Student Loans - Repayment Options

It may be a good time to review student loan repayment options. It’s free and may end up saving you money. To change your repayment option you can speak to your loan officer.

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Below are the different plans offered by Federal Student Aid.

Standard Repayment Plan

Everyone is eligible.
Your payments are fixed so the debt is paid within 10 years or 10-30 years for consolidation loans.
If you are thinking of seeking Public Service Loan Forgiveness (PSLF,) this is not a good plan and the standard payment plan for Consolidation Loans does not qualify.
- Eligible Loans
  - Direct Subsidized and Unsubsidized Loans
  - Subsidized and Unsubsidized Federal Stafford Loans
  - All PLUS loans
  - All Consolidation Loans (Direct or Federal Family Education Loan (FFEL)

Graduated Repayment Plan

Everyone is eligible.
Your payments are lower at the beginning, then, about every two years, the payments increase, so the loan is paid within 10 years or 10-30 years for consolidation loans.
You’ll pay more than the 10-year Standard Plan.
Usually does not qualify for PSLF.
- Eligible Loans
  - Direct Subsidized and Unsubsidized Loans
  - Subsidized and Unsubsidized Federal Stafford Loans
  - All PLUS loans
  - All Consolidation Loans (Direct or FFEL)

Extended Repayment Plan

Direct Loan borrowers with $30,000 or more in outstanding Direct Loans are eligible.
Your payments will be fixed or graduated, so the loan is paid within 25 years.
Your payments will be lowered than the fixed or graduated plan.
You’ll pay more than the 10-year Standard Plan.
Does not qualify for PSLF.
- Eligible Loans
  - Direct Subsidized and Unsubsidized Loans
  - Subsidized and Unsubsidized Federal Stafford Loans
  - All PLUS loans
  - All Consolidation Loans (Direct or FFEL)

Income-Sensitive Repayment Plan

Only eligible to Federal Family Education Loan (FFEL) Program that are not eligible for PSLF.
Your annual income determines the payment but it will be paid in full within 15 years.
You’ll pay more than the 10-year Standard Plan.
- Eligible Loans
  - Subsidized and Unsubsidized Federal Stafford Loans
  - FFEL PLUS Loans
  - FFEL Consolidation Loans

Revised Pay As You Earn Repayment Plan (REPAYE)

Direct Loan borrowers are eligible.
Your payments will be 10% of your discretionary income. You have to update your income and family size yearly which will determine your recalculated payment. You need to do an update regardless of change.
If you are married, filing jointly or separately, your spouse’s income and loan debt will also be considered to determine your payment.
You’ll pay more than the 10-year Standard Plan.
After 20 years if loans were taken for undergraduate studies, your balance will be forgiven, 25 years for graduate or professional studies. The forgiven amount will be taxable.
Qualifies for PSLF.
- Eligible Loans
  - Direct Subsidized and Unsubsidized Loans
  - Direct PLUS Loans made to students
  - Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents

Pay As You Earn Repayment Plan (PAYE)

Both must be met to be eligible: new borrower on or after Oct. 1, 2007 and received disbursement of Direct loan on or after Oct. 1, 2011.
You must have high debt compared to your income.
Your payments will be 10% of your discretionary income.
You have to update your income and family size yearly which will determine your recalculated payment. You need to do an update regardless of change.
Payments will never be more than under the 10 year Standard Repayment Plan.
You’ll pay more than the 10-year Standard Plan.
After 20 years your balance will be forgiven. The forgiven amount will be taxable.
Qualifies for PSLF.
- Eligible Loans
  - Direct Subsidized and Unsubsidized Loans
  - Direct PLUS Loans made to students
  - Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents

Income-Based Repayment Plan (IBR)

You must have a high debt in comparison to your income.
Your payments will be 10% or 15% of your discretionary income which is dependent upon when you received your first loan.
You have to update your income and family size yearly which will determine your recalculated payment. You need to do an update regardless of change.
Payments will never be more than under the 10 year Standard Repayment Plan.
You’ll pay more than the 10-year Standard Plan.
If you are married, filing jointly, your spouse’s income and loan debt will also determine your payment or if you both chose to repay your loans together.
After 20 if you were a new borrower on or after July 1, 2014 or 25 years if you were not a new borrower on or after July 1, 2014, your balance will be forgiven. The forgiven amount will be taxable.
Qualifies for PSLF.
- Eligible Loans
  - Direct Subsidized and Unsubsidized Loans
  - Subsidized and Unsubsidized Federal Stafford Loans
  - all PLUS loans made to students
  - Consolidation Loans (Direct or FFEL) that do not include PLUS loans (Direct or FFEL) made to parents

Income-Contingent Repayment Plan (ICR)

Direct Loan borrowers or Parent Plus Loans which are consolidated into a Direct Consolidation Loan are eligible.
Your payments will be the lesser of 20% of your discretionary income or what you would pay under a 12 year fixed payment plan.
You have to update your income and family size yearly. This and your Direct Loan balance will determine your recalculated payment. You need to do an update regardless of change.
If you are married filing a joint tax return, your spouse’s income and loan debt will also determine your payment or if you both chose to repay your loans.
You’ll pay more than the 10-year Standard Plan.
After 25 years your balance will be forgiven. The forgiven amount will be taxable.
Qualifies for PSLF.
- Eligible Loans
  - Direct Subsidized and Unsubsidized Loans
  - Direct PLUS Loans made to students
  - Direct Consolidation Loans

Mindful Reminder

The thought of addressing student loans may draw emotions of anxiety and feelings of being overwhelmed. Take time to process what you are feeling instead of pushing them away. Changing plans may take time, so allow ample time. This will ease the tension and set clear expectations.

