The federal student loan programs offer many options to help you successfully repay your loans. You can choose from a variety of repayment plans that best suit your financial circumstances. And there's help when you have trouble making your monthly payments.
Repayment Calculators
The repayment calculators can help you estimate how different repayment plans will affect your monthly payment amount and interest costs.
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Types of Repayment Plans
Here's a list of the repayment plans available to you and how they differ.
Standard Repayment Schedule
Typically this is the least expensive option in terms of total interest costs. Most federal education-loan borrowers choose this option. This option provides a fixed monthly payment of at least $50 over a period of up to 10 years.
If your monthly student-loan payments under this option exceed 8 percent to 10 percent of your gross monthly income, however, you should consider one of the following flexible repayment options or loan consolidation.
Graduated Repayment Schedule
Monthly payments start low and increase over time. Graduated repayment may be a good choice if you currently have limited income but expect higher earnings in the future. Unless you consolidate several federal education loans, the maximum repayment term under this option is 10 years. Total interest costs are higher under this option than with standard repayment.
Income-Sensitive Repayment
This option is available for Federal Family Education Loan Program loans. Payments can be adjusted up or down annually to account for changes in your income. The minimum payment must be enough to cover accruing interest. The repayment period of 10 years can be extended to 15 years under a special forbearance provision. Total interest costs will be higher with this option than with standard repayment.
Income-contingent repayment
This option is available for Direct Loans, except Direct PLUS loans to parents. Your payments are based on your income, family size and outstanding loan balanced. Payments may be less than the accruing interest. If you haven’t fully repaid your loan after 25 years, you may qualify to have the unpaid amount forgiven.
Extended Repayment
This option is available only if you did not have a balance on a Federal Family Education Loan Program or Direct Loan as of Oct. 7, 1998, or at the time you received a federal student loan after Oct. 7, 1998. In addition, extended repayment is available only if your outstanding FFELP or Direct Loan balance is more than $30,000.
Under this plan, you may reduce the amount of your monthly payment by spreading payments over a period of up to 25 years. You may choose to make payments over this extended period under a level or graduated schedule. Because payments are stretched over a longer term, total interest costs will be significantly higher than under the other repayment plans.
Income-Based Repayment
You may qualify for this new repayment option if your loan payments during the year exceed 15 percent of your "discretionary" income. Under this plan you may limit your payments to 15 percent of your "discretionary" income. In addition, your payments may be less than accruing interest, you may qualify to pay back your loans over a period of up to 25 years and you may qualify for forgiveness of any remaining amount you owe after 25 years of payment. Income-based repayment is not available for parent PLUS loans or consolidation loans that repaid parent PLUS loans..
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Handling Multiple Loans
Whenever practical, lenders are required to treat all of your loans of the same type as one loan. For example, if you have three Stafford Loans with the same lender, that lender must treat those loans as one loan and let you make one monthly payment on all of them. If you have multiple lenders or more than one type of loan, however, you will be required to make more than one monthly payment, unless you decide to consolidate your loans.
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Repayment Troubleshooting
Sometimes financial hardship may affect your ability to make monthly payments. Don't be afraid to ask for help before the payment is due. If you are having trouble making payments, talk to your lender. You may be eligible for an extended repayment period, deferment or forbearance.
You also have the option of consolidating your student loans, which could extend your repayment period and reduce your monthly payments.
If you are having trouble making your payments, you can also contact NELA.
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Deferment
If you are unemployed, facing certain economic hardships, on active duty in the military, or returning to school for additional studies, you may qualify for a deferment. Borrowers who meet the qualifications and submit the required documentation are entitled to defer principal payments, in the case of unemployment or economic hardship, for up to a total of three years during the term of their loans. There is no maximum time limit for an in-school deferment or for deferment for certain types of military service.
Read more about loan deferment.
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Forbearance
If you don't meet the standards for deferment but still need payment relief, you may appeal to your lender or loan servicer for forbearance. Forbearance permits a borrower to reduce or postpone payments or extend the time for making payments, usually at the discretion of the lender or servicer. Forbearance requests typically are granted for periods of up to 12 months.
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Loan Consolidation
A consolidation loan permits you to bundle multiple federal education loans into one new loan with the benefit of a convenient single monthly loan payment. Depending on your total outstanding loan balance, you also may be able to extend your repayment period and lower your monthly payments by as much as half.
Loan consolidation is not the best choice for every borrower. You are likely to pay more total interest because you are extending your payment period and making smaller payments over a longer term. Learn more about loan consolidation.
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The True Cost of Default
If you have fallen behind in your payments, contact your lender or loan servicer immediately to avoid the high cost of loan default. To take a look how defaulting increases your student loan debt, use our interactive calculator.
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Questions?
Contact your loan servicer or the holder of your loans for more information about loan-repayment options. If you don't know who services or holds your loans, use the National Student Loan Data System.
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