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Repaying Your Student Loan

 

Repayment Options


A federal student loan is an obligation that must be repaid. However, the way you repay that loan is up to you. Whether you opt for standard repayment or choose an alternate plan, know your options before you enter repayment.


When will repayment start?

Although your loan holder will notify you of the date your first payment will be due, it's helpful to know what to expect. Depending on the type of loan(s) you borrowed, here's a quick refresher on when you start repayment:

  • Direct/Stafford: Repayment begins the day after your six-month grace period ends, with your first payment due 60 days later.
  • Student PLUS: Repayment begins upon final disbursement of the loan. However, your loan will be placed into deferment while you are enrolled at least half time and during the six months after you leave school, with your first payment due 60 days later.
  • Parent PLUS: Repayment begins upon final disbursement of the loan. Generally, your first payment is due within 60 days of the final disbursement, unless you choose to delay making payments while your dependent student is enrolled in school at least half time.

How long will repayment last?

While the standard repayment period may not exceed 10 years, alternate plans have longer repayment periods. For example, Income-Based Repayment has a maximum repayment term of 20 or 25 years depending on when the loans were disbursed. If you wish to pursue an alternate repayment plan, you can change plans at least once per year.


What are the various repayment plans?

Now that you have a better idea of when you have to start paying back your loan(s), and how long repayment will last, explore different plans and choose the one that's right for you.

Standard Repayment Plan

  • Lowest total interest costs over life of the loan
  • Regular payments of both principal and interest are due monthly, excluding periods of deferment and forbearance
  • Minimum monthly payment is $50 or interest accrued, whichever is larger (payment is based on total loan amount)
  • Ten-year repayment term

For more information, visit the College Loan Calculator at TG's Adventures In Education website.

Income-Based Repayment (IBR) Plan

  • Available for Stafford, Direct, Grad PLUS, and certain Consolidation loans
  • Parent PLUS loans, consolidation loans that included a parent PLUS loan, nonfederal loans, and defaulted loans are not eligible for the IBR plan
  • You must demonstrate a partial financial hardship* to qualify for the IBR plan
  • Monthly payments are based on your adjusted gross income and your family size
  • Repayment term is a maximum of 20 or 25 years depending on when the loans were disbursed
  • Total amount paid in interest over the new repayment plan will be greater than the total interest paid over a standard repayment plan, but any outstanding principal and interest still owed after 20 or 25 years of qualifying payments will be forgiven
  • Eligibility must be re-evaluated annually

* The IBR plan has an eligibility requirement you must meet to qualify for the plan. To qualify, the payment you would be required to make under the IBR plan (based on your income and family size) must be less than what you would pay under the Standard Repayment Plan with a 10-year repayment period.

For more information, visit Income-Based Repayment or contact your loan holder or servicer.

Graduated Repayment Plan

  • Monthly payments are reduced at the beginning of the repayment period and gradually increase over the repayment period
  • Ten-year repayment term
  • No single payment will be more than three times greater than any other payment
  • Total amount paid in interest over the new repayment plan will be greater than the total interest paid over a standard repayment plan

Income-Contingent Repayment (ICR) Plan

  • Available to Federal Direct Loan Program (FDLP) borrowers only
  • Monthly payment is adjusted annually, based on the total amount of your Direct loans, your family size, and your adjusted gross income
  • Must reapply annually
  • Total amount paid in interest over the new repayment plan will be greater than the total interest paid over a standard repayment plan, but any outstanding principal and interest still owed after 25 years of qualifying payments will be forgiven

