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A Guide To Student Loan Repayment

Student loans—two dreaded words.
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A Guide To Student Loan Repayment

In the first quarter of 2019, student debt rose to $1.49 trillion—that’s more than the national totals for auto loan debt (1.28 trillion), according to credit.com.  

Whether you’re a parent, or a student, don’t let go of all hope just yet. If you borrowed from the U.S. Department of Education, you are eligible to change your repayment plan to one that better suits your budget. You may select a fixed or graduated monthly payment (graduated payments will increase over time). There are also options that calculate your loan payments based on your income. 

It may be easier to continue making payments without looking at the numbers. But we can assure you, it’s well worth it to get over your fear and manage your student debt responsibly. It’s time to take control of your financial future.

Keep reading to learn more about the federal student loan repayment plans:

  • Standard Repayment: Payments are a fixed amount that guarantee your loan will be paid off within 10 years. This plan will cost the least amount in interest.
  • Graduated Repayment: Payments are lower at first and then increase, usually every two years, and are for an amount that will ensure your loans are paid off within 10 years.
  • Extended Repayment: Payments may be fixed or graduated, and will ensure that your loans are paid off within 25 years. 
  • Revised Pay As You Earn Repayment (REPAYE): Your monthly payments will be 10 percent of discretionary income. Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 years (if all loans were taken out for undergraduate study) or 25 years (if any loans were taken out for graduate or professional study).
  • Pay As You Earn Repayment (PAYE): Your monthly payments will be 10 percent of discretionary income, but never more than you would have paid under the 10-year Standard Repayment Plan. Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 years.
  • Income-Based Repayment (IBR): Your monthly payments will be either 10 or 15 percent of discretionary income (depending on when you received your first loans), but never more than you would have paid under the 10-year Standard Repayment Plan. Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 years or 25 years, depending on when you received your first loans; you may have to pay taxes on the forgiven amount.
  • Income-Contingent Repayment (ICR): Your monthly payment will be the lesser of: 20 percent of discretionary income, or the amount you would pay on a repayment plan with a fixed payment over 12 years, adjusted according to your income. Any outstanding balance will be forgiven if you haven't repaid your loan in full after 25 years.
  • Income-Sensitive Repayment: Your monthly payment is based on annual income, but your loan will be paid in full within 15 years.

Questions? To learn more, contact your student loan servicer, or visit studentaid.ed.gov.