Loan Repayment

Loan Repayment

Federal educational loans have four main repayment plans, consisting of the Standard Repayment and three alternatives. The monthly payments of the alternative plans are lower than those of the Standard Repayment plan, but the term of the loan is extended and the amount of interest to be repaid over the life of the loan is increased. The repayment plans are as follows:

Standard Repayment

Under this plan a fixed monthly amount will be paid for a loan term of up to ten years. There is a $50 minimum payment requirement.

Extended Repayment

Under this plan the loan term may be extended up to 30 years, depending upon the amount borrowed.

Graduated Repayment

Unlike the standard and extended repayment plans, this plan begins with lower payments, which gradually increase every two years. As with the extended repayment plan, the loan term may be extended up to 30 years.

Income Contingent Repayment

Under this plan, repayment is based on the borrower’s income and the total amount of debt. Monthly payments are adjusted each year as the borrower’s income changes. The loan term is up to 25 years, at which point any remaining balance on the loan will be discharged. This repayment plan option is not available to parents.

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