayment Plan

  • Unsubsidized Federal Stafford Loans

Your monthly payment is based on annual income.

Up to 15 years.

  • You’ll pay more over time than under the 10-year Standard Plan.
  • The formula for determining the monthly payment amount can vary from lender to lender.

 

Loan consolidation can greatly simplify loan repayment by centralizing your loans to one bill and can lower monthly payments.

However, if you increase the length of your repayment period, you'll also make more payments and pay more in interest. Be sure to compare your current monthly payments to what monthly payments would be if you consolidated your loans.

Borrower benefits from your original loan, which may include interest rate discounts, principal rebates, or some loan cancellation benefits, can significantly reduce the cost of repaying your loans. You might lose those benefits if you consolidate. Most federal student loans are eligible for consolidation, but private education loans are not.

Generally, you are eligible to consolidate after you graduate, leave school, or drop below half-time enrollment. Repayment of a Direct Consolidation Loan can begin 60 days after the loan is disbursed, or sooner.

More information about loan consolidation


Loan Deferment

Situations when you may apply for deferment include:

  • At least half-time enrollment in college.
  • Period of study in approved graduate programs.

The government does not pay the interest on your unsubsidized loans (or on any PLUS loans). You are responsible for paying the interest that accrues (accumulates) during the deferment period, but your payment is not due during the deferment period. If you don’t pay the interest on your loan during deferment, it may be capitalized (added to your principal balance), and the amount you pay in the future will be higher.

More information about loan deferment


Loan Forbearance

What is forbearance?

If you can't make your scheduled loan payments, but don't qualify for a deferment, your loan servicer may be able to grant you a forbearance. With forbearance, you may be able to stop making payments or reduce your monthly payment for up to 12 months. Interest will continue to accrue on your subsidized and unsubsidized loans (including all PLUS loans).  

There are two types of forbearances:

  • Discretionary
  • Mandatory 

Discretionary Forbearance

For discretionary forbearances, your lender decides whether to grant forbearance or not.

You can request a discretionary forbearance for the following reasons: 

  • Financial hardship
  • Illness

Mandatory Forbearance

For mandatory forbearances, if you meet the eligibility criteria for the forbearance, your lender is required to grant the forbearance.

You can request a mandatory forbearance for the following reasons:

  • You are serving in a medical or dental internship or residency program, and you meet specific requirements.
  • The total amount you owe each month for all the student loans you received is 20 percent or more of your total monthly gross income (additional conditions apply).
  • You are performing teaching service that would qualify for teacher loan forgiveness.
  • You qualify for partial repayment of your loans under the U.S. Department of Defense Student Loan Repayment Program.
  • You are a member of the National Guard and have been activated by a governor, but you are not eligible for a military deferment.

More information about loan forbearance


Other Strategies

  • Pay off variable private loans first. The interest rates on variable private loans (given by banks and credit unions) are currently lower than the fixed rates on federally backed and private loans. But historically this situation is unusual, and if the economy improves, interest hikes are probable in the near future. That’s why it’s wise to unload these balances as soon as possible. If you can, pay twice the required amount until you have eliminated this debt and make only the minimum monthly contribution toward your fixed-rate federal loans, since those rates cannot increase.
  • Biweekly Payments. First, you are paying less in interest because there is less time between payments for interest to accumulate. Second, you will end up making an extra month's worth of payments every year. This is because paying every other week equals 26 annual payments. It's a relatively painless way to reduce the cost of borrowing and pay off your loans faster. If you get paid biweekly, the payment feels the same on your wallet because you are taking half of a payment from each paycheck.
  • Adding small amounts each month. You may not be able to afford an extra payment a year, but you can afford to send in an extra $5 a month or $25 every other month. Every dollar you pay toward your student loans can save you up to 200% of the extra payment you sent.

 

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