Repayment of Federal Direct Stafford Loans

Student Loans Repayment Options

The key to successful repayment of your student loans is to understand your repayment options.

Your federal student loan must be repaid. You have a choice of several repayment plans that are designed to meet the needs of individual borrowers. There are five options for repaying your student loan.

Take the time to compare repayment plans and find one that fits your finances. If necessary, you may change your repayment plan at least once a year to meet your financial obligations.

These standard repayment options are offered by all loan servicers.

Option in Action
Standard Repayment Up to 10 years
  • Your payment will be based on this repayment option unless you request a different option.

  • Your monthly payment will be at least $50. However, your required payment may be higher if that is necessary to repay the loan within the shortest time, 10 years.

  • You will pay a fixed amount each month until your loans are paid in full.  You may pay the least amount of interest.
Graduated Repayment Up to 10 years
  • Payments start smaller and gradually will increase every two years.

  • If you expect your income to increase steadily over time, this plan may be right for you.

  • Your monthly payment will never be less than the amount of interest that accrues between payments.

  • You will pay more interest over the life of the loan.
Income-Sensitive Repayment (FFEL Loans Only) Maximum of 10 years
  • Your monthly loan payment is based on your annual income.

  • As your income increases or decreases, so do your payments.
Income-Contingent Repayment (Federal Direct Stafford Loans Only) Maximum of 25 years
  • Your monthly loan payment is based on your annual income.

  • As your income increases or decreases, so do your payments.

  • Each year, your monthly payments will be calculated on the basis of your adjusted gross income (plus your spouse’s if you’re married), family size, and the total amount of your Federal Direct Stafford Loans.

  • You will pay each month the lesser of:

    • the amount you would pay if repaid in 12 years multiplied by an income percentage that varies with your annual income.

    • 20% of your monthly discretionary income.
  • If your payments are not large enough to cover the interest that has accumulated on your loans, the unpaid amount will be capitalized once each year.
Extended Repayment Not to exceed 25 years
  • For FFEL or Federal Direct Stafford Loan borrowers with a minimum of $30,000 in borrower debt.  Not combined, accessed individually.

  • The payment amounts can be either fixed annual or graduated.

  • Smaller monthly payment that are less than with the Standard Repayment plan.

  • You will pay more interest over the life of the loan.
Income-Based Repayment Up to 25 years
  • Effective for borrowers repaying loans on or after July 1, 2009.

  • The required monthly payment is capped at an amount that is intended to be affordable based on income and family size.

  • Eligible if the monthly repayment amount under Income-Based Repayment plan will be less than the Standard Repayment plan.

  • You pay more interest and must submit annual documentation.

  • Other benefits: 
    • Pay as you earn
    • Interest payment benefit
    • 25-year cancellation
    • 10-year public service loan forgiveness

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