Federal Loan Repayment Plans

How to Repay Your Direct Loans and Federal Family Education Loan (FFEL) Program Loans

Reference: https://studentaid.ed.gov/sa/repay-loans/understand/plans

Repayment Plan Eligible Loans Monthly Payment and Time Frame Quick Comparison
Standard Repayment Plan
  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • All PLUS Loans
  • All Consolidation Loans (Direct or FFEL)
  • Payments are a fixed amount.
  • Up to 10 years (or up to 30 years for Consolidation Loans)
  • All borrowers are eligible for this plan.
  • You’ll pay less over time than under other plans.
Graduated Repayment Plan
  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • All PLUS Loans
  • All Consolidation Loans (Direct or FFEL)
  • Payments are lower at first and then increase, usually every two years.
  • Up to 10 years (or up to 30 years for Consolidation Loans)
  • All borrowers are eligible for this plan.
  • You’ll pay more over time than under the 10-year Standard Plan.
Extended Repayment Plan
  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • All PLUS Loans
  • All Consolidation Loans (Direct or FFEL)
  • Payments may be fixed or graduated
  • Up to 25 years
  • If you’re a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans.
  • If you’re a FFEL borrower, you must have more than $30,000 in outstanding FFEL Program loans.
  • Your monthly payments will be lower than under the 10-year Standard Plan or the Graduated Repayment Plan.
  • You’ll pay more over time than under the 10-year Standard Plan.
Revised Pay As You Earn Repayment Plan (REPAYE)
  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS loans made to students
  • Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents
  • Your monthly payments will be 10 percent of discretionary income.
  • Payments are recalculated each year and are based on your updated income and family size.
  • If you’re married, both you and your spouse’s income or loan debt will be considered, whether taxes are filed jointly or separately (with limited exceptions).
  • Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 or 25 years.
  • Any Direct Loan borrower with an eligible loan type may choose this plan.
  • Your monthly payment can be more than the 10-year Standard Plan amount.
  • You may have to pay income tax on any amount that is forgiven.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF)
Pay As You Earn Repayment Plan
  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS loans made to students
  • Direct Consolidation Loans that do not include (Direct or FFEL) PLUS Loans made to parents
  • Your maximum monthly payments will be 10 percent of discretionary income.
  • Payments are recalculated each year and are based on your updated income and family size.
  • If you’re married, your spouse’s income or loan debt will be considered only if you file a joint tax return.
  • Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 years.
  • You must be a new borrower on or after October 1, 2007, and must have received a disbursement of a Direct Loan on or after October 1, 2011.
  • You must have a high debt relative to your income.
  • Your monthly payment will never be more than the 10-year Standard Plan amount.
  • You’ll pay more for your loan over time than you would under the 10-year Standard Plan.
  • You may have to pay income tax on any amount that is forgiven.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF)
Income-Based Repayment Plan (IBR)
  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • All PLUS Loans made to students
  • Consolidation Loans (Direct or FFEL) that do not include Direct or FFEL PLUS loans made to parents
  • Your monthly payments will be 10 or 15 percent of discretionary income.
  • Payments are recalculated each year and are based on your updated income and family size.
  • If you’re married, your spouse’s income or loan debt will be considered only if you file a joint tax return.
  • Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 or 25 years.
  • You may have to pay income tax on any amount that is forgiven.
  • You must have a high debt relative to your income.
  • Your monthly payment will never be more than the 10-year Standard Plan amount.
  • You’ll pay more over time than under the 10-year Standard Plan.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF)
Income-Contingent Repayment Plan
  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS Loans made to students
  • Direct Consolidation Loans
  • Your monthly payment will be the lesser of:
    1. 20 percent of discretionary income, or
    2. The amount you would pay on a repayment plan with a fixed payment over 12 years, adjusted according to your income
  • Payments are recalculated each year and are based on your updated income, family size, and the total amount of your Direct Loans.
  • If you’re married, your spouse’s income or loan debt will be considered only if you file a joint tax return or you choose to repay your Direct Loans jointly with your spouse.
  • Any outstanding balance will be forgiven if you haven’t repaid your loan in full after 25 years.
  • Any Direct Loan borrower with an eligible loan type may choose this plan.
  • You’ll usually pay more over time than under the 10-year Standard Plan.
  • You may have to pay income tax on the amount that is forgiven.
  • Good option for those seeking Public Service Loan Forgiveness (PSLF)
  • Parent borrowers can access this plan by consolidating their Parent PLUS Loans into a Direct Consolidation Loan.
Income-Sensitive Repayment Plan
  • Subsidized and Unsubsidized Federal Stafford Loans
  • FFEL PLUS Loans
  • FFEL Consolidation Loans
  • Your monthly payment is based on annual income
  • Up to 15 years
  • You’ll pay more over time than under the 10-year Standard Plan.
  • The formula for determining the monthly payment amount can vary from lender to lender.

