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Repayment Options

When it comes time to start repaying your student loan(s), select a repayment plan that’s right for your financial situation. How much you pay and how long you take to repay your loans will vary depending on the repayment plan you choose. Generally, you'll have 10 to 25 years to repay your loan.

Standard Repayment With the standard plan, you'll pay a fixed amount each month until your loans are paid in full. Your monthly payments will be at least $50, and you'll have up to 10 years to repay your loans.

Your monthly payment under the standard plan may be higher than it would be under the other plans because your loans will be repaid in the shortest time. For that reason, having a 10-year limit on repayment, you may pay the least interest.

Extended Repayment Under the extended plan, you’ll pay a fixed annual or graduated repayment amount over a period not to exceed 25 years. If you're a FFEL Program borrower, you must have more than $30,000 in outstanding FFEL Program loans.

If you're a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans. For example, if you have $35,000 in outstanding FFEL Program loans and $10,000 in outstanding Direct Loans, you can choose the extended repayment plan for your FFEL Program loans, but not for your Direct Loans. Your fixed monthly payment is lower than it would be under the Standard Plan, but you'll ultimately pay more for your loan because of the interest that accumulates during the longer repayment period.

This is a good plan if you will need to make smaller monthly payments. Because the repayment period will be 25 years, your monthly payments will be less than with the standard plan. However, you may pay more in interest because you're taking longer to repay the loans. Remember that the longer your loans are in repayment, the more interest you will pay.

Graduated Repayment
With this plan, your payments start out low and increase every two years. The length of your repayment period will be up to ten years. If you expect your income to increase steadily over time, this plan may be right for you. Your monthly payment will never be less than the amount of interest that accrues between payments. Although your monthly payment will gradually increase, no single payment under this plan will be more than three times greater than any other payment.

Income Based Repayment (IBR)
Income Based Repayment is a new repayment plan for the major types of federal loans made to students. Under IBR, the required monthly payment is capped at an amount that is intended to be affordable based on income and family size. You are eligible for IBR if the monthly repayment amount under IBR will be less than the monthly amount calculated under a 10-year standard repayment plan.

If you repay under the IBR plan for 25 years and meet other requirements you may have any remaining balance of your loan(s) cancelled. Additionally, if you work in public service and have reduced loan payments through IBR, the remaining balance after ten years in a public service job could be cancelled. For more information and to apply for IBR, you should contact the lender or lenders who hold your student loans.

Income Contingent Repayment (ICR) (Direct Loans Only)
This plan gives you the flexibility to meet your Direct Loan obligations without causing undue financial hardship. Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of:

  • The amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or
  • 20 percent of your monthly discretionary income.

If your payments are not large enough to cover the interest that has accumulated on your loans, the unpaid amount will be capitalized once each year. However, capitalization will not exceed 10 percent of the original amount you owed when you entered repayment. Interest will continue to accumulate but will no longer be capitalized (added to the loan principal).

The maximum repayment period is 25 years. If you haven't fully repaid your loans after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged. You may, however, have to pay taxes on the amount that is discharged.

Income-Sensitive Repayment Plan (FFEL Program Loans only)
With an income-sensitive plan, your monthly loan payment is based on your annual income. As your income increases or decreases, so do your payments. The maximum repayment period is 10 years. Ask your lender for more information on FFEL Program Income- Sensitive Repayment Plans.

The Benefits of Electronic Payment
In some cases, you might be able to reduce your interest rate if you sign up for electronic debiting. You can choose to receive your student loan statement electronically, make a student loan payment online through electronic debiting, or schedule a recurring electronic debit to pay your bill. Some loan holders will even reduce your interest rate as an incentive for paying by electronic debiting.

Your bank can automatically deduct your monthly loan payments from your checking or saving accounts; payments are forwarded to your loan holder for processing. Electronic debiting is the most convenient and efficient way to make your student loan payments; you won’t have to remember to mail a check each month, and your loan payments will always be on time.

FFELP Borrowers: Contact your loan provider.
Direct Loan Borrowers: Consult Direct Loan Servicing.

Loan Consolidation
A Consolidation Loan allows you to combine all the federal student loans you received to finance your college education into a single loan. Learn more about direct loan consolidation.

All Stafford Loan borrowers are eligible to consolidate after they graduate, leave school, or drop below half-time enrollment. PLUS loans are eligible for consolidation once they are fully disbursed. Borrowers who are delinquent or in default must meet certain requirements before they may consolidate their loans. Contact your loan holder for more information.