Repayment

Repayment is an important topic when looking into loan options. You should discuss with your lender how long the repayment period is and also the different options available to help make your payments affordable. It is a good idea to know if your loan has a grace period and determine when a payment is due. Most federal loans have a six-month grace period after you leave school or drop below half-time status, but don’t make an assumption. Give your federal loan servicer a call.

Want to research your federal student loan payment options ahead of time? Check out the overview of the federal student loan repayment options below:

Standard Repayment

Payment amount is fixed over the life of the loan, with a minimum of $50, over a 10-year term. This is the default payment plan if the student does not contact the loan servicer to make other arrangements.

Graduated Repayment

Payments are lower at first, typically interest only, and then increases incrementally over the term of the loan. Repayment term is 10 years.

Extended Repayment

Payments can be fixed or graduated. Student must not have an outstanding federal student loan prior to Oct. 7, 1998, (new borrower) and have existing federal debt exceeding $30,000 for each program (Direct and FFEL). If so, the student can request the term of the loan to be extended to 25 years.

Revised Pay As You Earn

Maximum monthly payment cannot exceed 10 percent of a student’s discretionary income (the difference between adjusted gross income and 150 percent of the poverty line for the state of residency and family size). The monthly payment changes as income changes and annual documentation of income and family size is required. There is a penalty if documentation is not received timely. Loan term can be up to 20 years for an undergraduate student. If a balance remains after 20 years, it’s eligible to be forgiven, but it is currently considered taxable income. Loan subsidy benefit on subsidized and unsubsidized loans.  Note: Available for Direct Loan borrowers, but not Parent PLUS loan borrowers. 

Pay as You Earn

Must be a new borrower (on or after Oct. 1, 2007, and received an eligible loan disbursement on or after Oct. 1, 2011). Maximum monthly payment cannot exceed 10 percent of a student’s discretionary income (the difference between adjusted gross income and 150 percent of the poverty line for the state of residency and family size), but can never be more than the 10 year Standard Repayment Plan amount. The monthly payment changes as income changes and annual documentation of income and family size is required. Loan term can be up to 20 years. If a balance remains after 20 years, it’s eligible to be forgiven, but it is currently considered taxable income. Loan subsidy benefit on subsidized loans. Note: Available for Direct Loan borrowers, but not Parent PLUS loan borrowers. 

Income-based Repayment

Maximum monthly payment cannot exceed 15 percent of a student’s discretionary income (the difference between adjusted gross income and 150 percent of the poverty line for the state of residency and family size). The monthly payment changes as income changes and annual documentation of income and family size is required. Loan term can be up to 25 years. If a balance remains after 25 years, it is eligible to be forgiven, but it’s currently considered taxable income. Loan subsidy benefit on subsidized loans. Note: Available for Direct Loan and FFEL (Federal Family Education Loan) borrowers, but not Parent PLUS loan borrowers. 

Income-contingent Repayment

Payment is calculated each year and based on the lesser of 20% of discretionary income or what you would pay on a repayment plan with a fixed amount over 12 years, adjusted according to your income. The monthly payment changes as income changes and annual documentation of income, family size and Direct Loan debt is required. Loan term is up to 25 years. If a balance remains, it is eligible to be forgiven, but it is currently considered taxable income. Note: Available for Direct Loans borrowers. Parent PLUS borrowers are eligible, if consolidated.

Income-sensitive Repayment

Monthly payment is based on annual income. The monthly payment changes as income changes. The loan term is up to 10 years. Note: This is only for FFEL loans.

Estimate Your Monthly Payments After Graduation

Loan Calculator: It’s important to know how much your loan payments will be after you graduate. Check out this online tool to help you estimate your monthly payments.

Estimate Your Salary: Do you know how much you’ll likely be making after graduation? If not, use this online tool to estimate your future earnings.