Federal Direct Student Loan Repayment

 

When it comes to repaying your federal student loan(s), there are many things to you should understand. The details of repayment can save students time and money. Understanding when loan repayment starts, how to make payments on them, the repayment plan options available, and what to do if you have trouble making payments on your Federal Student Loan(s) will all be essential.  You can go onto https://studentaid.ed.gov/sa/repay-loans/understand to receive further detailed information on repayment.

*Please Be Aware: Students are still be responsible for payment of student loans even if they face difficult financial circumstances. You should contact your loan servicer(s) to discuss all (re)payment options.

Below are the Federal Repayment Plans available to student loan borrowers, the eligible loan(s), monthly payment and time frame requirements as well as a quick comparison to the other plans offered.  You should contact your loan servicer for the available options and required information to process a repayment plan request.
  

Repay Your Direct Loans and Federal Family Education Loan (FFEL) Program Loans

 

Overview of Direct Loan and FFEL Program Repayment Plans

Repayment Plan

Eligible Loans

Monthly Payment and

Time Frame

Quick Comparison

Standard Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans

Payments are a fixed amount of at least $50 per month.

Up to 10 years

You’ll pay less interest for your loan over time under this plan than you would under other plans.

Graduated Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans

Payments are lower at first and then increase, usually every two years.

Up to 10 years

You’ll pay more for your loan over time than under the 10-year standard plan.

Extended Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans

Payments may be fixed or graduated.

Up to 25 years

  • Your monthly payments would be lower than the 10-year standard plan.
  • If you are a
    • Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans.
    • FFEL borrower, you must have more than $30,000 in outstanding FFEL Program loans.

For example, if you have $35,000 in outstanding FFEL Program loans, and $10,000 in Direct Loans, you can use the extended repayment plan for your FFEL Program loans, but not for your Direct Loans.

  • For both programs, you must also be a “new borrower” as of Oct. 7, 1998.
  • You’ll pay more for your loan over time than under the 10-year standard plan.

Income-Based Repayment Plan (IBR)

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans made to students
  • ConsolidationLoans (Direct or FFEL) that do not include Direct or FFEL PLUS loans made to parents
  • Your maximum monthly payments will be 15 percent of discretionary income, the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence (other conditions apply).
  • Your payments change as your income changes.

Up to 25 years

  • You must have a partial financial hardship.
  • Your monthly payments will be lower than payments under the 10-year standard plan.
  • You’ll pay more for your loan over time than you would under the 10-year standard plan.
  • If you have not repaid your loan in full after making the equivalent of 25 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven.
  • You may have to pay income tax on any amount that is forgiven.

Pay As You Earn Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS loans made to students
  • Direct Consolidation Loans that do not include (Direct or FFEL) PLUS loans made to parents
  • Your maximum monthly payments will be 10 percent of discretionary income, the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence (other conditions apply).
  • Your payments change as your income changes.

Up to 20 years

  •  You must be a new borrower on or after Oct. 1, 2007, and must have received a disbursementof a Direct Loan on or after Oct. 1, 2011.
  • You must have a partial financial hardship.
  • Your monthly payments will be lower than payments under the 10-year standard plan.
  • You’ll pay more for your loan over time than you would under the 10-year standard plan.
  • If you have not repaid your loan in full after you made the equivalent of 20 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven.
  • You may have to pay income tax on any amount that is forgiven.

Income-Contingent Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS Loans made to students
  • Direct Consolidation Loans
  • Payments are calculated each year and are based on your adjusted gross income, family size, and the total amount of your Direct Loans.
  • Your payments change as your income changes.

Up to 25 years

 

  • You’ll pay more for your loan over time than under the 10-year standard plan.
  • If you do not repay your loan after making the equivalent of 25 years of qualifying monthly payments, the unpaid portion will be forgiven.
  • You may have to pay income tax on the amount that is forgiven.

Income-Sensitive Repayment Plan

  • Subsidized and Unsubsidized Federal Stafford Loans
  • FFEL PLUS Loans
  • FFEL Consolidation Loans
  • Your monthly payment is based on annual income.
  • Your payments change as your income changes.

Up to 10 years

  • You’ll pay more for your loan over time than you would under the 10-year standard plan.
  • Each lender‘s formula for determining the monthly payment amount under this plan can vary.

 

Use the Repayment Estimator

 Before you contact your loan servicer to discuss repayment plans, you can use the Repayment Estimator available on:

https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

to look at which plans you may be eligible for and see monthly payment estimates and the overall cost of the loan(s).