Student Loan Repayment Options

Generally, when it comes to repaying your student loans, you can select a repayment plan that’s right for you and your financial situation.

Payment Plans
Forgiveness Options
Other Loan Repayment Tips
Consolidation


Payment Plans

For the payment plan examples below, we used the U.S. Department of Education's Repayment Estimator.  We encourage you to log in to the Repayment Estimator using your FSA ID and receive more accurate estimates based on your actual loan amounts.

Standard Repayment

With the standard repayment plan, you pay a fixed amount each month until your loans are paid in full for up to 10 years. 

Monthly Payments:

  • are a fixed amount of at least $50 each month
  • are made for up to 10 years (not including periods of deferment or forbearance)

Eligibility Requirements:

  • Available for all Direct Loans and FFEL Program Loans

Other Considerations:

  • Your loans will automatically be placed on the standard repayment plan unless you decide to choose - and qualify for - another repayment plan.
  • This plan works the best for someone who has steady monthly income and can afford the standard payment.
  • As this plan allows you to pay your loan in full within the 10-year period, payments may be higher than it would be for other plans because your loans would be paid in the shortest amount of time. For that reason, you may pay the least in overall interest.
Standard Repayment Plan Example: (Direct Loan at 5% interest rate)
Loan Amount Monthly Payment Months in Repayment Total Interest Paid Total Amount Paid
$20,000  $212  120 $5,456 $25,456

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Graduated Repayment

With the graduated repayment plan, your payments start out lower and gradually increase every two years until your loans are paid in full for up to 10 years.

Monthly Payments:

  • start out low and increase every two years
  • are made for up to ten years (not including periods of deferment or forbearance)
  • are at least equal the amount of interest that accrues on your loan each month
  • can't be more than three times greater than any other payment

Eligibility Requirements:

  • Available for all Direct Loans and FFEL Program Loans

Other Considerations:

  • Your monthly payment will never be less than the amount of interest that accrues between payments.
  • This plan works well for someone who has cash flow problems early on but expects for your income to increase steadily over time.
Graduated Repayment Plan Example: (Direct Loan at 5% interest rate)
Loan Amount Monthly Payment Months in Repayment Total Interest Paid Total Amount Paid
$20,000

First Monthly Payment: $120

Last Monthly Payment: $360

 120 $6,863

$26,863


Pay as You Earn (PAYE)

With the Pay as You Earn (PAYE) repayment plan, monthly payments are limited to 10% of your discretionary income.

Eligibility Requirements:

  • To initially qualify for this plan and to continue to make income-based payments under this plan, you must have a partial financial hardship, which means that your calculated payment amount under PAYE must be less than what you would pay under the Standard Repayment Plan with a 10-year repayment period.
  • You must be a new borrower.
  • Direct Loan Program loans, not in default, are eligible except:
    • Direct PLUS Loans made to parent borrowers and
    • Direct Consolidation Loans that repaid a Direct or FFEL PLUS Loan made to a parent borrower.
  • FFEL Program loans are not eligible for this plan, but can become eligible through loan consolidation.

Other Considerations:

  • Payments will be lower, but you’ll pay more in interest because you’re taking longer to repay your loans.

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Revised Pay as You Earn (REPAYE)

With the Pay as You Earn (REPAYE) repayment plan, monthly payments are generally limited to 10% of your discretionary income.

Eligibility Requirements:

  • Direct Loan Program loans, not in default, are eligible except:
    • Direct PLUS Loans made to parent borrowers and
    • Direct Consolidation Loans that repaid a Direct or FFEL PLUS Loan made to a parent borrower.
  • FFEL Program loans are not eligible for this plan, but can become eligible through loan consolidation.

Other Considerations:

  • Payments will be lower, but you’ll pay more in interest because you’re taking longer to repay your loans.

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Income-Based Repayment (IBR)

With the Income-Based Repayment (IBR) plan, monthly payments are generally equal to 15% of your discretionary income (10% if you are a new borrower).  The remaining balance after 25 years can be forgiven (but the forgiven amount will be taxable).

