Repayment Options
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.
- Standard
- Graduated
- Extended
- Income-Contingent
- Income-Based
- Pay As You Earn
- Revised Pay As You Earn (REPAYE)
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 : Initial Monthly Payment $206
Interest Paid $15,066 : Max. Monthly Payment $617
Total Amount Paid $46,066
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 : Initial Monthly Payment $206
Interest Paid $15,066 : Max. Monthly Payment $617
Total Amount Paid $46,066
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 : Initial Monthly Payment $215
Interest Paid $33,549 : Max. Monthly Payment $215
Total Amount Paid $64,549
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 : Initial Monthly Payment $210
Interest Paid $28,323 : Max. Monthly Payment $275
Total Amount Paid $59,323
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 : Initial Monthly Payment $90
Interest Paid $41,405 : Max. Monthly Payment $357
Total Amount Paid $72,405
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 : Initial Monthly Payment $60
Interest Paid $7,105 : Max. Monthly Payment $269
Total Amount Paid $38,105
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 : Initial Monthly Payment $60
Interest Paid $28,912 : Max. Monthly Payment $413
Total Amount Paid $59,912
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.
-
Standard
-
Graduated
-
Extended
-
Income-Contingent
-
Income-Based
-
Pay As You Earn
-
Revised Pay As You Earn (REPAYE)
Description
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).
Repayment Example
Total Loan Amount $31,000 : Initial Monthly Payment $206
Interest Paid $15,066 : Max. Monthly Payment $617
Total Amount Paid $46,066
Interest Rate 6.8% : Years in Repayment 10
Assumptions
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.
Description
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).
Repayment Example
Total Loan Amount $31,000 : Initial Monthly Payment $206
Interest Paid $15,066 : Max. Monthly Payment $617
Total Amount Paid $46,066
Interest Rate 6.8% : Years in Repayment 10
Assumptions
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.
Description
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:
They did not have a balance on a FFELP or Direct Loan as of Oct. 7, 1998.
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.
Pros
Monthly payments may be either fixed or graduated.
This plan offers lower monthly payments than the Standard Repayment plan.
Cons
Total interest costs are higher under this option than with Standard Repayment.
Extended loan payments may not count towards public service loan forgiveness.
Repayment Example
Total Loan Amount $31,000 : Initial Monthly Payment $215
Interest Paid $33,549 : Max. Monthly Payment $617
Total Amount Paid $64,549
Interest Rate 6.8% : Years in Repayment 25
Assumptions
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.
Description
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.
Repayment Example
Total Loan Amount $31,000 : Initial Monthly Payment $210
Interest Paid $28,323 : Max. Monthly Payment $275
Total Amount Paid $59,323
Interest Rate 6.8% : Years in Repayment 20 yrs. 6 mos.
Assumptions
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.
Description
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.
Repayment Example
Total Loan Amount $31,000 : Initial Monthly Payment $90
Interest Paid $41,405 : Max. Monthly Payment $357
Total Amount Paid $72,405
Interest Rate 6.8% : Years in Repayment 24.
Assumptions
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.
Description
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 submit documentation about income and family size annually.
Borrowers must have a financial hardship to qualify for this plan.
Repayment Example
Total Loan Amount $31,000 : Initial Monthly Payment $60
Interest Paid $7,105 : Max. Monthly Payment $269
Total Amount Paid $38,105
Remaining Unpaid Balance $34,780
Interest Rate 6.8% : Years in Repayment 20
Assumptions
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.
Description
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.
Repayment Example
Total Loan Amount $31,000 : Initial Monthly Payment $60
Interest Paid $28,912 : Max. Monthly Payment $413
Total Amount Paid $59,912
Remaining Unpaid Balance $16,733
Interest Rate 6.8% : Years in Repayment 25
Assumptions
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.
