Call (866) 497-8723 today!

Learn About Repayment Plans

A sensible repayment plan is your ticket to financial freedom. When you begin repaying your student loans, you’re automatically placed in the Standard Repayment plan. However, if you qualify, you may be able to choose from several other plans.

A sensible repayment plan is your ticket to financial freedom. When you begin repaying your student loans, you're automatically placed in the Standard Repayment plan. However, if you qualify, you may be able to choose from several other plans.

Click each repayment plan for information about how the plan works, to weigh the pros and cons, and to see repayment examples.

Please note that all calculations are estimates based on $23,000 in Direct Subsidized Loans at 6.8% interest, and $8,000 in Direct Unsubsidized Loans at 6.8% interest.

Borrowers' actual monthly payments and loan costs will vary.
The Standard Repayment plan is assigned by default to all borrowers unless the borrower requests another option. This plan provides a fixed monthly payment of at least $50 over a period of up to 10 years. Typically, this is the least expensive option in terms of total interest costs.
Pros
  • This plan offers lower interest costs compared to other repayment options.
  • Loans are paid off in 10 years.
  • No additional paperwork is required.
Cons
  • Monthly payments may be higher with Standard Repayment compared to other repayment options.
Total Loan Amount
$31,000
Interest Paid
$11,810
Total Amount Paid
$42,810
Initial Monthly Payment
$357
Max. Monthly Payment
$357
Interest Rate
6.8%
Years in Repayment
10
Examples assume Direct Subsidized and Unsubsidized Loans with the total loan amount due on the day repayment begins, 6.8% fixed interest rate on non-consolidated loans, no borrower benefits, no pre-payments, and no delinquent payments.

Repayment example assumptions:
  • Estimated adjusted gross income of $25,000 with 5 percent annual growth.
  • Household size of one.
  • Household status of single with no dependents.
  • Living in the state of Indiana in the U.S.
  • The remaining unpaid balance is forgiven or canceled.
Graduated Repayment may be a good choice for borrowers who currently have limited income but expect higher earnings in the future, as the monthly payments start low and increase over time.

The maximum repayment term under this option is 10 years (or 25 years for borrowers eligible for an extended repayment schedule).
Pros
  • This plan offers lower initial monthly payments compared to the Standard Repayment plan.
Cons
  • Total interest costs are higher under this option than with Standard Repayment.
  • Because the monthly payments increase every two years, the borrower's later payments will be higher than the initial payments.
  • The repayment period cannot exceed 10 years (or 25 years for borrowers eligible for an extended repayment schedule).
Total Loan Amount
$31,000
Interest Paid
$15,066
Total Amount Paid
$46,066
Initial Monthly Payment
$206
Max. Monthly Payment
$617
Interest Rate
6.8%
Years in Repayment
10
Examples assume Direct Subsidized and Unsubsidized Loans with the total loan amount due on the day repayment begins, 6.8% fixed interest rate on non-consolidated loans, no borrower benefits, no pre-payments, and no delinquent payments.

Repayment example assumptions:
  • Estimated adjusted gross income of $25,000 with 5 percent annual growth.
  • Household size of one.
  • Household status of single with no dependents.
  • Living in the state of Indiana in the U.S.
  • The remaining unpaid balance is forgiven or canceled.
If the borrower qualifies, the Extended Repayment option allows borrowers to reduce the monthly payment amount by spreading payments over a period of up to 25 years. Borrowers may choose to make payments over this extended period under a standard or graduated schedule.

This option is only available to borrowers if:
  • Their outstanding federal education loan balance is more than $30,000 in either the Federal Family Education Loan Program or Direct Loan program, NOT the combined total of loans obtained through both programs.
  • They did not have a balance on a FFELP or Direct Loan as of Oct. 7, 1998.
Pros
  • This plan offers lower monthly payments than the Standard Repayment plan.
  • Monthly payments may be either fixed or graduated.
Cons
  • Total interest costs are higher under this option than with Standard Repayment.
  • Extended loan payments may not count towards public service loan forgiveness.
Total Loan Amount
$31,000
Interest Paid
$33,549
Total Amount Paid
$64,549
Initial Monthly Payment
$215
Max. Monthly Payment
$215
Interest Rate
6.8%
Years in Repayment
25
Examples assume Direct Subsidized and Unsubsidized Loans with the total loan amount due on the day repayment begins, 6.8% fixed interest rate on non-consolidated loans, no borrower benefits, no pre-payments, and no delinquent payments.

