How repayment works
If you borrow money to pay for school, you’ll need to repay the loan amount plus accrued interest. Because every family is different, there are multiple repayment options to help you make on-time payments to your loan service agency. Failure to make payments can impact your credit and prevent you from receiving further federal financial aid. If you are having difficulty making payments please contact your loan servicer immediately.
You can view all your federal loans online on the National Student Loan Data System. This website includes information about disbursed amounts, type of loan, outstanding principal and interest, and total amounts borrowed.
You will also find contact information for your loan servicer, which you can use to make payments, change addresses, request deferments, forbearance, or a new repayment plan. Detailed information and repayment calculators for each repayment option are available at www.studentloans.gov. A summary of the eight repayment options is provided below.
Your repayment options
Standard repayment plan
You pay a fixed amount each month of at least $50. The minimum payment may be higher based on the total amount borrowed, and there is a ten-year limit on repayment.
Example: Susan has graduated and borrowed a total of $7,500 in Stafford loans with an interest rate of 6.8%. Her monthly payments under the Standard Repayment plan are approximately $86.31 for 120 months. This student will pay a total of $10,357.20 when her loans are paid in full.
Extended repayment plan
You pay a fixed annual or a graduated amount over a period of time. The maximum time period for this plan cannot exceed 25 years. To apply for this plan, a student must have over $30,000 in loans for one loan program (FFEL or Direct Loan program). So if you have $5,000 in the FFEL program (which was discontinued June 30, 2010) and $35,000 in the Direct Loan program, you’ll only be able to use the extended repayment option for the $35,000 in the Direct Loan Program.
Example: Stanley borrows $37,750 in Stafford loans under the Direct Loan program. His loans have a 6.8% interest rate. Under the standard repayment plan, his payments would be approximately $575.40. Billy cannot make this payment so he applies for the extended repayment plan through his servicer. His payments are now a fixed $347.04 a month for 300 months. However, under the plan, he will pay significantly more in interest. His total payments will be $104,112 if he only pays the minimum payment for the full 300 months.
Graduated repayment plan
Under this plan, the payments start low and are increased every two years. The payment period is ten years. This plan is for students who expect their income to increase steadily over the payment period. For more information and to calculate repayment amounts go to the Department of Education's Repayment Plans and Calculators at studentloans.gov.
Income Based Repayment (IBR)
You can set up an affordable plan with the servicer based on your income and family size. You qualify for this plan if the repayment amount calculated is less than the monthly amount for the Standard Repayment plan. Please go to other forms of repayment for more information and access to the IBR calculator.
Income Contingent Repayment (ICR)
The ICR plan is only available to Direct Loan borrowers. Monthly payments are recalculated annually using the student's AGI, spouse's income (if married), family size, and the total amount in Direct Loans. For more information and for ICR calculator, visit studentloans.gov.
Pay as You Earn Repayment (PAYE)
Only available to new borrowers on or after Oct. 1, 2007, you must have received a disbursement of a Direct Loan on or after Oct. 1, 2011. On this plan, your maximum monthly payment will be ten percent of discretionary income. Payments are recalculated each year and are based on your updated income and family size. Any outstanding balance on your loan will be forgiven if you have not repaid your loan in full after 20 years.
Revised Pay as You Earn Repayment (REPAYE)
This plan is available to any direct loan borrower with an eligible loan type. On this plan, your maximum monthly payment will be ten percent of discretionary income. Payments are recalculated each year and are based on your updated income and family size. Any outstanding balance on your loan will be forgiven if you have not repaid your loan in full after 20 or 25 years.
Your monthly payment will be based on your annual income. It is for up to 15 years. You will pay more over time than you would with the ten-year Standard Plan.
For more information, please go to the Federal Student Aid website.
Deferments and Forbearance
If you are having trouble making your payments it is important that you contact the agency servicing your loan immediately. You may qualify for a deferment, forbearance, or another plan to help you make payments.
Deferment is a temporary suspension of loan payments. Payments are not required for loans in deferment status, but interest still accrues on unsubsidized Stafford and PLUS loans.
Forbearance is a temporary postponement or reduction of payments for a period of time due to economic hardship. More information is available online at studentloans.gov.
Consolidation allows you to combine your federal education loans into one new consolidation loan. To apply or for more information go to www.studentloans.gov and select "Direct Loan Consolidation."