Repaying a Loan
Loans, unlike educational grants, must be repaid. After you graduate, leave school, or drop below half-time enrollment, you have six months before you must begin repaying your loans. This is called the "grace period." Your repayment period begins the day after your grace period ends. Your first payment will be due within 60 days after your repayment period begins. It is important to begin repayment when you receive a bill from your lender.
Five repayment plans are available:
If you do not select one, you will be assigned to the Standard Plan.
If you have a Federal Family Education Loan (FFEL), check with your lender about repayment options.
Standard repayment
With the Standard Plan, you'll pay a fixed amount each month until your loans are paid in full. Your monthly payments will be at least $50, and you'll have up to 10 years to repay your loans.
The Standard Plan is good for you if you can handle higher monthly payments because you'll repay your loans more quickly. Your monthly payment under the Standard Plan may be higher than it would be under the other plans because your loans will be repaid in the shortest time. For the same reason--the 10-year limit on repayment--you may pay the least interest.
Extended repayment
Under the Extended Plan, you'll still have minimum monthly payments of at least $50, but you can take from 12 to 30 years to repay your loans. The length of your repayment period will depend on the total amount you owe when your loans go into repayment.
This is a good plan if you will need to make smaller monthly payments. Because the repayment period generally will be at least 12 years, your monthly payments will be less than with the Standard Plan. However, you may pay more in interest because you're taking longer to repay the loans. Remember that the longer your loans are in repayment, the more interest you will pay.
TopGraduated repayment
With this plan, your payments start out low, then increase, generally every two years. The length of your repayment period will depend on the total amount you owe when your loans go into repayment. If you expect your income to increase steadily over time, this plan may be right for you. Your initial monthly payments will be equal to either the interest that accumulates on your loans or half of the payment you would make each month using the Standard Plan, whichever is greater. However, your monthly payments will never increase to more than 1.5 times what you would pay with the Standard Plan.
TopIncome-contingent repayment (ICR)
This plan gives you the flexibility to meet your Direct Loan obligations without causing undue financial hardship. Each year, your monthly payments will be calculated on the basis of your Adjusted Gross Income (AGI), family size, and the total amount of your Direct Loans. To participate in the ICR Plan, you must sign a form that permits the Internal Revenue Service to provide information about your income to the U.S. Department of Education. This information will be used to recalculate your monthly payment, adjusted annually based on the updated information. For more information on income-contingent repayment, visit the Federal Student Aid Direct Loans Repayment Plans webpage at Income Contingent Repayment and scroll down to the Income Contingent Repayment section. To calculate an estimated initial monthly payment amount, visit the Income Contingent Repayment Calculator. To review the guidelines and the income percentage factors information please visit the HHS Poverty Guidelines and Income Percentage Factors
TopIncome-sensitive repayment
This option is similar to income-contingent repayment (see above) but is for FFEL loans. Payments are based on a percentage of your monthly income.