Repayment example assumptions:
  • Estimated adjusted gross income of $25,000 with 5 percent annual growth.
  • Household size of one.
  • Household status of single with no dependents.
  • Living in the state of Indiana in the U.S.
  • The remaining unpaid balance is forgiven or canceled.
Income-Contingent Repayment is available for Direct Subsidized, Unsubsidized,
and PLUS Loans made to students through the Direct Loan program. Payments are based on income, family size and outstanding loan balance.

Since income changes result in payment changes, borrowers must apply for this option each year. Payments can be less than accruing interest but must be at least $5 per month. If the loan hasn't been fully repaid after 25 years, the borrower may qualify to have the unpaid amount forgiven.

In some cases, the remaining unpaid balance can be larger than the amount initially borrowed, and the borrower may have to pay taxes on the amount that is forgiven
or canceled.
Pros
  • This plan offers lower monthly payments than the Standard Repayment plan.
  • The monthly payment amount is based on the borrower's income.
  • If the loan hasn't been fully repaid after making the equivalent of 25 years of qualifying monthly payments, and 25 years have passed, the unpaid amount may be canceled.
  • The accrued interest capitalized is capped at 10 percent of the original principal balance at the time the borrower entered repayment. After the maximum is reached, interest continues to accrue but is not capitalized.
Cons
  • Borrowers may have to pay taxes on the amount that is forgiven or canceled.
  • Total interest costs are higher under this option than with Standard Repayment.
  • If the borrower is married and files a tax return jointly, both spouses' incomes are considered in calculating the monthly payment amount.
  • Borrowers must submit documentation about income and family size annually.
Total Loan Amount
$31,000
Interest Paid
$28,323
Total Amount Paid
$59,323
Initial Monthly Payment
$210
Max. Monthly Payment
$275
Interest Rate
6.8%
Years in Repayment
20 yrs. 6 mos.
Examples assume Direct Subsidized and Unsubsidized Loans with the total loan amount due on the day repayment begins, 6.8% fixed interest rate on non-consolidated loans, no borrower benefits, no pre-payments, and no delinquent payments.

Repayment example assumptions:
  • Estimated adjusted gross income of $25,000 with 5 percent annual growth.
  • Household size of one.
  • Household status of single with no dependents.
  • Living in the state of Indiana in the U.S.
  • The remaining unpaid balance is forgiven or canceled.
Income-Based Repayment is available for Direct and FFELP Subsidized, Unsubsidized, and Grad PLUS Loans. It also is available for Direct and FFELP Consolidation Loans that don't include parent PLUS Loans.

This repayment plan is available if a borrower's loan payments exceed 15 percent of their discretionary income (10 percent for new borrowers as of July 1, 2014). Under this plan borrowers may limit payments to 15 percent of their discretionary income (10 percent for new borrowers as of July 1, 2014).

Payments may be less than accruing interest. If the borrower hasn't fully repaid the loan after making the equivalent of 25 years of qualifying monthly payments, and 25 years have passed (20 years for both criteria for new borrowers as of July 1, 2014), the unpaid amount may be canceled. In some cases, the remaining unpaid balance can be larger than the amount initially borrowed, and the borrower may have to pay taxes on the amount that is forgiven or canceled.
Pros
  • This plan offers lower monthly payments than the Standard Repayment plan.
  • The monthly payment amount is based on the borrower's income.
  • If the loan hasn't been fully repaid after making the equivalent of 25 years of qualifying monthly payments, and 25 years have passed (20 years for both criteria for new borrowers as of July 1, 2012), the unpaid amount may be canceled.
Cons
  • Borrowers may have to pay taxes on the amount that is forgiven or canceled.
  • Total interest costs are higher under this option than with Standard Repayment.
  • Borrowers must submit documentation about income and family size annually.
  • Borrowers must have a qualifying financial hardship to meet requirements for this plan.
Total Loan Amount
$31,000
Interest Paid
$41,405
Total Amount Paid
$72,405
Initial Monthly Payment
$90
Max. Monthly Payment
$357
Interest Rate
6.8%
Years in Repayment
24
Examples assume Direct Subsidized and Unsubsidized Loans with the total loan amount due on the day repayment begins, 6.8% fixed interest rate on non-consolidated loans, no borrower benefits, no pre-payments, and no delinquent payments.

