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One of the benefits of educational loans (including Federal PLUS Loans) is the variety of repayment options available. Most educational loan payments are set up on a standard repayment plan with monthly payments that remain the same throughout the repayment period. However, the following list includes other plans for Federal PLUS Loan graduate/professional borrowers that may make the payments more manageable.
Prepayment
- All or part of your loan can be prepaid at any time without penalty
- Prepayment may substantially decrease your total interest costs
Standard Repayment
- Fixed schedule of equal monthly payments
- Maximum 10-year repayment period
Graduated Repayment
- Monthly schedule that starts with small payments that increase gradually over time
- Maximum 10-year repayment
- Higher total interest than with the standard repayment plan
Income-Sensitive Repayment
- Monthly schedule that assigns fixed payments for one year at a time
- Scheduled payments may increase or decrease each year as income changes
- Maximum 10-year repayment period (can be extended for up to five years)
- Substantially increases total debt. A return to standard repayment plan as quickly as possible is recommended
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
- Available if first loan was disbursed on or after October 7, 1998, and if total debt exceeds $30,000
- Fixed annual or graduated repayment schedule
- Maximum 25-year repayment period
- Substantially increases total debt. A return to standard repayment plan as quickly as possible is recommended
If you borrow a Federal PLUS loan through the Federal Direct Loan Program all of the above repayment options are available except income-sensitive repayment.
Repayment Option Comparison
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.
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Standard Repayment Option |
|
Amount Borrowed |
Monthly Payment for 10 Years |
Total Amount Repaid |
|
$10,000 |
$124 |
$14,879 |
|
$15,000 |
$186 |
$22,318 |
|
$20,000 |
$248 |
$29,756 |
| Graduated Repayment Option |
|
Amount Borrowed |
Monthly Payment for 10 Years |
Total Amount Repaid |
|
$10,000 |
1st stage: $75 for 2 years
2nd stage: $97 for 2 years
3rd stage: $126 for 2 years
4th stage: $164 for 2 years
5th stage: $214 for 2 years |
$16,242 |
|
$15,000 |
1st stage: $112 for 2 years
2nd stage: $146 for 2 years
3rd stage: $190 for 2 years
4th stage: $247 for 2 years
5th stage: $321 for 2 years |
$24,363 |
|
$20,000 |
1st stage: $150 for 2 years
2nd stage: $195 for 2 years
3rd stage: $253 for 2 years
4th stage: $329 for 2 years
5th stage: $427 for 2 years |
$32,485 |
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