Federal Stafford Loan Repayment Options

The best time to think about how to repay student loan debt is before you borrow. But even if you are about to graduate, this guide to repayment options for federal student loans, including the Federal Stafford Loan and Federal PLUS loan, will help you control your debt, instead of vice versa.

Before Repayment Begins: Exit Counseling

Before repayment begins, borrowers must complete an exit counseling session. Exit counseling reviews the terms and conditions of the loans, including repayment options, as well as the borrower’s rights and responsibilities. Some colleges will refuse to release official academic transcripts and diplomas to students who fail to complete exit counseling.

Federal Loan Repayment Plan Options

Federal loan borrowers can choose from a variety of repayment plans when it’s time to start paying back their student loans. To select or change repayment plans, borrowers should contact their federal student loan servicer. With their name and Social Security number, borrowers can find their servicer’s name and contact information by logging in to the student access portal to the National Student Loan Data System (NSLDS) at www.NSLDS.ed.gov.

Repayment Plan Key Features Considerations
Standard Repayment
  • 10-year term or less
  • Minimum $50 monthly payment
  • Level monthly payment
  • Shorter repayment plans accrue less interest than longer-term plans
  • Higher monthly payment than other repayment plans
Graduated Repayment
  • 10-30 year repayment term, depending on amount owed
  • Minimum $25 monthly payment
  • Low payments increase gradually every two years
  • Monthly payment no more than 50 percent above or below standard repayment amount
  • Accrues more interest than standard 10-year repayment plan
  • Monthly payment may initially be lower than under standard repayment
  • Not compatible with public service loan forgiveness
Extended Repayment
(Without Consolidation)
  • 25-year term or less
  • Minimum $50 monthly payment
  • Graduated or level monthly payment
  • Must have at least $30,000 in federal student loan debt with a single lender
  • Must be a new borrower as of 10/7/1998
  • Accrues more interest than standard 10-year repayment plan
  • Lower monthly payments than standard repayment plan
  • Not compatible with public service loan forgiveness
Extended Repayment
(With Consolidation)
  • 10-30 year repayment term, depending on amount owed
  • Minimum $50 monthly payment
  • Requires debt to be consolidated
  • Accrues more interest than standard 10-year repayment plan
  • Lower monthly payments than standard repayment plan
  • Not compatible with public service loan forgiveness
Pay As You Earn Repayment (PAYER)
  • 20-year term or less
  • Payments capped at 10% of discretionary income (not total income)
  • Discretionary income is adjusted gross income minus 100% of poverty line
  • Must have a partial financial hardship
  • Only available to borrowers with a Direct Loan disbursement after 10/1/2011
  • Must be a new borrower as of 10/1/1997
  • Accrues more interest than standard 10-year repayment plan
  • Remaining loan balance is forgiven after 20 years (but taxable under current law)
  • Lower monthly payment than standard repayment plan
Income-Based Repayment (IBR)
  • 25-year term or less
  • Payments capped at 15% of discretionary income (not total income)
  • Discretionary income is adjusted gross income minus 150% of the poverty line
  • Must have a partial financial hardship
  • Available to most FFELP and Direct Loan borrowers
  • Accrues more interest than standard 10-year repayment plan
  • Remaining loan balance is forgiven after 25 years (but taxable under current law)
  • Lower monthly payment than standard repayment plan
Income-Contingent Repayment (ICR)
  • 25-year term or less
  • Payments capped at 20% of discretionary income (not total income)
  • Discretionary income is adjusted gross income minus 150% of the poverty line
  • Available only to Direct Loan borrowers
  • Accrues more interest than standard 10-year repayment plan
  • Remaining loan balance is forgiven after 25 years (but taxable under current law)
  • Lower monthly payment than standard repayment plan
Income-Sensitive Repayment (ISR)
  • 10-year term or less
  • Monthly payments based on a fixed percentage of income
  • Available only to FFELP borrowers
  • Accrues more interest than standard 10-year repayment plan
  • Lower monthly payment than standard repayment plan

Loan Term for Extended and Graduated Repayment

Certain versions of the extended and graduated repayment plans base the loan term on the amount owed. Higher loan amounts yield longer repayment terms. These repayment plans are available to borrowers who have consolidated their loans. The repayment terms are summarized in the following table.

Loan Balance Extended Loan Term Decrease in Monthly Payment Increase in Total Interest
Less than $7,500 10 years

$7,500 to $9,999 12 years About 1/8 More than 1/5
$10,000 to $19,999 15 years About 1/4 More than 1/2
$20,000 to $39,999 20 years About 1/3 More than double
$40,000 to $59,999 25 years About 2/5 Almost triple
$60,000 or more 30 years About 1/2 About 3 1/2 times

Federal Loan Consolidation

A consolidation loan allows a borrower to combine all of his/her existing federal education loans into one loan with a single monthly payment. This can reduce the monthly payments by as much as about half by increasing the overall term of the loan and total interest paid over the life of the loan.

Learn more about Federal Consolidation Loans

Federal Student Loan Forgiveness

Under certain circumstances, the federal government will forgive (cancel) all or part of an education loan. Options for qualifying for federal student loan forgiveness include:

  • Work in a public service job
  • Perform military service
  • Perform volunteer work
  • Teach or practice medicine in low-income and rural communities

Learn more about federal student loan forgiveness

Federal Loan Cancellation and Discharge Options

In extreme cases, borrowers may qualify to have their federal education Loans discharged. This can happen due to various circumstances like disability, identity theft, closed schools or bankruptcy.

Learn more about federal loan cancellation and discharge

Federal Education Loan Deferment and Forbearance

Loan deferment refers to a temporary period when a borrower is not required to make payments on his or her loans. For subsidized Federal Stafford Loans and Federal Perkins Loans, the interest that accrues on the loan during the deferment is paid by the federal government. For unsubsidized Federal Stafford Loans, the interest that accrues during a deferment must be paid by the borrower during the deferment period or it will be capitalized (added to the loan balance).

Loan forbearance allows borrowers to temporarily postpone or reduce payments for a period of time. This typically takes place because the borrower is experiencing financial difficulty. Both deferment and forbearance are good loan management tools and can help borrowers avoid default.