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Loan Repayment

Unlike grants, federal student loans must be repaid at some point.  Federal Direct Stafford Loans have a 6 month grace period which begins once a student graduates, withdraws, or drops below half-time enrollment. After that grace period ends, the student must begin to repay the loan(s).  For Federal Direct PLUS Loans, on the other hand, repayment begins once the funds have been fully disbursed, but it is possible to request a deferment or forbearance. 

The Department of Education uses several loan servicers to manage the loans they've made.  The servicer assigned to the borrower's loan will supply a repayment schedule that states when the first payment is due, the number and frequency of payments, and the amount of each payment.  The schedule and payments are based on the loan repayment plan the borrower chose (or a servicer assigned).  A borrower may change their repayment plan at any time by contacting their loan servicer who will be able to answer questions and assist with any changes.     

LOAN REPAYMENT PLANS
The following is a brief summary of available repayment plans for the Stafford and PLUS (parent) Loans. Additional information is available at the Federal Student Aid website.

Standard Repayment
This is the most common plan and all borrowers are eligible for it.  Monthly payments are a fixed amount ($50 minimum) and must be paid in full within 10 years.  To get an estimate of monthly payments, click here to enter a loan amount, interest rate (be sure to override the amount that's automatically populated and enter the applicable interest rate), and fees.  This calculator is for reference only - the loan servicer can provide the most accurate data for a borrower's specific loan(s).    

Graduated Repayment
All borrowers are eligible for this plan. Payments are lower at first and then increase, usually every two years, and are for an amount that will ensure  the loan is paid off within 10 years.  

Extended Repayment
To qualify for this plan, the borrower must have more than $30,000 in outstanding Direct Loan debt.  Payments may be fixed or graduated, and will ensure the loan is paid off within 25 years.

Income Based Repayment (IBR) 
To qualify for this plan, the borrower must have high debt relative to income (which includes a spouse's income and debt if married and filing jointly).  Monthly payments will be either 10 or 15 percent of discretionary income (dependent upon timing of when the first loan was received), but never more than what would have been paid under the Standard Repayment Plan.  Payments are recalculated each year and are based on updated income and family size.  Any outstanding balance on a loan will be forgiven if it hasn't been repaid in full after 20 or 25 years (dependent upon timing of when the first loan was received).  

Income Sensitive Repayment  
This plan is an option for Stafford Loans.  Monthly payments are based on annual income and must be paid in full within 15 years.  The formula for determining the monthly payment can vary between servicers.    

LOAN DEFERMENT AND FORBEARANCE
Under certain circumstances, a borrower may receive a deferment or forbearance
 that allows for temporarily stopping federal student loan payments or temporarily reducing the amount.  Stopping or reducing payments may help to avoid defaulting on a loan.  It is the borrower's responsibility to contact their loan servicer to request a deferment or forbearance (unless deferment is due to his/her being enrolled at least half-time in an approved college--this is an automatic deferment).  Borrowers should be sure to keep making their scheduled payments until they've been advised that the deferment or forbearance has been granted.  For more information on deferment and forbearance, including the difference between the two and eligibility for each, click here.

It's important that borrowers contact their loan servicers if they are experiencing difficulty making payments.  In addition to deferment or forbearance, it's possible a different repayment plan would be beneficial.  The NSLDS for Students link in the navigation menu on the left provides information relevant to student loans and includes loan servicer contact information.  The Financial Aid Office at the college will also assist with any questions or concerns regarding loan repayment.  

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