Student Loan Repayment
Your student loan repayment begins 6 months after you graduate or drop below half-time enrollment for federal loans, and for most private loans as well. Before you enter repayment, you’ll want to make sure that you can afford your monthly payment.
If you have federal loans, there are a multitude of payment plans that can make student loan repayment easier. None of these plans have any prepayment penalties. If you have variable rate loans, your payment amount may be adjusted each July 1 to ensure that you pay off your loan within your plan’s loan term. Here is a brief description of the federal student loan repayment plans:
Standard– This is the payment plan that is normally set up unless the borrower selects another plan. Standard repayment provides for the same payment amount, over your loan term (it gives you a fixed payment every month), except for the final payment which can be higher or lower. The minimum payment amount under this plan is $50. You will pay the least amount of interest under the Standard repayment plan, but your payment amount will often be higher than other plans.
Graduated – Your payment amount starts out low and increases every two years. If you are expecting your income to increase over time, but need low payments now, this might be a good option to consider.
Extended- If your balance is over $30,000 you can chose the extended payment plan to increase your loan term to 25 years. Remember that by taking longer to pay your loan, you will also pay more in interest.
Income Sensitive- If your loans are held by a FFEL lender, you can select this repayment plan which will set your payment at a percentage of your gross income. If you have a relatively high loan balance and low income, you might want to consider this payment plan.
Income Contingent- This plan is available only for loans made through the Direct Loan Program run by the Department of Education. If your income is very low, your payments could be as low as $0 under this plan. Monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans. This plan has a 25 year term. Parent loans (PLUS) do not qualify for this plan.
Income Based- This is a new repayment plan offered by both FFEL lenders and the Direct Loan Program. Similar to the income contingent plan, this plan helps if your debt is considerably higher than your income, as your monthly payment is based on your income. This plan has a 25 year term and any balance remaining after that period will be forgiven. Parent loans (PLUS) do not qualify for this plan.
Depending on whether your federal loans are with the Department of Education or a FFEL lender, certain repayment and loan forgiveness options may not apply. See the chart below for details based on your student loan product.
FFEL Lender
| Repayment Plans |
Stafford |
PLUS |
Grad PLUS |
CON |
| Standard |
Y |
Y |
Y |
Y |
| Graduated |
Y |
Y |
Y |
Y |
| Income Sensitive |
Y |
Y |
Y |
Y |
| Extended |
Y 30k+ |
Y 30k+ |
Y 30k+ |
Y 30k+ |
| Income Contingent |
N |
N |
N |
N |
| Income Based |
Y |
N |
Y |
Y |
| Public Service Loan Forgiveness |
N |
N |
N |
N |
Department of Education Direct Loan Program
| Repayment Plans |
Stafford |
PLUS |
Grad PLUS |
CON |
| Standard |
Y |
Y |
Y |
Y |
| Graduated |
Y |
Y |
Y |
Y |
| Income Sensitive |
N |
N |
N |
N |
| Extended |
Y 30k+ |
Y 30k+ |
Y 30k+ |
Y 30k+ |
| Income Contingent |
Y |
N |
Y |
Y |
| Income Based |
Y |
N |
Y |
Y |
| Public Service Loan Forgiveness |
Y |
Y |
Y |
Y |
Private Loan Repayment Plans - If you have private student loans, you will need to ask your lender what repayment plans they offer. Most private loan lenders will offer Standard and Graduated Repayment Plans.
Federal Student Loan Deferments
Federal loans come with various deferment and forbearance entitlements; private loan deferment and forbearance options are determined by your lender. If you return to school and qualify for student loan deferment, this is generally granted for the period that the school certifies you as enrolled at least half-time.
You may be eligible for a deferment if you are:
- Enrolled in school half-time or more
- On active duty in the military
- Unemployed and seeking work
- Experiencing economic hardship
You should only use forbearance as a short-term solution for financial hardship, as interest will accrue on your loans during the forbearance period and increase the amount you owe.
If you need financial relief, you should apply for a student loan deferment and not a forbearance. If you have any subsidized Federal Stafford loans, Perkins loans, or subsidized Stafford Loans that were rolled into a Federal Consolidation Loan, the government will pay the interest on these loans during periods of student loan deferment.
If you have private loans, you will need to check with your lender to see if their loan program provides for loan deferment if you go back to school.
Student Loan Forbearance
If you are experiencing financial hardship, you can apply with your lender to temporarily “postpone” your payments. You can apply for forbearance on your federal loans for up to 12 months at a time; private loan forbearance options are determined by your lender.
If you would like to apply for forbearance on your federal student loans, but you don’t know who your lender is, you can look up your account through the National Student Loan Clearinghouse or the National Student Loan Data System. If your school participated in the Direct Lending program when you took out your loans, your loans are serviced with the Department of Education.