Loan Repayment

How To Pay For College

Loan Repayment Programs

After you graduate, leave school, or drop below half-time enrollment, you have a period of time before you have to begin repayment of student loans. This "grace period" is

  • 6 months for a Federal Stafford Loan (FFEL or Direct)
  • 9 months for Federal Perkins Loans

The repayment period for all PLUS loans begins on the date the loan is fully disbursed, and the first payment is due within 60 days of the final disbursement. However, a graduate student PLUS loan borrower (as well as a parent PLUS borrower who is also a student) can defer repayment while the borrower is enrolled at least half time, and, for PLUS loans first disbursed on or after July 1, 2008, for an additional six months after the borrower is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the borrower.

Parent PLUS loan borrowers whose loans were first disbursed on or after July 1, 2008, may choose to have repayment deferred while the student for whom the parent borrowed is enrolled at least half-time and for an additional six months after that student is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the borrower.

The U.S. Department of Education's National Student Loan Data System (NSLDS) allows you to access information on loan and/or federal grant amounts, your loan status (including outstanding balances), and disbursements made.

When choosing a student loan, you should also factor in the repayment options.  The Federal Direct Loan program and numerous private lenders also offer several flexible repayment options. You'll typically have from 10 to 25 years to repay your loan, depending on what type of loan, and which repayment plan you choose. When it comes time to pay, you'll select your repayment plan.

Standard Repayment

Under the standard plan, you'll pay a fixed amount each month until your loans are paid in full. Your monthly payments have to be at least $50, and you'll have up to 10 years to repay your loans.

Your monthly payment under the standard plan may be higher than it would be under the other plans because your loans will be repaid in the shortest amount of time. By having a 10-year limit on repayment, you may pay the least amount of interest. To calculate your estimated loan payments, go to the Standard Repayment plan calculator.

Extended Repayment

With the extended plan, you’ll pay a fixed annual or graduated repayment amount over a period not greater than 25 years. If you're an FFEL borrower, you must have more than $30,000 in outstanding FFEL Program loans. If you're a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans. For example, if you have $32,000 in outstanding FFEL Program loans and $8,000 in outstanding Direct Loans, you can choose the extended repayment plan for your FFEL Program loans, but not for your Direct Loans. Your fixed monthly payment is lower than it would be under the Standard Plan, but in the long run you'll pay more for your loan because of the interest that accumulates during the longer repayment period.

Consider this plan if you will need to make smaller monthly payments. Because you're taking longer to repay it (25 years), your monthly payments will be less than with the standard plan. You may pay more in interest though, because you're taking longer to repay the loans. Remember that the longer your loans are in repayment, the more interest you will pay.

To calculate your estimated loan payments, go to the Extended Repayment plan calculator

Graduated Repayment

With this plan, your payments start out low and increase every two years. The length of your repayment period will be up to ten years. This plan may be right for you if you expect your income to increase steadily over time. Your monthly payment will always be at least the amount of interest that accrues between payments. Although your monthly payment will gradually increase, no single payment under this plan will be more than three times greater than any other payment.

To calculate your estimated loan payments, go to the Graduated Repayment plan calculator

Income Based Repayment (IBR)

Income Based Repayment is a new repayment plan for the major types of federal loans made to students. Under IBR, the required monthly payment is capped at an amount that is intended to be affordable based on your income and the size of your family. You are eligible for IBR if the monthly repayment amount under IBR will be less than the monthly amount calculated under a 10-year standard repayment plan.

If your monthly IBR payment does not cover the monthly interest that accrues on the loans, the government will pay your unpaid interest on Subsidized Stafford Loans (either Direct Loan or FFEL) for up to three consecutive years from when you first enter IBR repayment. After three years, and for all the other types of loans, interest that accrues will be added to the loan principal on which future interest is calculated when the borrower no longer is eligible for an IBR repayment amount.

If you repay under the IBR plan for 25 years and meet other requirements you may have any remaining balance of your loan(s) cancelled. Additionally, if you work in public service and have reduced loan payments through IBR, the remaining balance after ten years in a public service job could be cancelled through the Public Service Loan Forgiveness Program. To download an IBR Fact Sheet in PDF format, click here.

Find out if you qualify. To calculate your estimated loan payment amount under IBR, go to the IBR calculator.

Income Contingent Repayment (ICR) (Direct Loans Only)

This plan gives you the flexibility to meet your Direct Loan obligations without causing undue financial hardship. Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of:

  1. The amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or
  2. 20 percent of your monthly discretionary income.

If your payments are not large enough to cover the interest that has accumulated on your loans, the unpaid amount will be capitalized once each year. However, capitalization will not exceed 10 percent of the original amount you owed when you entered repayment. Interest will continue to accumulate but will no longer be capitalized (added to the loan principal).

The maximum repayment period is 25 years. If you haven't fully repaid your loans after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged. You may, however, have to pay taxes on the amount that is discharged.

Graduate and professional student Direct PLUS Loan borrowers are eligible to use the ICR plan. Parent Direct PLUS Loan borrowers are not eligible for the ICR repayment plan.

To calculate your estimated loan payments, go to the ICR plan calculator

Income-Sensitive Repayment Plan (FFEL loans only)

With an income-sensitive plan, your monthly loan payment is based on your annual income. As your income increases or decreases, so do your payments. The maximum repayment period is 10 years. Ask your lender for more information on FFEL Income- Sensitive Repayment Plans.

An FFEL-only borrower can consolidate or reconsolidate his or her loan(s) into the Direct Loan program in order to qualify for public service loan forgiveness.



Students and teachers save up to 80% on software!