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Managing Loan Debt

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Sample Comparison of Student Loan Repayment Plans

Standard Repayment Plan

  • Lowest total loan cost
  • Regular payments of both principal and interest are due monthly, excluding periods of deferment and forbearance
  • Minimum monthly payment is $50
  • 10-year repayment term

Additional Info: Students will make fixed monthly payments to repay their loan in full within 10 years (not including periods of deferment or forbearance) from the date the loan entered repayment.

Graduated Repayment Plan

  • Monthly payments are smaller at the start of the repayment period and gradually increase
  • 10-year repayment term
  • Total amount paid in interest will be greater than under the standard repayment plan

Additional Info: Payments will be lower at first and then will increase, usually every 2 years. Students must repay their loan in full within 10 years (not including periods of deferment or forbearance). At a minimum, payments must cover the interest that accumulates on the loan between payments.

Extended Repayment Plan

  • Lengthens repayment term up to 25 years
  • Available to borrowers with more than $30,000 in federal student loans
  • Total interest costs may be higher over life of the loan, although monthly payment amount may be lower

Additional Info: Students will make fixed or graduated monthly payments and repay their loan in full over a period of time, not to exceed 25 years (not including periods of deferment or forbearance). To be eligible for either Extended Repayment Plan, student must be a new borrower* on or after Oct. 7, 1998, and student must have more than $30,000 in federal student loan debt.

Income-Based Repayment Plan (IBR)

  • Borrowers may qualify for lower monthly payments as determined by adjusted gross income, federal student loan debt, and family size
  • After 25 years (300 payments), remaining balance and accrued interest is forgiven
  • Must reapply annually

Additional Info: The required monthly payment amount will be based on the student’s income during any period when they have a partial financial hardship. The monthly payment amount may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If student’s meet certain requirements over a specified period of time, they may qualify for cancellation of any outstanding balance on their loans.

What federal student loans are eligible to be repaid under an IBR plan?

Any Stafford, Grad PLUS or Consolidation loan made under either the Direct Loan or FFEL program is eligible for repayment under IBR, EXCEPT loans that are currently in default, parent PLUS Loans, or consolidation loans that repaid a parent PLUS Loan. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training).

Who is eligible for IBR?

You may enter IBR if your federal student loan debt is high relative to your income and family size. You can use the Department's IBR calculator or other calculators listed above to estimate if you would likely benefit from the IBR plan. It looks at your income, family size, and state of residence to calculate your IBR monthly payment amount. If that amount is lower than the monthly payment under a 10-year standard repayment plan, then you are eligible to repay your loans under IBR.

25-year Cancellation

If you repay under the IBR plan for 25 years, make 300 payments and meet certain other requirements, any remaining balance will be cancelled.


Income-contingent Repayment Plan

  • Offered only to borrowers under the Direct Loan Program
  • Monthly payment based on adjusted gross income, family size, and total Direct Loan debt
  • If payment does not cover interest accrued, unpaid amount is capitalized annually.
  • Maximum repayment period is 25 years, and any balance after 25 years is forgiven.

Additional Info: Income Contingent Plan is only available to FDLP borrowers

Monthly payment amount will be based on:

  • student’s annual income (and that of their spouse if married),
  • family size, and
  • the total amount of Direct Subsidized and Unsubsidized Loans.

As income changes, payments may change. If students do not fully repay their loan after 25 years under this plan, the unpaid portion will be forgiven. Students may have to pay income tax on any amount forgiven.

Income Sensitive Repayment Plan

  • Offered only to borrowers under the FFELP
  • Monthly payment varies according to gross monthly income
  • Monthly payment covers at least monthly accruing interest
  • Must reapply annually
  • Total interest costs will be higher over the life of your loan than with standard repayment

Additional Info: Income-Sensitive Plan is only available to FFELP borrowers

  • Maximum repayment period is 10 years or 120 monthly payments.
  • The payment amount changes annually based on the borrower’s expected total monthly gross income.
  • Payment cannot be less than the monthly interest accrual.
  • Loan servicer must grant borrower up to 5 years of forbearance in cases where the effect of decreased installment amounts paid under an income- sensitive repayment schedule would result in a loan not being repaid within the maximum repayment period.