EDU Loan Support

Student Loan Consolidation Repayment Options:

• Standard Repayment

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 loans. The standard plan is good for you if you can handle higher monthly payments because you'll repay your loans more quickly. 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.

Extended Repayment

To be eligible for the extended plan, you must have more than $30,000 in Direct Loan debt and you must not have an outstanding balance on a Direct Loan as of October 7, 1998. Under the extended plan you have 25 years for repayment and two payment options: fixed or graduated. Fixed payments are the same amount each month, as with the standard plan, while graduated payments start low and increase every two years, as with the graduated plan below.

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 may 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.

• Graduated Repayment

With this plan your payments start out low and increase every two years. The length of your repayment period will be up to ten 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 (ICR)

(not available for parent PLUS Loans)

This plan gives you the flexibility to meet your Direct Loan obligations without causing undue financial hardship. Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of:

1. the amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or

2. 20% of your monthly discretionary income*.

If your payments are not large enough to cover the interest that has accumulated on your loans, the unpaid amount will be capitalized once each year. However, capitalization will not exceed 10 percent of the original amount you owed when you entered repayment. Interest will continue to accumulate but will no longer be capitalized.

The maximum repayment period is 25 years. If you haven't fully repaid your loans after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged. You may, however, have to pay taxes on the amount that is discharged.

• Income-Based Repayment Plan. (IBR)

Under this plan the required monthly payment will be based on your income during any period when you have a partial financial hardship. Your monthly payment may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If you meet certain requirements over a specified period of time, you may qualify for cancellation of any outstanding balance of your loans.

• Pay As You Earn. (PAYE/PER)

On January 2013 the DOE announced that borrowers with Federal Student Loans may now be able to take advantage of a new repayment plan that could lower their monthly federal student loan payments. The plan, known as Pay As You Earn, caps monthly payments for many recent graduates at an amount that is affordable based on their annual income. This new option follows through on President Obama’s promise to provide student graduates with relief on their student loan payments and help them responsibly manage their debt payments. “We know many recent graduates are worried about repaying their student loans as our economy continues to recover, and now it’s easier than ever for student borrowers to lower monthly payments and stay on track,” said U.S. Secretary of Education Arne Duncan.

Pay As You Earn plan, which President Obama first introduced on October 2011, caps payments for Federal Direct Student Loans at 10% of discretionary income for eligible borrowers, and the Department estimates as many as 1.6 million Direct Loan borrowers could reduce their monthly payments with this plan. The new option complements similar repayment plans available to help borrowers manage their debt, including Income-Based Repayment, which caps monthly loan payments at 15% of a borrower’s discretionary income. Borrowers who don’t qualify for a Pay As You Earn may still qualify for an Income-Based Repayment, which more than 1.3 million borrowers already use. Most borrowers are able to repay their student loans, but for many who are struggling – including nurses, teachers, first-responders and others in lower-paying public service jobs – these income driven plans could reduce monthly payments to help borrowers to manage their student loan debt and avoid the negative consequences of defaulting on their student loans. While borrowers may pay more in interest in the long run under an income driven plan, those options can provide some relief on loan payments, especially in a borrower’s early years of repayment. Given the many options that make paying back federal student loans more manageable, the DOE has developed tools to assist borrowers make responsible financing and repayment choices. To qualify you must have at least one Direct Loan or a loan in the Federal Family Education Loan (FFEL) program that is eligible to be repaid under one of the income-driven plans.