Repayment example assumptions:
  • Estimated adjusted gross income of $25,000 with 5 percent annual growth.
  • Household size of one.
  • Household status of single with no dependents.
  • Living in the state of Indiana in the U.S.
  • The remaining unpaid balance is forgiven or canceled.
Pay As You Earn Repayment is available for Direct Subsidized, Unsubsidized, and Grad PLUS Loans. It also is available for Direct Consolidation Loans that don't include parent PLUS Loans.

It is available if a borrower's loan payments during the year exceed 10 percent of their discretionary income. This option is only available to borrowers who were new borrowers on or after Oct. 1, 2007, and they must have received a Direct Loan disbursement on or after Oct. 1, 2011.

Payments may be less than accruing interest. If the borrower hasn't fully repaid the loan after making the equivalent of 20 years of qualifying monthly payments and 20 years have passed, the unpaid amount may be canceled. In some cases, the remaining unpaid balance can be larger than the amount initially borrowed, and the borrower may have to pay taxes on the amount that is forgiven or canceled.
Pros
  • This plan offers lower monthly payments than the Standard Repayment plan.
  • The monthly payment amount is based on the borrower's income.
  • If the borrower hasn't fully repaid their loan after making the equivalent of 20 years of qualifying monthly payments and 20 years have passed, the unpaid portion may be canceled.
Cons
  • Borrowers may have to pay taxes on the amount that is forgiven or canceled.
  • Total interest costs are higher under this option than with Standard Repayment.
  • If the borrower is married and files a tax return jointly, both spouses' incomes are considered in calculating the monthly payment amount.
  • Borrowers must have a financial hardship to qualify for this plan.
  • Borrowers must submit documentation about income and family size annually.
Total Loan Amount
$31,000
Interest Paid
$7,105
Total Amount Paid
$38,105
Initial Monthly Payment
$60
Max. Monthly Payment
$269
Interest Rate
6.8%
Years in Repayment
20
Remaining Unpaid Balance
$34,780
Examples assume Direct Subsidized and Unsubsidized Loans with the total loan amount due on the day repayment begins, 6.8% fixed interest rate on non-consolidated loans, no borrower benefits, no pre-payments, and no delinquent payments.

Repayment example assumptions:
  • Estimated adjusted gross income of $25,000 with 5 percent annual growth.
  • Household size of one.
  • Household status of single with no dependents.
  • Living in the state of Indiana in the U.S.
  • The remaining unpaid balance is forgiven or canceled.
The Revised Pay As You Earn Repayment plan is available for Direct Subsidized, Unsubsidized, and Grad PLUS Loans. It also is available for Direct Consolidation Loans that don't include parent PLUS Loans.

Monthly payments will be 10 percent of the borrower's discretionary income and are recalculated each year based on income and family size. This option is available to any Direct Loan borrower with an eligible loan type.

Payments may be less than accruing interest. If the borrower hasn't fully repaid the loan after making the equivalent of 20 years of qualifying monthly payments and 20 years have passed (25 years for both criteria if loans were for graduate or professional study), the unpaid amount may be canceled. In some cases, the remaining unpaid balance can be larger than the amount initially borrowed, and the borrower may have to pay taxes on the amount that is forgiven or canceled.
Pros
  • The monthly payment amount is based on the borrower's income.
  • If the borrower hasn't fully repaid their loan after making the equivalent of 20 years of qualifying monthly payments and 20 years have passed (25 years for both criteria if loans were for graduate or professional study), the unpaid portion may be canceled.
Cons
  • Borrowers may have to pay taxes on the amount that is forgiven or canceled.
  • Total interest costs are higher under this option than with Standard Repayment.
  • If the borrower is married, both spouses' incomes are considered in calculating the monthly payment amount (regardless of tax filing status).
  • Borrowers must submit documentation about income and family size annually.
Total Loan Amount
$31,000
Interest Paid
$28,912
Total Amount Paid
$59,912
Initial Monthly Payment
$60
Max. Monthly Payment
$413
Interest Rate
6.8%
Years in Repayment
25
Remaining Unpaid Balance
$16,733
Examples assume Direct Subsidized and Unsubsidized Loans with the total loan amount due on the day repayment begins, 6.8% fixed interest rate on non-consolidated loans, no borrower benefits, no pre-payments, and no delinquent payments.

Repayment example assumptions:
  • Estimated adjusted gross income of $25,000 with 5 percent annual growth.
  • Household size of one.
  • Household status of single with no dependents.
  • Living in the state of Indiana in the U.S.
  • The remaining unpaid balance is forgiven or canceled.