Federal Family Education Loan Repayment Plans
When it's time to start repaying your student loans, you can select a repayment plan that’s right for your financial situation. Generally, you'll have from 10 to 25 years to repay your loan, depending on which repayment plan you choose.
With the Standard Repayment 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.
Under the Extended Repayment plan, you’ll pay a fixed annual or graduated repayment amount over a period not to exceed 25 years. As a FFEL borrower, you must have more than $30,000 in outstanding FFEL loans that were taken out after 10/7/98 to choose the extended repayment option for your FFEL loans.
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.
With the Graduated Repayment plan, your payments start out low and increase over time.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 repayment plan for for both Direct and FFEL Stafford, Grad PLUS and Consolidation loans. It is not available for loans that are currently in default, Parent PLUS Loans, or Consolidation loans that repaid a parent PLUS Loan. Under IBR, the required monthly payment is capped at an amount that is intended to be affordable based on your 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. Learn more about Income Based Repayment and use the IBR Calculator
to see if you qualify.
If you repay under the IBR plan for 25 years and meet other requirements you may be able to have any remaining balance of your loan(s) forgiven.*
Income Contingent Repayment Plan (Direct Loans only)
Similar to the IBR plan, payments are made for a maximum of 25 years and are based on your adjusted gross income, your family size and the total amount of the qualifying Direct Loans. Interest is capitalized once each year until your balance is 10 percent higher than your original loan balance when you entered repayment. Once this happens, interest will still accrue, but is not capitalized. After 25 years of qualifying monthly payments, the unpaid portion will be forgiven.*
Income-Sensitive Repayment Plan (FFEL Loans only)
With an Income-Sensitive Repayment plan, your monthly loan payment is adjusted annually based on your yearly income. As your income increases or decreases, so do your payments. The maximum repayment period is 10 years, with up to five years of forbearance in certain cases. Each lender's formula for determining the monthly payment amount can vary.
Pay-As-You-Earn Plan (Direct Loans only)
The Pay-As-You-Earn plan generally has the lowest monthly payment, and eligible borrowers have up to 20 years to repay. Maximum monthly payments are set at 10 percent of discretionary income. You must be a new borrower on or after October 1, 2007 and have received a disbursement of a Direct Loan on or after October 1, 2011. Only Direct Subsidized, Unsubsidized or Direct PLUS loans made to students qualify. If you repay under Pay-As-You-Earn and meet certain other requirements, any remaining balance will be forgiven after 20 years of qualifying repayment.*
*Note: You may have to pay income tax on any amount that is forgiven. Consult your loan servicer or tax professional for details.
Additional details about the various federal student loan repayment plans can be found at StudentAid.gov