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Repayment Schedules & Options

Student loan borrowers can repay different types of loans in a number of different ways—and even possibly postpone making payments.

Paying your loans is always the best option: The more you pay now, the less you pay later. But, if you find it easier to pay less—or you cannot afford to pay anything—take advantage of these options. Do what’s best for you.

Repayment Schedules

There are several different repayment plans available for Stafford and Grad PLUS loan borrowers:

  1. The traditional 10-year schedule—and the one in which you pay the least interest overall—is standard repayment.
  2. You can pay an amount based on your income with Income-Based Repayment (IBR), Pay As You Earn, or the slightly less common income-contingent repayment (for Direct Loan borrowers) and income-sensitive repayment (for Federal Family Education Loan Program borrowers) plans.
  3. You can start with low payments and slowly increase them by signing up for graduated repayment.
  4. You can also stretch your repayment period to up to 25 years with extended repayment.
  5. Combine all your loans into a single loan—with a single payment—by consolidating your loan.

Parent PLUS loan borrowers can choose from any of the plans above except income-based repayment or income-contingent repayment. However, you can become eligible for income-contingent repayment by consolidating your Parent PLUS loans. Other loans may have different options.

Pausing Payments or Applying for Forgiveness

If you are struggling to make any payment due to personal circumstances, you have other options, including pausing payments with deferment or forbearance, or having a portion of your loan forgiven or discharged.

Changing Your Repayment Plan

Call your servicer to find out what you need to do to change your repayment plan. Your servicer may be able to make the change over the phone, or they may require you to fill out paperwork and provide documentation. You can also contact American Student Assistance® (ASA) for help. Our counselors can help you pick the right plan, and even call your servicer with you to help you get started. Remember, you can only change your repayment schedule once a year (unless you’re switching to income-based repayment).

Standard Repayment

When your loans enter repayment, they are automatically enrolled in standard repayment. If you have trouble making your payments, you may be able to lower them by switching to a different repayment schedule.

Making your payments fit your life and circumstances is important. Just remember that lower payments may not cover the interest building up on your loan—or any part of the original loan amount (which is called your principal balance). So, over the life of your loan, you will likely pay less interest with standard repayment than with other repayment schedules.

How It Works

  • Under this schedule, you have 10 years to repay the total amount of your loan.
  • Your loan servicer (the company that sends you your student loan bill) determines your monthly bill.
  • They do this by splitting your loan amount into 120 equal payments (or 12 payments per year for 10 years).
  • Your payments pay off the interest building up each month, plus part of your original loan amount.

See what your payments could look like under this schedule with the Department of Education’s Repayment Estimator Tool.

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Income-Based Repayment

If you have high student loan debt, a low income level, or both, it can be difficult to follow a standard repayment schedule. Income-based repayment (IBR) may be able to help you.

There are two forms of IBR. One for borrowers who received the first disbursement of their loans prior to July 1, 2014 and one for borrowers who received their first disbursement on or after July 1, 2014. IBR bases your payments on your income and family size—essentially customizing your payments to your situation if you qualify.

How It Works

  • You must demonstrate partial financial hardship to qualify for IBR.
  • Hardship is determined by reviewing your monthly payment amount of all your eligible loans under standard repayment against your discretionary income.
  • If you are married and filing jointly, you must include your spouse’s income to determine your IBR payment. If you are married and filing separately, you don’t.
  • If you are a legally married same-sex couple, you cannot include your spouse’s income when determining your IBR payment because you cannot file jointly. However, you can include your spouse in the family size calculation.
  • If you qualify, your payments will be capped at no more than 10% or 15% of your discretionary income, depending on when you received your first loan disbursement.
  • Your repayment amount could change annually, based on changes in your financial situation.
  • There is no minimum payment with IBR.
  • You are still responsible for interest that builds up over the length of your payment period.

You can become eligible for forgiveness of the remaining balance if you haven’t finished paying off the loan after making a certain number of payments:

  • For borrowers who work at certain public or nonprofit employers: 10 years of repayment and 120 eligible payments. This benefit is tax free.
  • For borrowers who start borrowing after July 1, 2014: 20 years of repayment and 240 eligible payments. This benefit is taxable under current law.
  • For borrowers who started borrowing prior to July 1, 2014: 25 years of repayment and 300 eligible payments. This benefit is taxable under current law.