Tables Summarizing Payment Plans

Loans	Standard Payment Plan	Graduated Repayment Plan	Extended Repayment Plan	Income-Sensitive Repayment Plan
Who is eligible?	Everyone	Everyone	Direct Loan borrowers with $30,000 or more in outstanding Direct Loans	Federal Family Education Loan (FFEL) Program
Payments	Fixed	Lower at the beginning, then increase every 2 years	Fixed or graduated	Based on annual income
Term (in years)	10 or 10-30 for consolidation loans	10 or 10-30 for consolidation loans	25	15
Eligible Loans	Direct Subsidized and Unsubsidized Loans	Direct Subsidized and Unsubsidized Loans	Direct Subsidized and Unsubsidized Loans	Subsidized and Unsubsidized Federal Stafford Loans
	Subsidized and Unsubsidized Federal Stafford Loans	Subsidized and Unsubsidized Federal Stafford Loans	Subsidized and Unsubsidized Federal Stafford Loans	FFEL PLUS Loans
	PLUS loans	PLUS loans	PLUS loans	FFEL Consolidation Loans
	Consolidation Loans (Direct or FFEL)	Consolidation Loans (Direct or FFEL)	Consolidation Loans (Direct or FFEL)
Public Service Loan Forgiveness (PSLF)	Not a good option and consolidation loans do not qualify	Usually does not qualify	Does not qualify	Does not qualify

Income Driven Plans

Loans	Income-Based Repayment Plan (IBR)	Income-Contingent Repayment Plan (ICR)	Revised Pay As You Earn Repayment Plan (REPAYE)	Pay As You Earn Repayment Plan (PAYE)
Who is eligible?	You must have a high debt in comparison to your income	Direct Loan borrowers Parent Plus Loans can be consolidated into a Direct Consolidation Loan	Direct Loan borrowers	New borrowers on or after Oct. 1, 2007 and received disbursement of Direct loan on or after Oct. 1, 2011. You must have high debt compared to your income.
Payments	10% or 15% of your discretionary income	Less than 20% of your discretionary income or what you would pay under a 12 year fixed payment plan	10% of your discretionary income	10% of your discretionary income
	Income and family size must be reevaluated annually regardless of change to determine recalculated payment	Income and family size must be reevaluated annually regardless of change to determine recalculated payment	Income and family size must be reevaluated annually regardless of change to determine recalculated payment	Income and family size must be reevaluated annually regardless of change to determine recalculated payment
	If you are married, filing jointly, your spouse’s income and loan debt will also be considered to determine your payment	If you are married, filing jointly, your spouse’s income and loan debt will also determine your payment or if you both chose to repay your loans together	If you are married, filing jointly or separately, your spouse’s income and loan debt will also be considered to determine your payment	Payments will never be more than under the 10 year Standard Repayment Plan
	Payments will never be more than under the 10 year Standard Repayment Plan
Term (in years)	20 if you were a new borrower on or after July 1, 2014 25 years if you were not a new borrower on or after July 1, 2014	25	20 for undergraduate 25 for graduate or professional studies	20
Eligible Loans	Direct Subsidized and Unsubsidized Loans	Direct Subsidized and Unsubsidized Loans	Direct Subsidized and Unsubsidized Loans	Direct Subsidized and Unsubsidized Loans
	Subsidized and Unsubsidized Federal Stafford Loans	Direct PLUS Loans made to students Direct Consolidation Loans	Direct PLUS Loans made to students	Direct PLUS Loans made to students
	All PLUS loans made to students Consolidation Loans (Direct or FFEL) that do not include PLUS loans (Direct or FFEL) made to parents		Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents	Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents
Qualifies for (PSLF)	All qualify for Public Service Loan Forgiveness (PSLF)
Taxes	Forgiven amount will be taxable

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References

Federal Student Aid. (n.d.). Income-driven repayment plans. Retrieved from: https://studentaid.gov/manage-loans/repayment/plans/income-driven

Federal Student Aid. (n.d.). Repayment plans. Retrieved from: https://studentaid.gov/manage-loans/repayment/plans

Federal Student Aid. (n.d.). One time student loan debt relief. Retrieved from: https://studentaid.gov/debt-relief-announcement/one-time-cancellation

Kumok, Zina, Forbes. (2022). 6 Ways to pay off student loans fast. Retrieved from: https://www.forbes.com/advisor/student-loans/pay-off-student-loans-fast/