The U.S. Department of Education administers the old Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan Program. Students and parents repaying loans in either program make payments to a loan servicer. Depending on the loan program utilized and when you borrowed, there are several options available for student loan repayment.
Federal Student Loan Repayment Plans
You are not locked into a single repayment plan. If your circumstances change, you are free to switch repayment plans. All you need to do is contact your loan servicer. If you are unsure of who services your loan, you can look up your federal loans through the National Student Loan Data System (NSLDS™).
If you are having trouble making your payments, contact your servicer before you start missing payments. There are options to help make repayment more affordable or, in the case of hardship, to temporarily suspend payments. Federal and private student loans are not dischargeable in bankruptcy. If your failure to pay results in default, the consequences are very unpleasant. Avoid default at all costs.
Direct/FFEL Loan Repayment Plan Overview
| Repayment Plan | Eligible Loans | Repayment Term / Payments | Notes |
| Standard Repayment Plan | Direct Subsidized and Unsubsidized Loans Subsidized and Unsubsidized Federal Stafford Loans PLUS Loan for Parents and Graduate/Professional Students | Up to 10 years Minimum payment of $50/month | Taking a shorter amount of time to repay will lower your overall cost of borrowing. Interest payments over longer periods will increase your costs and are something to think about when considering other plans. |
| Graduated Repayment Plan | Direct Subsidized and Unsubsidized Loans Subsidized and Unsubsidized Federal Stafford Loans PLUS Loan for Parents and Graduate/Professional Students | Up to 10 years Low payments at first followed by increases every two years | If you are starting a career, payments will be more affordable. However, the total cost of borrowing will be higher than under the standard repayment plan. |
| Extended Repayment Plan | Direct Subsidized and Unsubsidized Loans Subsidized and Unsubsidized Federal Stafford Loans PLUS Loan for Parents and Graduate/Professional Students | Up to 25 years Fixed or graduated payments | For each program, Direct and FFEL, you must have least $30,000 in outstanding debt in order to use this plan and must have borrowed your loans on or after October 7, 1998. You can’t combine your balances from Direct and FFEL to reach the minimum outstanding balance requirement. Your total cost of borrowing will be higher than the standard plan. |
| Income-Based Repayment Plan (IBR) | Direct Subsidized and Unsubsidized Loans Subsidized and Unsubsidized Federal Stafford Loans PLUS Loan for Parents and Graduate/Professional Students Consolidation Loans (Direct or FFEL) that do not include Direct or FFEL PLUS loans made to parents | Up to 25 years Payments will be 15% of discretionary income, the difference between your adjusted gross income and 150% of the poverty guideline for your family size and state of residence (other conditions apply). Payments will change when your income changes. | Must have a partial financial hardship to qualify. Loan forgiven after 25 years of qualifying payments. Income tax may apply to amount forgiven. While payments will be lower, your total cost of borrowing will be higher than the standard plan. |
| Pay As You Earn Repayment Plan | Direct Subsidized and Unsubsidized Loans Direct Graduate PLUS Loans Direct Consolidation Loans that do not include (Direct or FFEL) PLUS loans made to parents | Up to 20 years Payment will be 10% of discretionary income. Payments change when your income changes. | You must be a new borrower on or after October 1, 2007, and must have received a disbursement of a Direct Loan on or after October 1, 2011. Must have a partial financial hardship Loan forgiven after 20 years of qualifying payments. Income tax may apply to amount forgiven. |
| Income-Contingent Repayment Plan | Direct Subsidized and Unsubsidized Loans Direct Graduate PLUS Loans Direct Consolidation Loans | Up to 25 years Payments are calculated each year and are based on your adjusted gross income, family size, and the total amount of your Direct Loans. Payments change when your income chages. | Loan forgiven after 25 years of qualifying payments. Income tax may apply to amount forgiven. While payments will be lower, your total cost of borrowing will be higher than the standard plan. |
| Income-Sensitive Repayment Plan | Subsidized and Unsubsidized Federal Stafford Loans FFEL PLUS Loans FFEL Consolidation Loans | Up to 10 years Monthly payments based on annual income. Payments change annually as your income changes. | Lender formulas for determing payments may vary. |
Federal Perkins Loan Repayment
The options to repay your Federal Perkins loan are not the same as those offered for other federal loans. The standard repayment term for a Perkins loan is 10 years and repayment doesn’t being until 9 months after you graduate or stop attending on at least a half-time basis. Contact your school’s financial aid office for more details about repaying your Perkins loan.