Pay As You Earn (PAYE) Repayment Plan

  • Available to certain Federal Direct Loan Program (FDLP) student loan borrowers only. To qualify:
    • You must have had no outstanding balance on an FDLP or FFELP loan as of October 1, 2007, or had no outstanding balance on an FDLP or FFELP loan when you received a new loan on or after October 1, 2007; AND
    • You must have received a disbursement of an FDLP loan on or after October 1, 2011.
  • Parent PLUS loans, consolidation loans that included a parent PLUS loan, nonfederal loans, and defaulted loans are not eligible for the PAYE plan
  • You must demonstrate a partial financial hardship* to qualify for the PAYE plan
  • Monthly payment is adjusted annually, based on your family size and your adjusted gross income
  • Must reapply annually
  • Total amount paid in interest over the new repayment plan will be greater than the total interest paid over a standard repayment plan, but any outstanding principal and interest still owed after 20 years of qualifying payments will be forgiven

* The PAYE plan has an eligibility requirement you must meet to qualify for the plan. To qualify, the payment you would be required to make under the PAYE plan (based on your income and family size) must be less than what you would pay under the Standard Repayment Plan with a 10-year repayment period.

Revised Pay As You Earn (REPAYE) Repayment Plan

  • Available to Federal Direct Loan Program (FDLP) student loan borrowers only, regardless of when they borrowed
  • Parent PLUS loans, consolidation loans that included a parent PLUS loan, nonfederal loans, and defaulted loans are not eligible for the REPAYE plan
  • Monthly payment is adjusted annually, based on your family size and your adjusted gross income
  • Must reapply annually
  • Total amount paid in interest over the new repayment plan will be greater than the total interest paid over a standard repayment plan, but any outstanding principal and interest still owed after 20 or 25 years of qualifying payments will be forgiven

Income-Sensitive Repayment Plan

  • Available to Federal Family Education Loan Program (FFELP) borrowers only
  • Monthly payment varies according to gross monthly income
  • Payment includes at least monthly accruing interest
  • Must reapply annually
  • Total amount paid in interest over the new repayment plan will be greater than the total interest paid over a standard repayment plan

Extended Repayment Plan

  • Lengthens repayment term up to 25 years
  • Must have a minimum loan balance of $30,000 to qualify
  • Payments can be either fixed or graduated
  • Total amount paid in interest over the new repayment plan will be greater than the total interest paid over a standard repayment plan


What is deferment?

Deferment is a tool available to borrowers to help them meet their loan repayment obligations. Once the repayment period has begun, you are entitled to defer your student loan payments when certain criteria are met. Through deferment, you can postpone your scheduled student loan payments for various reasons, such as unemployment, economic hardship, and school enrollment. Your lender or servicer determines if you meet the requirements for a deferment based on documentation that you submit.

During a deferment period, you are not responsible for paying the interest that accrues on a subsidized Stafford or Direct loan, or any portion of a Consolidation loan eligible for federal interest benefits. However, you are responsible for paying the interest that accrues on unsubsidized Stafford, Direct, PLUS, and Grad PLUS loans, as well as unsubsidized portions of a Consolidation loan. If you fail to make required interest payments during a deferment period, the loan holder or servicer may capitalize the unpaid accrued interest. To ensure prompt processing of your deferment, please complete the deferment application and forward directly to your loan holder or servicer. For more information, visit Deferment.


What is forbearance?

Forbearance is a period of time during which a lender permits a borrower to temporarily postpone making payments or make reduced payments. Medical or financial problems that do not meet the requirements for a deferment may qualify you for forbearance.

During a forbearance period, you are responsible for paying the interest that accrues on any loan, including a subsidized Stafford or Direct loan. If you fail to make required interest payments during a forbearance period, the lender or servicer may capitalize the unpaid accrued interest.

A loan holder or servicer may grant a general forbearance to assist you in fulfilling the repayment obligations of the loan and help prevent default. It is important to remember that the loan holder or servicer must approve the forbearance request before your payments can be suspended. For more information, visit Forbearance.


Should I consider consolidation?

By consolidating your loans, you might be able to reduce your monthly payments. Your loan holder or servicer can help you decide if you are eligible and if loan consolidation is the best option for you. For more information, visit Consolidation.

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