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Student loan repayment options

There are a number of student loan repayment options to help you pay off student loans in a timely manner that will also work with your budget. Repayment plans can be changed at any time, even if you’ve been assigned a repayment plan when you first began repaying the student loan. Please note that these repayment options are available for Direct Loans and Federal Family Education Loans (FFEL). For federal Perkins loans, check for student loan repayment program options with the school.

Standard Repayment Plan

Subsidized and unsubsidized Direct and Stafford loans are eligible under this plan, as well as all PLUS loans. Payments are fixed, with at least $50 per month, up to 10 years. Under the Standard Repayment Plan, less interest is paid over time.

Graduated Repayment Plan

Subsidized and unsubsidized Direct and Stafford loans are eligible under this plan, as well as all PLUS loans. Payments are not fixed, and start at a lower number at first. Then, every two years, the payment (which is calculated based on the amount of your initial loan) increases. Over time, you will eventually pay more for the loan than under the 10-year standard plan. However, if you are starting off in an entry-level job with a lower income, but expect your income to increase steadily, this might be the right choice.

Extended Repayment Plan

Subsidized and unsubsidized Direct and Stafford loans are eligible under this plan, as well as all PLUS loans. Payments can be either fixed or graduated, and borrowers have up to 25 years to complete payment. Monthly payments are lower than on the 10-year standard plan, but you will pay more over  time in interest. For Direct Loans and FFEL, you must have more than $30,000 in outstanding loans under each category.

Income-Based Repayment Loan (IBR)

Subsidized and unsubsidized Direct and Stafford loans are eligible under this plan, as well as all PLUS loans and consolidation loans that do not include Direct or FFEL PLUS loans made to parents. This type of loan is based on your discretionary income, and maximum monthly payments must be 15 percent of the difference between your adjusted gross income and 150 percent of the poverty guidelines. As your income changes, the payments change. The borrower has up to 25 years to pay this off, and must prove partial financial hardship. Monthly payments will be lower than under 10-year standard plans, but you’ll pay more for the loan over time. After 25 years of qualified monthly payments (payments that meet the requirements of your loan repayment), the loan will be forgiven on any outstanding balance. However, you may have to pay income tax on any forgiven amount.

Income-Contingent Repayment Plan

Direct subsidized, unsubsidized, PLUS made to students, and consolidation loans are eligible under this plan. The payments, calculated on an annual basis, are based on your individual situation, including gross income, family size, and total amount of loans. After 25 years of qualified monthly payments (payments that meet the requirements of your loan repayment), the loan will be forgiven on any outstanding balance. However, you may have to pay income tax on any forgiven amount.

Income-Sensitive Repayment Plan

Subsidized and unsubsidized Stafford loans are eligible under this plan, as well as FFEL PLUS and FFEL consolidation loans. The repayment schedule over 10 years is based on your annual income, and the payments change as your income changes. Every lender has a different formula to determine the monthly payment amount, and you will end up paying more for the loan over time than under the 10-year standard plan.

For more information on repayment options, visit Student Aid. For information on repayment plans for private loans, contact your lender.

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