Service providers have several repayment options that you may take advantage of, such as:
Standard Repayment – This plan provides a fixed monthly payment of at least $50 over a period of up to 10 years.
Graduated Repayment – Monthly payments start low and increase over time. Graduated repayment may be a good choice if you currently have limited income but expect higher earnings in the future. The maximum repayment term under this option is 10 years.
Income-Sensitive Repayment – Available only for FFELP loans, your payments can be adjusted up or down annually to account for changes in your income.
Extended Repayment – This option is available only if you did not have a balance on a FFELP loan or Direct Loan as of Oct. 7, 1998, or at the time you received a FFELP loan or Direct Loan after Oct. 7, 1998. Under this plan, you may reduce the amount of your monthly payment by spreading payments over a period of up to 25 years.
Income Based Repayment – This is the preferred repayment option. You may qualify for this repayment option if your loan payments during the year exceed 15 percent of your “discretionary” income. In addition, your payments may be less than accruing interest, you may qualify to pay back your loans over a period of up to 25 years, and you may qualify for forgiveness of any remaining amount you owe after 25 years of payment. For qualification: www.ibrinfo.org
Pay as you Earn Repayment – This repayment plan is similar to income-based repayment, except payments are limited to 10 percent of your “discretionary” income, and you may qualify for loan forgiveness after 20 years of repayment. The option is available only to Direct Loan borrowers – except for those with Direct PLUS loans to parents or Direct Consolidation loans that repaid a parent PLUS loan – who were new borrowers as of Oct. 1, 2007, and received a Direct Loan disbursement since Oct. 1, 2011.
Income-Contingent Repayment – This option is available for Direct Loans, except Direct PLUS loans to parents. Your payments are based on your income, family size and outstanding loan balance. Payments may be less than the accruing interest. If you haven’t fully repaid your loan after 25 years, you may qualify to have the unpaid amount forgiven.
All of these options are subject to the service provider’s discretion, which means your provider may not have them all. It is wise to visit your service provider’s website and see if any of these options will fit your needs.