When it comes time to start repaying your student loan(s), you can select a repayment plan that’s right for your financial situation. Generally, you'll have from 10 to 25 years to repay your loan, depending on which repayment plan you choose.
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 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. By having a 10-year limit for repayment, you may pay the lowest amount of interest of any repayment plan.
Under the extended plan, you’ll pay a fixed annual or graduated repayment amount,that was agreed upon between you and the lender, over a period not to exceed 25 years. To be eligible, you must have more than $30,000 in outstanding Direct loan debt.
This is a good plan if you will need to make smaller monthly payments. Because the repayment period will be 25 years, your monthly payments will be less than with the standard plan. However, you will 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.
With this plan, your payments start out low and increase every two years. The length of your repayment will be up to 10 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. Although your monthly payment will gradually increase, no single payment under this plan will be more than three times greater than any other payment.
Income Contingent Repayment
With this plan, your monthly payment amount will be based on your annual income (and that of your spouse if you are married), your family size and the total amount of your Direct Subsidized and Unsubsidized Loans. As your income changes, your payments may change. If the loan isn’t fully repaid after 25 years under this plan, the unpaid portion will be forgiven.
Income-Based Repayment (IBR)
This is a new repayment plan for Direct Loans. Under this plan, your monthly payment is capped at an amount that is intended to be affordable, based on your income and family size. To initially qualify for the IBR plan, you must have a partial financial hardship. You are considered to have a partial financial hardship if the monthly amount you would be required to pay on your eligible loans under a Standard Repayment Plan with a 10-year repayment period is more than the monthly amount you would have to repay under the IBR Plan. If you repay under this plan for 25 years and meet other requirements, you may have any remaining balance of your loan(s) forgiven. For more detailed information about this plan, or to download an IBR fact sheet, go to the Direct Loan Web site at www.direct.ed.gov.