As a Federal Direct education loan borrower, you can choose from among several options for paying back your loan. Some, but not all, of the options are available if you have a graduate or professional student PLUS Loan.
You make a fixed monthly payment of at least $50 over a period of up to 10 years until your loan is repaid. The amount of your payment is determined by the amount you borrowed. Typically this is the least expensive option in terms of total interest costs because you pay over the shortest time. However, if your monthly student-loan payments under this option exceed 8% to 10% of your gross monthly income, you should consider one of the more flexible repayment options or loan consolidation.
Standard Repayment Calculator
With this plan, you pay a fixed annual or graduated amount over a period of up to 25 years. Your fixed monthly payment will be less than it would be with a standard repayment plan, but you'll pay more interest over time because the repayment term is longer. To qualify for an extended repayment plan, you must have more than $30,000 in outstanding Direct Loans if you are a Direct Loan borrower or more than $30,000 in FFEL loans if you're a FFEL borrower. If you have some of each type, but not $30,000 of either, you can't combine the amounts to qualify for this plan.
Extended Repayment Calculator
Your monthly payments start low and increase every two years with this plan. The repayment period is up to 10 years, and your payment will never be less than the amount of interest that accrues between payments. Total interest costs are somewhat higher under this option than with standard repayment, but not as high as a plan with a longer term. As the payments increase, no single payment will be more than three times greater than any other payment.
Graduated Repayment Calculator
INCOME-BASED REPAYMENT (IBR)
You may qualify for this repayment option that took effect on July 1, 2009, if your monthly repayment amount under IBR will be less than the monthly amount you would owe on a 10-year repayment plan. The plan, which is intended to be affordable based on income and family size, may allow you to have your remaining loan balance cancelled if you repay under the IBR plan for 25 years and fulfill other plan obligations. In addition, if you work in a job that qualifies as public service, you may be eligible to have the remaining loan balance forgiven. You can find more information here.
Income-Based Repayment Plan Calculator
PAY AS YOU EARN REPAYMENT (PAYE)
To qualify for this plan, which has a term of up to 20 years, your student loan must be relative to your income and you must have had a loan disbursed after 10/1/11. Your monthly payment is based on your income, family size, and other factors and is adjusted annually. The payments are usually lower than any other income-linked plan and always lower than with the standard plan. You will pay more in interest than with a standard plan, but any outstanding balance remaining after 20 years will be forgiven. You may owe income tax on the amount that is forgiven.
Pay As You Earn Calculator
INCOME-CONTINGENT REPAYMENT (ICR)
This option is available for repayment of Direct Loans. Your monthly payments for the year are based on your adjusted gross income (AGI) plus your spouse's income if you are married, your family size, and your outstanding Direct Loan balances. If your payments under this plan aren't large enough to cover the interest that accrues, the unpaid amount is capitalized and added to your principal, up to 10% of the original amount you owed. If you haven't fully repaid your loan after 25 years, you may qualify to have the unpaid amount discharged. However, the portion that is discharged may be taxable.
Income-Contingent Repayment Calculator
If you have a Federal Family Education Loan (FFEL), you may be eligible for this repayment plan. Your payments are adjusted up or down annually as your income changes. The minimum payment must be enough to cover the interest that accumulates. The repayment period of 10 years can be extended to 15 years under a special forbearance provision. Total interest costs will be higher with this option than with standard repayment. You can ask your lender for more information.
Income-Sensitive Repayment Plan Calculator
You can also get additional information about repayment plans and access repayment calculators by visiting http://studentaid.ed.gov/repay-loans/understand/.