It is possible to repay the loan in full before becoming eligible for forgiveness.

See what your payments could look like under this schedule with the Department of Education’s Repayment Estimator Tool.

To apply

You can apply for either version of IBR online at studentloans.gov, or fill out the Income Based/Pay As You Earn/Income Contingent Repayment Plan Request (pdf, 0.6 MB) and return it to your servicer. You will also need to provide information about your family size, income, and taxes, including filling out IRS Tax Form 4506-T.

IBR is available to you whether you are in the William D. Ford Direct Loan Program or the Federal Family Education Loan Program. Most federal loans are eligible, but there are a few exceptions.

IBR-Eligible Loans

  • Subsidized and unsubsidized Stafford loans
  • SLS loans
  • Grad PLUS loans
  • Consolidation loans without underlying Parent PLUS loans (Perkins loans may be included).

Ineligible loans include:

  • Parent PLUS loans
  • Consolidation loans with underlying Parent PLUS loans
  • Perkins loans, unless they are included in a Consolidation loan
  • Private, state, and other non-federal student loans
  • Loans in default

Remembering Your Anniversary Is Important

You will need to reapply annually if you wish to remain in any of the “income-driven” repayment plans (Income-Contingent, Income-Sensitive, Income-Based and Pay As You Earn). This means that you must update your income information every year before your annual anniversary of enrolling in the program so that your monthly payment amount for the next year can be determined. Your loan servicer will send you a notification to provide documentation of your Adjusted Gross Income (AGI) and to self-certify your family size no later than 60 days and no earlier than 90 days prior to your annual deadline.

The notice will also contain:

  • Your annual renewal deadline
  • The consequences to you if the servicer does not receive your renewal information
  • Your new monthly payment amount and effective date if you no longer qualify for or miss the annual deadline 
  • An explanation that unpaid accrued interest will be capitalized at the end of your current annual payment period

Missing your deadline can result in a much higher monthly payment than your income-driven payments as well as a significant amount of interest capitalizing, or being added on to, your loan balance. Be sure to make note of your anniversary date and proactively contact your servicer if you don’t receive this notification.

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Pay As You Earn Repayment

Pay As You Earn Repayment can offer you a lower monthly payment than IBR, depending on when you began borrowing your loans.

Pay As You Earn bases your payments on your income and family size—essentially customizing your payments to your situation.

Pay As You Earn is available to you if you are a new Direct Loan Program (DL) borrower as of October 1, 2007 and you had a loan disbursement after October 1, 2011, or if you had a consolidation loan made after October 1, 2011 that does not include any loans made prior to October 1, 2007.

Pay As You Earn is not available for Federal Family Education Loan Program (FFEL) loans, but if you have no loans made prior to October 1, 2007, you can consolidate your FFEL loans into the DL program to potentially gain eligibility. You can apply by going to the DL consolidation site .

How It Works

  • You must demonstrate a “partial financial hardship” to qualify for Pay As You Earn.
  • Hardship is determined by reviewing your monthly payment amount for all of your eligible loans under a standard, 10 year, repayment plan against your discretionary income.
  • If you qualify, your payments will be capped at no more than 10% of your discretionary income.
  • If you are married and file your taxes jointly, you must include your spouse’s income to determine your IBR payment. If you are married and file separately, you don’t.
  • Same-sex married couples will not include their spouse’s income when determining their IBR payments, but they can include their spouse in the family size.
  • Your repayment amount could change annually, based on changes in your financial situation.
  • There is no minimum payment with Pay As You Earn.
  • You are still responsible for interest that builds up over the length of your payment period.

You can become eligible for forgiveness of the remaining balance if you haven’t finished paying off your loan after making a certain number of payments:

  • For borrowers who work at certain public or nonprofit employers: 10 years of repayment and 120 eligible payments. This benefit is tax free.
  • Other borrowers: 20 years of repayment and 240 eligible payments. This benefit is taxable under current law. 

See what your payments could like under this schedule with the Department of Education’s Repayment Estimator Tool

Changing Your Repayment Plan

To apply for Pay As You Earn, you will need to fill out an (pdf, 0.6 MB) and return it to your servicer. You will also need to provide information about your family size, income, and taxes.

If you’re not sure whether your loans are from the Federal Family Education Loan Program or the Direct Loan program, learn about the difference between these key industry players.