Eligibility Requirements:

  • To initially qualify for this plan and to continue to make income-based payments under this plan, you must have a partial financial hardship, which means that your calculated payment amount under IBR must be less than what you would pay under the Standard Repayment Plan with a 10-year repayment period.
  • Direct Loan and FFEL Program loans, not in default, are eligible except;
    • Direct or FFEL PLUS Loans made to parent borrowers and
    • Direct or FFEL Consolidation Loans that repaid a Direct or FFEL PLUS Loan made to a parent borrower.

Other Considerations:

  • Payments will be lower, but you’ll pay more in interest because you’re taking longer to repay your loans.
  • Under the Healthcare and Education and Reconciliation act of 2010, anyone who qualifies for IBR and has a new loan in 2012 but none older than 2008, their IBR payment amount will be based on 10% of your discretionary income rather than 15%. 
  • You must reapply every year.

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Income-Contingent Repayment (ICR)

With the Income-Continguent Repayment (ICR) plan, monthly payments are the lesser of:

  • what you would pay on a 12-year standard repayment plan adjusted based on your income or
  • 20% of your discretionary income.

The remaining balance after 25 years can be forgiven (but the forgiven amount will be taxable).

Eligibility Requirements:

  • Direct Loan Program loans, not in default, are eligible except:
    • Direct PLUS Loans made to parent borrowers.
  • Direct and FFEL PLUS Loans made to parent borrowers may become eligible for this plan through loan consolidation.
  • FFEL Program loans are not eligible for this plan, but can become eligible through loan consolidation.

Other Considerations:

  • Payments may be lower (or they could be higher than the Standard Plan amount), but you’ll often pay more in interest because you’re taking longer to repay your loans.
  • This plan is designed to help borrowers with unmanageable payments relative to their income.

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Forgiveness Options

Public Service Forgiveness

This program will forgive any remaining student loan debt after 10 years of payments for people who work in qualifying public service positions. Qualifying positions may include: military service, public safety, public education, social work, public defenders and more.

To be eligible you must have made 120 monthly payments on or after October 1, 2007 in the Direct Loan Program. You must also be employed in a public service job during the time the qualifying payments are made and at the time the loan is forgiven. For additional information, visit studentaid.ed.gov.

Direct Loan Forgiveness for Teachers

This program is intended to encourage individuals to enter and continue working in the teaching profession. Individuals who teach full time for five consecutive, complete academic years in elementary or secondary schools serving low-income students and meet other qualifications may be eligible for up to $17,500 of forgiveness. For additional information, visit studentaid.ed.gov.

Federal Employee Student Loan Program

The federal student loan repayment program permits federal agencies to repay federal student loans as a recruitment or retention incentive for candidates or current employees of the federal agency. For additional information, visit opm.gov/oca/pay/StudentLoan.

Rural Opportunity Zones

Rural Opportunity Zones are 50 counties that have been authorized to offer one or both of the following financial incentives to new full-time residents:

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Other Loan Repayment Tips

  1. Know who and how much you owe: You can find all of your outstanding federal loans by visiting nslds.ed.gov. The National Student Loan Data System (NSLDS) tracks your federal loans until they are paid in full. For information on private loans borrowed for educational purposes, you may obtain a free copy of your credit report at AnnualCreditReport.com.
  2. You can change your repayment plan at any time by contacting your loan servicer.
  3. Notify your loan servicer if your name, address, or telephone number changes to ensure you receive timely communications.
  4. If you are in school at least part-time, unemployed, in the military or meet other eligibility criteria, you may be eligible to postpone your payments for a period of time by applying for a deferment.
  5. If you do not qualify for a deferment, you may be eligible to request a forbearance. Forbearance may temporarily lower or suspend your loan payments. Forbearances are allowed based on the discretion of your lender/loan servicer.

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Consolidation

Direct loan consolidation allows borrowers to combine multiple federal student loans into one loan. This results in one single monthly payment with one loan holder. This option would often be best for borrowers who are looking for monthly payment relief and who would not qualify for the Income-Based Repayment Plan. For more information, to apply for consolidation, visit studentloans.gov/consolidation

Other Considerations:

  • The overall total cost of repayment could significantly increase.
  • You could lose borrower benefits offered under repayment plans for the original loans.

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