Repayment is the time period during which you are responsible for paying back your student loans. Federal Student loans have a six month grace period and Perkins loans have a nine month grace period. The grace period begins after graduation or after the borrower ceases to be enrolled at least half time. It is imperative that you keep in contact with your loan servicer to insure that you are aware of your repayment terms.

Repayment Plans

Now that you have entered repayment on your federal student loans, there are several repayment plans that you may want to discuss with your loan servicer. Many borrowers enter repayment under the standard repayment plan. Under this plan the borrower makes the same monthly payment each month for ten years. However, if you are having difficulty making the standard payments, you may want to consider a different option. Keep in mind the longer you extend your loan repayment term, the more interest you will pay on those loans.

 Standard Repayment Plan

  • This plan requires at least a minimum payment of $50 a month or more depending on your total loan balance
  • The borrower pays the least amount of interest over the life of the loan
  • Regular payments of both principal and interest are due monthly unless you are under a deferment or forbearance
  • Repayment term is 10 years

 Graduated Repayment Plan

  • Payments start out low and steadily increase over your repayment period
  • More interest will accrue over the life of the loan because the principal balance is being paid at a slower rate
  • If you expect your income to increase over time then this plan may be right for you
  • Repayment term is up to 10 years

 Extended Repayment Plan

  • Payments can either be fixed or graduated over time; Interest paid will be more than on the standard plan
  • Must have a minimum loan balance of $30,000 to qualify
  • This plan is only available to new borrowers on or after October 7, 1998
  • The repayment term is up to 25 years

Income-Contingent Plan (Not Available for Parent Plus Loans)

  • Monthly payment is adjusted annually, based on the total amount of your direct loans
  • Family size and adjusted gross income along with(spouse’s income if married) is considered for this plan
  • You must reapply annually
  • The repayment term is 25 years (Outstanding balance after 25 years will be forgiven but you may have to pay income tax on forgiven amount)

Income-Sensitive Plan (For FFELP Loans Only)

  • Monthly payment is based on a percentage of monthly gross income
  • Payment amount and eligibility is verified annually
  • Each payment must be at least equal to the interest accrued on the loan between scheduled payments
  • The repayment term is up to 10 years

 Income-Based Repayment (IBR) (For both Direct Loans & FFELP Loans)

  • Offered to borrowers who have a partial financial hardship/May qualify if your student loan debt is high relative to income
  • The payment amount may increase or decrease each year based on your income and family size
  • Once you qualify for the IBR plan you may continue to make the same payments under this plan even if you no longer have financial hardship
  • Outstanding balance may be forgiven after 25 years (you must meet certain qualifications for loan forgiveness) Any amount forgiven may be taxable!

Pay As You Earn (PAYE) Repayment Plan (Not available for Plus Loans)

  • You must be a new borrower as of October 1, 2007 and must have received a disbursement of a Direct Loan on or after October 1, 2011
  • You may qualify if your student loan debt is high relative to income/payment amount will be 10% of your discretionary income
  • Your payment amount may increase or decrease each year based on your income and family size (You must submit annual documentation)
  • If you meet certain requirements, any remaining balance will be forgiven after 20 years of qualifying repayment
  • If you are employed full-time for a public service organization and make 120 on-time payments you may be eligible to receive forgiveness of the remaining balance

*Please visit our “Helpful Links” page for a complete list of Federal Loan Servicers