Pay As You Earn-Eligible Loans

  • DL Subsidized and unsubsidized Stafford loans
  • DL Grad PLUS loans
  • DL Consolidation loans without underlying Parent PLUS loans (Perkins loans may be included).

Ineligible loans include:

  • Parent PLUS loans
  • FFEL Consolidation loans
  • DL Consolidation loans with underlying Parent PLUS loans
  • Perkins loans, unless they are included in a Consolidation loan
  • Private, state, and other non-federal student loans
  • Loans in default

Remembering Your Anniversary Is Important

You will need to reapply annually if you wish to remain in any of the “income-driven” repayment plans (Income-Contingent, Income-Sensitive, Income-Based and Pay As You Earn). This means that you must update your income information every year before your annual anniversary of enrolling in the program so that your monthly payment amount for the next year can be determined. Your loan servicer will send you a notification to provide documentation of your Adjusted Gross Income (AGI) and to self-certify your family size no later than 60 days and no earlier than 90 days prior to your annual deadline.

The notice will also contain:

  • Your annual renewal deadline
  • The consequences to you if the servicer does not receive your renewal information
  • Your new monthly payment amount and effective date if you no longer qualify for or miss the annual deadline
  • An explanation that unpaid accrued interest will be capitalized at the end of your current annual payment period

Missing your deadline can result in a much higher monthly payment than your income-driven payments as well as a significant amount of interest capitalizing, or being added on to, your loan balance. Be sure to make note of your anniversary date and proactively contact your servicer if you don’t receive this notification.

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Income-Contingent Repayment

If you have federal student loans through the Direct Loan program (DL) and are having difficulty making your loan payments, Income-Contingent Repayment (ICR) might be right for you. ICR allows you to lower your monthly loan payment amount.

How Is ICR Calculated?

Under ICR, your monthly payments will be calculated each year based on:

  • The basis of your adjusted gross income (plus your spouse’s income if you’re married and file your taxes jointly).
  • Family size (include your same-sex spouse even though you can’t include their income).
  • The total amount of your Direct loans.

Under the ICR plan, each month you will pay either 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 20% of your monthly discretionary income, whichever is less.

Will My Interest Be Capitalized?

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

Will My Loans Be Forgiven?

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. Please note that you may have to pay taxes on the amount that is discharged.

Can Graduate Students Apply for ICR?

As of July 1, 2009, 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 unless they consolidate their Parent Direct PLUS Loans.

To calculate your estimated loan payments, go to the Department of Education’s Repayment Estimator Tool.

Remembering Your Anniversary Is Important

You will need to reapply annually if you wish to remain in any of the “income-driven” repayment plans (Income-Contingent, Income-Sensitive, Income-Based and Pay As You Earn). This means that you must update your income information every year before your annual anniversary of enrolling in the program so that your monthly payment amount for the next year can be determined. Your loan servicer will send you a notification to provide documentation of your Adjusted Gross Income (AGI) and to self-certify your family size no later than 60 days and no earlier than 90 days prior to your annual deadline.

The notice will also contain:

  • Your annual renewal deadline 
  • The consequences to you if the servicer does not receive your renewal information
  • Your new monthly payment amount and effective date if you no longer qualify for or miss the annual deadline
  • An explanation that unpaid accrued interest will be capitalized at the end of your current annual payment period

Missing your deadline can result in a much higher monthly payment than your income-driven payments as well as a significant amount of interest capitalizing, or being added on to, your loan balance. Be sure to make note of your anniversary date and proactively contact your servicer if you don’t receive this notification.

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Income-Sensitive Repayment

Income-sensitive repayment lets Federal Family Education Loan Program (FFELP) borrowers decide what percentage of their income their loan payment will be. Borrowers in the Direct Loan (DL) program loans have the option of income-contingent repayment.

 When selecting that percentage—and this payment schedule—remember that your payments will eventually increase. Still, if you have a job with a lower salary, this plan could work for you.

How It Works

  • You select a monthly payment amount between 4%–25% of your monthly income.
  • Your payment must be greater than or equal to the interest accruing on your loan.
  • You must reapply for this schedule every year.
  • It is available to you for up to 5 years.
  • After 5 years, you will need to choose another repayment schedule. You may have up to 10 additional years under your new schedule.
  • Income-sensitive repayment extends your repayment period. As a result, the total amount you pay in interest may be greater than what you would pay under standard repayment.

