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Choosing the right repayment plan is key to successfully paying back your loans.  There are a number of plans available, but your eligibility for a specific plan depends on the types of loans you have, when the loans were borrowed, and the amount you owe.  There are also a number of income driven repayment plans that tie your monthly payment amount to annual income.  The chart below provides a general comparison of the plans.  For detailed information about each of the repayment plans, click here.  If you’re not sure which plan is right for you, discuss it with your loan servicer. 

Whichever plan you choose, create a budget to make sure you have the funds to make your monthly payment on time.  If you need some tips on budget creation visit our Money Smart Seawolves page.

Repayment Plan

Monthly Payment

Pros

Cons

Standard Repayment

Amount owed is spread over 10 years.  Monthly payment amount determined by amount owed (min $50).

Generally you will pay the least amount of interest under this plan.

Typically your monthly payment amount will be higher than it would on other plans.

Graduated Repayment

Payments start off lower and then increase every 2 years.

Lower monthly payment amount in the beginning may be more manageable.

You will pay more in interest over the life of the loan than under the 10-year Standard Plan.

Extended Repayment

Payments spread out over longer period of time, up to 25 years.  Payment amounts may be fixed or graduated.

By extending the time to pay, you will have a lower monthly payment.

You will pay significantly more interest than under the 10-year Standard Plan.  In some cases, you will pay back almost double what was originally borrowed.

Income-Based Repayment (IBR)

Must demonstrate partial financial hardship.  Maximum payment amount is 15% of your discretionary income for up to 25 years.  Monthly payment changes as income changes.

Payment amount will be lower than on the 10-year Standard Plan.

 If loan is not repaid after making the equivalent of 25 years of qualifying payments, the outstanding balance may be forgiven.

You will pay more in interest over the life of the loan than under the 10-year Standard Plan.

Forgiven balance may be taxable.

Pay As You Earn (PAYE)

Must demonstrate partial financial hardship.  Maximum payment amount is 10% of your discretionary income for up to 20 years.  Monthly payment changes as income changes.

Payment amount will be lower than on the 10-year Standard Plan.

 If loan is not repaid after making the equivalent of 20 years of qualifying payments, the outstanding balance may be forgiven.

You will pay more in interest over the life of the loan than under the 10-year Standard Plan.

Forgiven balance may be taxable.

Income Contingent Repayment (ICR)

Financial hardship not needed.  Payments are calculated annually based on your adjusted gross income, family size, and total loan debt.  Monthly payment changes as income changes.

Payment more aligned with annual income making monthly payment more manageable.

If loan is not repaid after making the equivalent of 25 years of qualifying payments, the outstanding balance may be forgiven

 

You will pay more in interest over the life of the loan than under the 10-year Standard Plan.

Forgiven balance may be taxable.

Income-Sensitive Repayment

FFEL loans only.  Monthly payment based on annual income for up to 10 years.  Monthly payment changes as income changes.

Payment more aligned with annual income making monthly payment more manageable.

You will pay more in interest over the life of the loan than under the 10-year Standard Plan.

Formula for calculating monthly payment will vary based on lender.

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