Loan Repayment

Federal Loan Repayment Plan Options

Federal Loan Programs offer repayment plans designed to meet the needs of almost every borrower. Federal Loans are funded through the U.S. Department of Education (DOE) and managed by a loan servicer under the department's supervision. The Programs allow borrowers to choose their repayment plan and switch plans if their needs change. 

Standard Payment

  • In this plan, you pay an equal (fixed) amount each month for up to 10 years. This plan has the highest initial monthly payment, since payments include both principal and interest, but it also has the lowest cost in total interest paid over the life of the loan. This may be the right option for those who wish to be debt-free as quickly as possible with the ability to make the higher monthly payments.

Graduate Repayment

  • In this plan, the minimum monthly payment amount increases at specific intervals over time. Initial payments may be lower than under the Standard Repayment Plan because early payments typically cover only the accrued interest each month. Repayment periods are up to 10 years. Monthly payments will never be less than the accrued interest.

Extended Repayment

  • To be eligible for the extended repayment plan, you must have more than $30,000 in federal student loan debt with a single lender. Under the extended plan, you have 25 years to repay with two options: fixed or graduated. With the fixed option, the payment amounts are the same each month for 15 years. With the graduated option, the payments start low and increase every two years.

Income Contingent Repayment

  • This plan will allow you to meet your student loan obligations without causing undue financial hardship.  Each year, your monthly payments will be calculated based on your adjusted gross income (AGI, plus your spouse's income if married), family size, and the total amount of your student loan debt.  Under the ICR plan, you will pay each month the lesser of:
    • 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
    • 20% of your monthly discretionary income.  Monthly discretionary income equals your AGI minus the poverty level for your state of residence and family size, divided by 12.

If your payments are not large enough to cover the interest accumulated on your loans, the unpaid amount will be capitalized once a year.  However, capitalization will not exceed 10% 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 remain in the ICR plan for 25 years and your loans have not been fully repaid (time spent in deferment and forbearance does not count), the unpaid portion will be discharged.  You may have to pay taxes on the amount that is discharged.

Income-Based Repayment

  • You must have a partial financial hardship to qualify for income-based repayment (IBR).  You have a partial financial hardship if the monthly amount you would be required to pay on your federal student loans under the 10-year Standard Repayment Plan is higher than the monthly amount you would be required under the IBR. Your payment amount may increase or decrease yearly based on your income and family size.  Once you have initially qualified for IBR, you may continue making payments under the plan even if you no longer have a partial financial hardship.  The Department of Education can provide more detailed information on Income-Based Repayment (IBR).

Federal Public Service Loan Forgiveness Program (PSLF)

In 2007, Congress created the Public Service Loan Forgiveness Program to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance due on their eligible federal student loans after making 120 payments under specific repayment plans while employed full-time by certain public service employers.  The Department of Education can provide detailed information on the PSLF Program.