If your income was $16,800 and you had $10,000 in loans at a 6.8% interest rate, your payments could look like this:

 

Standard Repayment

Income-Sensitive Repayment Plan

Number of Payments

120 (10 years)

180 (15 years)

Monthly Payment Amount

$115

$56 (for 5 years); $115 (remainder of payment)

Total Cost of Interest

$3,810

$7,210

Total Amount Repaid

$13, 810

$17,210

Changing Your Repayment Schedule

Call your servicer to find out what you need to do to change your repayment plan. Your servicer may be able to make the change over the phone, or they may require you to fill out paperwork and provide documentation.

Remembering Your Anniversary Is Important

You will need to reapply annually if you wish to remain in any of the “income-driven” repayment plans (Income-Contingent, Income-Sensitive, Income-Based and Pay As You Earn). This means that you must update your income information every year before your annual anniversary of enrolling in the program so that your monthly payment amount for the next year can be determined. Your loan servicer will send you a notification to provide documentation of your Adjusted Gross Income (AGI) and to self-certify your family size no later than 60 days and no earlier than 90 days prior to your annual deadline.

The notice will also contain:

  • Your annual renewal deadline
  • The consequences to you if the servicer does not receive your renewal information
  • Your new monthly payment amount and effective date if you no longer qualify for or miss the annual deadline
  • An explanation that unpaid accrued interest will be capitalized at the end of your current annual payment period

Missing your deadline can result in a much higher monthly payment than your income-driven payments as well as a significant amount of interest capitalizing, or being added on to, your loan balance. Be sure to make note of your anniversary date and proactively contact your servicer if you don’t receive this notification.

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Graduated Repayment

You can lower your federal student loan payments for a while—without extending your repayment period—if you opt for graduated repayment. If you don’t make a lot of money—but think you will in the future—this plan might be right for you.

Remember, it may seem like a good option to pay a smaller amount now, but those payments will grow in the future. When choosing this schedule, make sure to plan for those larger payments.

How It Works

  • Graduated repayment lets you pay just the interest on your loan for up to 4 years.
  • Some servicers will increase your payments after 2 years.
  • Payments then gradually increase so the loan is repaid in the same amount of time (10 years) as it would be under standard repayment.
  • Graduated repayment can increase the total amount of interest you pay. This means your loan may cost more than if you repaid it under standard repayment.

See what your payments could look like under this schedule with the Department of Education’s Repayment Estimator Tool.

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Extended Repayment

The extended repayment plan for federal student loans lowers your monthly payment, but you will have to make those payments for a longer time.

 Lower payments may be easier to make, but remember, the longer you take to repay your loan, the more interest you will have to repay overall.

How It Works

  • If you took out your oldest loan on or after October 7, 1998, you may be eligible.
  • You also need more than $30,000 in loans exclusively in the Direct Loan (DL) program or the Federal Family Education Loan Program (FFELP).
    • Example: If you have $15,000 in DL loans and $15,000 in FFELP loans, they cannot be added together to reach the $30,000 minimum.
  • Extended repayment stretches your repayment period from 10 years to as long as 25 years.
  • This lowers your payments, but it increases the total interest you pay over the life of the loan—making your loan more expensive.

For example, at 6.8% interest, the cost of repaying a $50,000 loan over 10 years is far lower than the cost of repaying it over 25 years:

 

Standard Repayment

Extended Repayment

Number of Payments

120 (10 years)

300 (25 years)

Monthly Payment Amount

$575

$347

Total Cost of Interest

$19,048

$54,112

Total Amount Repaid

$69,048

$104,112

The difference is costly, but don’t rule out extended repayment if you can’t afford your payments right now. Just consider extending your repayment only a few years—instead of the maximum time available. That will save you money in the long run.

See what your payments could look like under this schedule with the Department of Education’s Repayment Estimator Tool.

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Consolidation

Consolidation loans combine one or more federal student loans into one new loan held by a single lender. Since July 1, 2010, the only available lender for federal consolidation loans is the U.S. Department of Education.

If you are having trouble keeping track of multiple student loan payments, consolidation could help. It can also be useful if you need to extend your repayment, want to qualify for Public Service Loan Forgiveness, or have run out of forbearance time. However, if you are just looking for a lower monthly payment, you may want to consider other repayment options before consolidation.

