Student Loan Repayment Plans

Learn about the different plans for paying back federal student loans, including several plans that are based on your income.

If you have federal student loan debt, you might feel like you’re stuck in your current repayment plan. But you probably have more options than you think. In fact, there are eight different repayment plans for federal student loans. Private student loans, though, are a different story.

Read on to learn about the different repayment options that are available for federal student loans. (To learn basic information about student loans, see our Overview of Student Loans.)

What Kind of Loan Do You Have?

Different repayment plans apply to federal and private student loans.

Loans issued by banks or the federal government. The options discussed in this article are available for federal student loans. Which specific repayment plans are available to you depends largely on what type of federal student loan you have. The two main types of federal loans are:

  • Federal Family Education Loans (FFEL). Private lenders made these loans prior to July 1, 2010 (they’re no longer available) and the federal government guarantees them. This means that the federal government reimburses the lender if you default.
  • Federal Direct Loans. Loans that the federal government makes directly are called, as you might expect, federal Direct Loans.

For details about which types of loans qualify for each of the repayment options discussed below, see the U.S. Department of Education’s website.

School-issued federal loans. If you have school-issued federal student loans, like Perkins Loans, ask your school about repayment options. Repayment plan options for federal Perkins Loan are different than those for federal Direct Loans or FFELs.

Private student loans. Private student loans are not eligible for the repayment plans discussed in this article. If you have private student loans, contact your lender, loan holder, or loan servicer to find out your repayment options.

Basic Repayment Plans for Federal Student Loans

Currently, the available basic repayment plans for federal student loans are:

Standard Repayment Plan

Under the standard repayment plan, you’ll make the same monthly payment for the life of the loan. With this kind of plan you'll normally pay off your loan in the shortest amount of time—up to ten years. (For Consolidation loans, the repayment period is up to 30 years.) This means you’ll pay the most per month, but the least amount of interest over the life of your loan.

Graduated Repayment Plan

Under a graduated plan, your payments start out low and increase during the repayment period—usually every two years. This is typically a good option if your income is low when you graduate, but will likely increase quickly. Like with a standard repayment plan, the timeline is up to ten years (except for FFEL Consolidation Loans and Direct Consolidation Loans, which can have a repayment term of up to 30 years). Because you carry a larger balance at the beginning of the repayment period, you'll end up paying more interest than under a standard repayment plan.

Extended Repayment Plan

An extended plan allows you have fixed or graduated payments stretched over a period of up to 25 years. To be eligible for this plan, you must have an outstanding loan balance of more than $30,000.

Income-Based Repayment Plans

There are a number of income-driven plans available if your income is low or unstable, or you have moderate income with very high student loan debt. Your payment amount under an income-driven repayment plan is generally a percentage of your discretionary income.

Income Based Repayment Plan (IBR)

Under the IBR plan, the payments generally are:

  • 10% of your discretionary income if you're a new borrower on or after July 1, 2014 (but never more than the ten-year standard repayment plan amount) or
  • 15% of your discretionary income if you're not a new borrower on or after July 1, 2014 (again, never more than the ten-year standard repayment plan amount).

If you haven't paid off your loan after 20 years (if you're a new borrower on or after July 1, 2014) or 25 years (if you're not a new borrower on or after July 1, 2014), the government will cancel the remaining balance—though you might have to pay taxes on the canceled amount.

Income Contingent Repayment Plan (ICR)

Under the ICR plan, your payment is the lesser of:

  • 20% of your discretionary income or
  • what you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income.

Like with all of the income-driven repayment plans, you'll have to reapply every year and the payment amount will likely be adjusted. If you haven't paid off your loan after 25 years, the government will cancel the remaining balance. Again, you might have to pay taxes on the canceled amount.

Pay As You Earn Repayment Plan (PAYE)

With PAYE, your maximum monthly payments are 10% of your discretionary income. If you haven't paid off your loan after 20 years, the government will cancel the remaining balance. You might have to pay income tax on any forgiven amount.

Pay As You Earn Repayment Plan (REPAYE)

Like PAYE, with REPAYE, your maximum monthly payments will be 10% of your discretionary income. The main differences between PAYE and REPAYE are:

  • To qualify for PAYE, you must be a new borrower on or after October 1, 2007, and must have received a disbursement of a Direct Loan on or after October 1, 2011. For REPAYE, any Direct Loan borrower with an eligible loan type can pick this plan.
  • Under PAYE, if you're married, your spouse's income or loan debt will be considered only if you file a joint tax return. Under REPAYE, your income and your spouse’s income or loan debt will be considered, whether you file taxes jointly or separately (with limited exceptions).

Under REPAYE, if you haven’t paid off the loan after 20 years (undergraduate loans) or 25 years (loans for graduate or professional study), the government cancels the balance. The forgiven amount is, again, considered taxable.

Income Sensitive Repayment Plan (ISR)

In this plan, your payments are based on your annual income. The ISR plan is available only to low-income borrowers and only for FFEL loans. Because FFELs were discontinued in 2010, recent borrowers aren't eligible for an ISR plan.

Getting Help

With so many repayment options available to federal student loan borrowers, the trick is figuring out which of the eight major federal repayment plans you can choose from and, of those, which is best for your situation. Again, for details about which types of loans qualify for each of the repayment options discussed below, see the U.S. Department of Education’s website. For tips on where to start when selecting a plan, see How to Choose a Student Loan Repayment Plan.

To learn more about federal student loans in general, including the various repayment plans covered in this article, visit the U.S. Department of Education’s Federal Student Aid website or call your loan servicer.

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