Repay Your Federal Perkins Loan

Reference: https://studentaid.ed.gov/sa/types/loans/perkins

Please note: As of December 18, 2015, the Federal Perkins Loan Extension Act of 2015 went into effect and eligibility will be restricted. No Federal Perkins loans can be made to any student on or after October 1, 2017.

Perkins Loan repayment plan options are not the same as those for Direct Loan Program or FFEL Program loans. It is critical that you know how much you have accumulated in student loan debt. To monitor all of your federal student loans, you may access the National Student Loan Data System (NSLDS) online at studentloans.gov or call toll-free 800.999.8219. Student must complete a Perkins Exit Test, which review terms and conditions of taking out the Perkins loan, as well as reviews the Perkins loan repayment plan and schedule; student are provided with individual repayment schedule.

Your repayment schedule will provide you with the interest rate, payment amounts, and payment methods. The chart below shows sample loan amounts and monthly payments based on the 5 percent interest rate:

Amount Borrowed Monthly Payment Number of Payments Total Amount Paid
$1,500 $40 41 $1640
$3,500 $40 109 $4362
$5,500 $58.34 120 $7000.80
$6,500 $68.94 120 $8272.80
$7,500 $79.55 120 $9546
$8,500 $90.16 120 $10,819.20
$10,000 $106.70 120 $12,728.40
$12,500 $132.58 120 $15,909.60
$15,000 $159.10 120 $19,092
$20,000 $212.13 120 $25,455.60
$27,500 $291.39 120 $35,001.60
$60,000 $636.39 120 $76,366.80

Contact the Office of Financial Aid for more information on Perkins Loan repayment plans.

Consolidate Your Loans

Reference: https://studentaid.ed.gov/sa/repay-loans/consolidation

If you have multiple federal student loans, you can consolidate them into a single Direct Consolidation Loan. This may simplify repayment if you are currently making separate loan payments to different loan holders or servicers, as you’ll only have one monthly payment to make. There may be trade-offs, so you’ll want to learn about the advantages and possible disadvantages of consolidation before you consolidate.

Should I consolidate my loans?

The answer depends on your individual circumstances:

Pros

  • If you currently have federal student loans that are with different loan servicers, consolidation can greatly simplify loan repayment by giving you a single loan with just one monthly bill.
  • Consolidation can lower your monthly payment by giving you a longer period of time (up to 30 years) to repay your loans.
  • If you consolidate loans other than Direct Loans, it may give you access to additional income-driven repayment plan options and Public Service Loan Forgiveness. (Direct Loans are from the William D. Ford Federal Direct Loan Program.)
  • You’ll be able to switch any variable-rate loans you have to a fixed interest rate.

Cons

  • Because consolidation usually increases the period of time you to have to repay your loans, you might make more payments and pay more in interest than would be the case if you don’t consolidate.
  • Consolidation may also cause you to lose certain borrower benefits—such as interest rate discounts, principal rebates, or some loan cancellation benefits—that are associated with your current loans.
  • If you’re paying your current loans under an income-driven repayment plan, or if you’ve made qualifying payments toward Public Service Loan Forgiveness, consolidating your current loans will cause you to lose credit for any payments made toward income-driven repayment plan forgiveness or Public Service Loan Forgiveness.
  • If you want to lower your monthly payment amount but are concerned about the impact of loan consolidation, you might want to consider deferment or forbearance as options for short-term payment relief, or consider switching to an income-driven repayment plan.
  • Once your loans are combined into a Direct Consolidation Loan, they cannot be removed. The loans that were consolidated are paid off and no longer exist.