How It Works

You can begin the consolidation process online at studentloans.gov. Before you start, you should know a few things:

  • You must have at least one eligible federal student loan to consolidate.
  • You cannot consolidate private and federal loans together.
  • The U.S. Department of Education (ED) does not require a minimum balance to consolidate your loans.
  • Your new loan will have new terms.
  • Your loan will have a new interest rate, which will be the weighted average of the loans you consolidated rounded up to the nearest 1/8th of a percent (for an example, see below).
  • After you consolidate, your repayment schedule will be reset to standard repayment. You may then choose a different payment schedule.
  • Based on your total education loan debt (including private loans), you could extend your repayment to a maximum of 30 years.
  • Loan consolidation cannot be reversed.
  • Consolidation loans can be reconsolidated to add additional eligible education loans.
  • There are no penalties for prepayment or finishing repayment ahead of schedule.

Consolidation Pros and Cons

Some benefits of consolidation:

  • Your loans will have a fixed interest rate based on the rates of the underlying loans.
  • You will have one convenient payment per month to one lender, instead of multiple payments to different lenders.
  • If you extend your repayment period, your new payment will be lower.
  • Under certain conditions, you can postpone repayment by requesting a deferment or forbearance. Interest will continue accruing on unsubsidized portions of a Consolidation loan during periods of deferment and forbearance.
  • If you have run out of deferment and forbearance time, you may be eligible for forbearance again after you consolidate.
  • Federal Family Education Loan Program borrowers who consolidate into the Direct Loan program will gain access to military benefits and Public Service Loan Forgiveness.

Some disadvantages of consolidation:

  • Due to the fixed interest rate, you will not benefit if the variable interest rate goes down.
  • If you extend your payment period, you may be making payments for a longer time, which increases the amount of interest you pay over the long term.
  • Your weighted interest rate will be rounded up to the nearest 1/8th of a percent (0.125).
  • For older loans, you may lose some deferment options.
  • For Perkins loans, you will lose some forgiveness options and your interest subsidy.
  • If your Consolidation loan includes a Parent PLUS loan, you cannot repay your loan under the income-based repayment plan.

Obtaining a Consolidation Loan

When applying for a Consolidation loan, ensure all of your eligible loans are included by researching your loan history. Getting your federal student loan information is easy with the National Student Loan Data System.

Once you have all your information, and are certain that consolidation is the best choice for your loans, begin your application online at studentloans.gov.

Weighted Averages

Consolidation loan interest rates are calculated by using the process below.

As an example, if you were in repayment on a loan of $5,000 at 6.8% and a loan of $10,000 at 6.0%, your rate would be 6.375%. Here is why:

  • The amount you owe on each loan is multiplied by its respective interest rate (5,000 x 0.068 = 340; 10,000 x 0.06 = 600).
  • These amounts are then added together (340 + 600 = 940).
  • This total is divided by the total amount you owe (940 / 15,000 = 0.063).
  • Multiplied by 100, this number creates your weighted average interest rate (100 x 0.063 = 6.3).
  • Your weighted average is then rounded up to the nearest 1/8% percent (6.3 + 0.075 = 6.375).

Keep in mind that rates are capped at 8.25%.

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Perkins, Institutional, Private, and State Loans

Most federal student loans have very similar repayment options. However, Perkins loans, and non-federal loans from states, colleges, or banks, may have different terms.

Repaying Perkins Loans

Perkins loans have fewer repayment options; however, you can postpone payments, including through Perkins-specific deferments.

  • Repayment for Perkins loans lasts 10 years.
  • Your school determines your payment amount—the minimum payment is $40—and the frequency of your payments (monthly, quarterly, bi-monthly).
  • You can apply for graduated repayment, but the U.S. Department of Education must approve it.
  • You may be able to work with your school to establish a different repayment plan. Contact your school to find out more.

Repaying Institutional, Private, and State Loans

Repayment options vary for institutional, private, and state loans.

  • Institutional loans: Contact your school to learn about your repayment options.
  • Private loans: Contact your lender to find out your repayment options.
  • State loans: Contact your servicer or your state’s office of education to find out your repayment options.

If you do not know if you have institutional, private, or state loans, review your free annual credit report.

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