Federal Student Loan Repayment Options

Summary: Federal student loans offer a great benefit: flexible repayment plans. You can choose a plan that fits your financial needs and helps you pay off your loans as quickly as possible. You can also switch plans when you need to.

Paying back your federal student loans can be tough. Fortunately, federal student loans offer flexible repayment options to make the process easier. This guide will help you understand how federal student loan repayment works so you can successfully manage your debt.

Before Repayment Begins: Exit Counseling

Before repayment begins, you have to complete an exit counseling session. Exit counseling reviews the terms and conditions of the loans, including repayment options, as well as your rights and responsibilities. Some colleges won’t release your official academic transcripts and diplomas if you fail to complete exit counseling.

Repayment Plan Options

Federal student 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, contact your federal student loan servicer. You can find your 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 using your FSA ID.

Click the name of the plan in the charts below for more details on how that plan works.

Payment plans that aren’t based on your income

Name of Plan Key Features Notes
Standard Repayment
  • 10-year term (or less)
  • Up to 30-year term for Direct Consolidation Loans
  • $50 minimum monthly payment
  • Fixed monthly payment
  • You pay less interest because the term is shorter
  • Your monthly payment will be higher than other repayment options
  • You can’t use this plan if you’re trying to get Public Service Loan Forgiveness
Graduated Repayment
  • 10-year term (or less)
  • Up to 30-year term for Direct Consolidation Loans
  • $25 minimum monthly payment
  • Payments start out low and gradually increase, usually every 2 years
  • You pay more interest than under the standard 10-year repayment plan
  • Your monthly payment will initially be lower than under Standard Repayment
  • You can’t use this plan if you’re trying to get Public Service Loan Forgiveness
Extended Repayment
(Without Consolidation)
  • 10-30 year term, depending on the amount you owe
  • $50 minimum monthly payment
  • Payment can be graduated or fixed
  • Must have $30,000 in federal student loan debt
  • Must be a new borrower as of 10/7/1998

  • You pay more interest than under the standard 10-year repayment plan
  • Your monthly payment will be lower than under Standard Repayment
  • You can’t use this plan if you’re trying to get Public Service Loan Forgiveness
Extended Repayment
(With Consolidation)
  • Up to 30-year term, depending on the amount you owe
  • $50 minimum monthly payment
  • Requires Federal Student Loan Consolidation
  • You pay more interest than under the standard 10-year repayment plan
  • Your monthly payment will be lower than under Standard Repayment
  • You can’t use this plan if you’re trying to get Public Service Loan Forgiveness

Payment plans that are based on your income

Name of Plan Key Features Notes
Revised Pay-As-You-Earn Repayment (REPAYE)
  • 20-year term (or less) for loans used for undergraduate study
  • 25-year term (or less) for loans used for graduate study
  • Monthly payments capped at 10% of your discretionary income (not total income)
  • No income requirement
  • Only available to borrowers with a Direct Loan
  • Federal government pays part of the interest for eligible borrowers
  • Each year, payments are recalculated based on your updated income and family size
  • You pay more interest than under the standard 10-year repayment term
  • Your monthly payment will be lower than under Standard Repayment
  • Your remaining loan balance is forgiven after 20 or 25 years of qualifying monthly payments (but taxable under current law)
  • You can use this plan if you're trying to get Public Service Loan Forgiveness (PSLF)
Pay-As-You-Earn Repayment (PAYE)
  • 20-year term (or less)
  • Monthly payments capped at 10% of your discretionary income (not total income)
  • Must have a partial financial hardship
  • You must have borrowed your first federal student loan after 10/1/07 and received a Direct Loan Disbursement on or after 10/1/11
  • Not available to Parent PLUS Loan borrowers

