Student Loans

Repayment Plans

How soon you must pay and the amount of your payments will depend upon your student loan types and sometimes your current earnings.

When will your loan payments begin?

How soon you must repay your student loan depends on your type of loan. Some loans require payments while you are in school. Others wait until you leave school. Some federal loans provide a grace period before you must start repayment of your student loans. A grace period is a set period of time before you must begin repayment, usually at one of the following events: (1) student graduates; (2) student drops below half the credits needed to be full time; or (3) student withdraws from the academic program. Once your grace period ends, you must begin repaying your loan.

Direct PLUS Loans do not have a grace period. Repayment for PLUS loans begins immediately after the loan is disbursed. Private and state student loans often offer no grace period, and many require you to make interest payments while in school.

What will be the amount of your loan payments?

The amount of your payments depends on the terms of your loan and, in the case of federal loans, the available repayment options. You must repay your loans regardless of the outcome of your education. Even if you don’t finish school, can’t find a job in your field of study, or are unhappy with the education financed by your loan, you must still repay your student loans.

Federal student loan repayment options for borrowers include the following:

• Standard Repayment Plan Payments are a fixed amount of at least $50 per month for up to ten years. Monthly payments may be higher than other repayment plans, but you will pay less interest over the life of the loan. Borrowers on standard repayment plans are not eligible for public service loan forgiveness.
• Graduated Repayment Plan Payments are lower at first and then increase, usually every two years. Payment plan is for up to ten years. You will pay more interest over time than under the ten-year Standard Plan. Borrowers on graduated repayment plans are not eligible for public service loan forgiveness.
• Extended Repayment Plan Payments may be fixed or graduated, and may be up to 25 years. This Plan is available for Direct Loan debt of more than $30,000. You will pay more over time than under the ten-year Standard Plan. Borrowers on an extended repayment plan are not eligible for public service loan forgiveness.
• Income Based Repayment Plan (IBR) Monthly payments are 10 or 15 percent of discretionary income. Payments are recalculated each year and are based on your updated income and family size. IBR will also forgive the remaining debt after 20 or 25 years of qualifying payments. Borrowers on an IBR plan may be eligible for public service loan forgiveness after 10 years of repayment.
• Income Contingent Repayment Plan (ICR) Monthly payments are calculated each year and are based on your annual income (and your spouse’s income if you are married), family size, and the total amount of your Direct Loans. Your monthly payment will be the lesser of 20 percent of discretionary income or a fixed payment over 12 years. ICR will also forgive the remaining debt after 25 years of qualifying payments. Borrowers on an ICR plan are eligible for public service loan forgiveness after 10 years of repayment.
• Pay as Your Earn Repayment (PAYE) and Revised Pay as Your Earn (REPAYE) These plans aid borrowers who qualify for partial financial hardship. The monthly payments are ten percent of discretionary income and payment amount may increase or decrease each year based on income and family size. These plans will also forgive the remaining debt after 20 or 25 years of qualifying payments, and are eligible for public service loan forgiveness after 10 years of repayment.
• Saving on a Valuable Education (SAVE) Plan: The U.S. Department of Education has finalized the most affordable repayment plan in history. It’s called the Saving on a Valuable Education (SAVE) plan. Borrowers signed up for the current Revised Pay as You Earn (REPAYE) plan will be automatically enrolled in SAVE. The SAVE Plan, like other income-driven repayment (IDR) plans, calculates your monthly payment amount based on your income and family size. The SAVE Plan provides the lowest monthly payments of any IDR plan available to nearly all student borrowers.

Choosing a Repayment Option

Not every federal student loan debt is eligible for every federal repayment option. Check with your student loan servicer to learn more about your options in deciding or changing your repayment plan. To more easily navigate your federal student loan repayment options, go to this student loan repayment option webpage. The federal government launched this webpage to inform student loan borrowers about repayment options best-fitted for their unique circumstances. The webpage also covers private and non-federal loans. You can also check with your student loan servicer to learn your options in deciding or changing your repayment plan.

A repayment estimator tool is available from the U.S. Department of Education. This tool can tell you what your payments would be under the repayment plan based on the amount of the loan.

The Consumer Financial Protection Bureau webpage tool also lists options for how to pay off your student loans, both federal and private loans, based on basic information about your situation.

Private Student Loans

In general, most private loans offer fewer repayment options than federal student loans. Some private lenders may offer only one standard type of repayment plan with little flexibility. Other lenders might offer more than one type of repayment plan, including ones based on your income.

The federal Consumer Financial Protection Bureau has a webpage tool that lists options and advice for how to pay off your private student loans, as well as federal loans, based on basic information about your situation.

Check with your lender or loan servicer to determine what repayment options are available to you for your loan and which works best for you.