Federal Loan Repayment Plans

Loan Repayment Plans


► Standard

  • Level monthly payments that cover accruing interest and a portion of principal over a 10-year period
  • Higher monthly payments
  • Lowest overall cost

Graduated

  • Payments start low, increase over time
  • Interest only payments followed by standard principal & interest  
  • Finish in 10 years
  • Higher overall – but provides lower initial payment amounts

Income Sensitive Repayment (Non-Direct Federal Loans)

  • Payments are based on percentage of your monthly income
  • Payments must be sufficient to cover accruing interest
  • Finish in 10 years (may be extended to 15 years)

​► Income-Contingent (Direct Loans Only)

  • Payment is based on income
  • Negative amortization is allowed  
  • Up to 25 years to repay
  • Balance remaining after 25 years’ worth of payments can be forgiven

Extended Repayment

  • Available to borrowers who have accumulated more than $30K in Direct or FFELP Federal Stafford, PLUS & Consolidation loans first disbursed on or after October 7, 1998
  • Direct and FFELP Federal Loans are accumulated separately in determining eligibility
  • Repayment can be extended up to 25 years 
  • Permits you to manage monthly cash flow needs, but will increase your cost

Income-Based Repayment

  • Available to federal loan borrowers experiencing financial hardship
  • Borrower qualifies if annual monthly student loan payments exceed 15% of “discretionary income”
  • If eligible for IBR, borrower’s monthly payment will be determined by a formula that takes into account household size and adjusted gross income. Increases in income will impact the required monthly payment amount
  • Unpaid balance may be forgiven after 25 years of scheduled monthly payments 

Pay As You Earn

  • Announced by ED December 21, 2012
  • Available to new Direct loan borrowers (except Parent PLUS) experiencing financial hardship
    • No loan balance as of October 1, 2007 and 
    • Receive a Direct loan on or after October 1, 2011
  • Borrower qualifies if annual monthly student loan payments exceed 10% of “discretionary income”
  • Similar to IBR, borrower’s monthly payment will be determined by a formula that takes into account family size and adjusted gross income. Increases in income will impact the required monthly payment amount
  • Unpaid balance may be forgiven after 20 years of scheduled monthly payments