  • You pay more interest than under the standard 10-year repayment term
  • Your monthly payment will be lower than under Standard Repayment
  • Your remaining loan balance is forgiven after 20 years of qualifying payments (but taxable under current law)
  • You can use this plan if you're trying to get Public Service Loan Forgiveness (PSLF)
Income-Based Repayment (IBR)
  • 20-year term, if you're a new borrower as of 7/1/14
  • 25-year term, if you're not a new borrower as of 7/1/14
  • Monthly payments capped at 10% (new borrowers) or 15% (not new borrowers) of discretionary income
  • Must have a partial financial hardship
  • Not available to Parent PLUS Loan borrowers
  • You pay more interest than under the standard 10-year repayment term
  • Your monthly payment will be lower than under Standard Repayment
  • Your remaining loan balance is forgiven after 25 years of qualifying monthly payments (but taxable under current law)
  • You can use this plan if you're trying to get Public Service Loan Forgiveness (PSLF)
Income-Contingent Repayment (ICR)
  • 25-year term (or less)
  • Monthly payments capped at 20% of discretionary income (not total income)
  • Available only to Direct Loan borrowers
  • Parent PLUS Loan borrowers must consolidate with a Direct Consolidation Loan to be eligible
  • You pay more interest than under the standard 10-year repayment term
  • Your monthly payment will be lower than under Standard Repayment
  • Your remaining loan balance is forgiven after 25 years of qualifying monthly payments (but taxable under current law)
  • You can use this plan if you're trying to get Public Service Loan Forgiveness (PSLF)
Income-Sensitive Repayment (ISR)
  • 10-year term (or less)
  • Monthly payments based on a fixed percentage of your income
  • Available only to FFELP borrowers
  • You pay more interest than under the standard 10-year repayment term
  • Your monthly payment will be lower than under Standard Repayment
  • You can use this plan if you're trying to get Public Service Loan Forgiveness (PSLF)

What is Discretionary Income?

Your discretionary income is your adjusted gross income (reported on your federal income tax return) minus 150% of the poverty line.

Each year, the federal government publishes a set of poverty guidelines that help determine eligibility for various programs, including the federal student loan repayment plans that are based on income.

Are My Student Loans Direct Loans or FFELP?

All new federal student loans borrowed since July 1, 2010 are Direct Loans. Loans taken out earlier may be either Direct Loans or part of the FFEL (Federal Family Education Loan) program. To find out which type of loans you have, log in to the National Student Loan Data System at www.NSLDS.ed.gov using your FSA ID.

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 Student Loan Consolidation

A Direct Consolidation Loan allows you to combine all of your existing federal student loans into one loan with a single monthly payment. Consolidation can reduce your monthly payments by as much as 50% by increasing the term of the loan. This means you will pay more interest over the life of the loan.

Learn more about Direct Consolidation Loans

Student Loan Forgiveness

Under certain circumstances, the federal government will forgive (cancel) all or part of a student loan. Here are some options for qualifying for federal student loan forgiveness:

  • 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 student loan forgiveness

Student Loan Cancellation and Discharge Options

In extreme cases, you may qualify to have your federal student loans discharged. Here are some circumstances that may qualify you for federal student loan discharge:

  • Total and permanent disability
  • Death
  • Identity theft
  • Closed school

Learn more about federal loan cancellation and discharge

Student Loan Deferment and Forbearance

Loan deferment is a temporary period when you don’t make payments on your loans. You have to apply and be approved for deferment. If you have Direct Subsidized Loans and Perkins Loans, the federal government pays any interest that adds up during the deferment. If you have Direct Unsubsidized Loans, you are responsible for paying any interest that adds up during the deferment.

Loan forbearance is another temporary period when you either make reduced payments or don’t make payments on your loans. You would typically request forbearance if you are experiencing financial difficulty.

Deferment and forbearance are good loan management tools and can help you avoid student loan default.

Recommendations

  1. If you’re almost finished with school, attend an exit counseling session.
  2. To save the most money in interest, choose the payment plan with the highest monthly payment you can afford.
  3. If you’re having trouble making your payments, switch to a different payment plan by contacting your loan servicer.
  4. Consider student loan deferment and forbearance if you need to temporarily stop making payments.
  5. If you are trying to get Public Service Loan Forgiveness, make sure you choose one of the income-based repayment plans.
  6. Look into federal student loan consolidation if you want to combine multiple loans into a single loan with a single payment.
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