College Zone - Printable Version - Student Zone - 8th-12th Grade

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One of the benefits of a student loan is the variety of repayment options available. Most student loan payments are set up on a standard repayment plan with monthly payments that remain the same throughout the repayment period. However, other plans are available that may make your payments more manageable.

When the time arrives, work with your lender to determine which repayment option works best for you. If you borrow through the Federal Direct Loan Program, your repayment options may be different and you’ll be working with the college rather than a lending institution.

Keep in mind, many lenders and holders offer repayment incentives to those who make their payments on time. Such incentives include interest rate reductions or cash back. Check with your lender or holder to see if these options are available to you.

Repayment Options

The information below compares the "monthly payments" and the "total amount repaid" of the standard and graduated repayment plans using identical 10-year terms and a 6.8 percent interest rate. Additional information is also provided regarding other payment plan options. Income Sensitive and Extended repayment plans are also noted below. Repayment calculators are useful tools that can help you estimate your monthly payments. Remember that changes in interest rates and federal regulations that govern the loan programs can affect your payments.

Standard Repayment Option

This option allows you to make monthly payments of principal and interest, excluding periods of deferment and forbearance. Depending on the amount borrowed, $50 is the minimum monthly payment.

Amount Borrowed

Monthly Payment for 10 Years

Total Amount Repaid

$10,000

$115

$13,810

$15,000

$173

$20,714

$20,000

$230

$27,619

Graduated Repayment Option

Borrowers choosing this option can start with reduced payments and gradually increase the payments over time.

Amount Borrowed	Monthly Payment for 10 Years	Total Amount Repaid
$10,000	1st stage: $68 for 2 years 2nd stage: $89 for 2 years 3rd stage: $115 for 2 years 4th stage: $150 for 2 years 5th stage: $195 for 2 years	$14,812
$15,000	1st stage: $102 for 2 years 2nd stage: $133 for 2 years 3rd stage: $173 for 2 years 4th stage: $225 for 2 years 5th stage: $292 for 2 years	$22,220
$20,000	1st stage: $137 for 2 years 2nd stage: $177 for 2 years 3rd stage: $231 for 2 years 4th stage: $300 for 2 years 5th stage: $390 for 2 years	$29,626

Income Sensitive Repayment Option

Monthly payments are based upon a percentage of your gross monthly income.

Amount Borrowed Monthly Gross Income % of Income Required Monthly Payment

$10,000 $1,000 4% $57

$20,000 $2,000 4% $113

Income-Based Repayment Option
(effective July 1, 2009)

Borrowers who meet the conditions of partial financial hardship (based on income and family size) may qualify for an income-based repayment plan.

The payment amount will not be more than 15% of the amount by which the borrower's adjusted gross income exceeds 150% of the poverty line for the family size. If the monthly payment amount is not sufficient to pay accrued interest on a subsidized Stafford loan, the U.S. Department of Education (ED) will pay the remaining interest for a period of 3 years; any outstanding loan balance after 25 years will be forgiven.

More information about income-based repayment, including a chart of examples of IBR payments, is available on the Student Aid on the Web and IBR info Web sites.

Extended Repayment Plan Option

Depending on the amount borrowed, eligible borrowers can lengthen their repayment terms to a maximum of 25 years. Borrowers have a choice of either standard or graduated payment plans.

Early Payoff Option

Paying off your student loan in full carries no prepayment penalties and keeps interest costs to a minimum.

Loan Consolidation Option

Federal Consolidation Loans allow you to combine any number of existing federal educational loans into a single, more manageable loan.

You can find more information on repaying your student loans at the U. S. Department of Education's Federal Student Aid Student Web Portal.