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Repayment Programs

If you are one of the 44 million U.S. student loan borrowers, you are aware of the pain and problems associated with repaying the debt. Fortunately, there are federal student loan repayment options that can help ease your burden to a certain extent.

Although student loans are stressful, repayment programs give you the flexibility to repay your loan with ease. Depending on your goals, you can choose from different student loan repayment options.

For instance, if you want to reduce the number of your monthly repayments, you can select the income-driven repayment program. If you have extra money and want to repay your debt ahead of the actual schedule, you can make extra repayments to avoid a penalty. Selecting the most suitable repayment plan can also be difficult. To help you with the selection, here is an overview of some common student loan repayment programs:

Loan Consolidation

If you have multiple federal student education loans, you can consolidate them into a single loan. This results in a single monthly loan installment instead of multiple payments each month.

Benefits of Loan Consolidation

  • Through a loan consolidation program, you can simplify the loan repayment process

  • Centralize your loans in a single bill while lowering your monthly payment

  • Get the additional advantage of repaying your loan within 30 years

  • Gain access to different loan repayment plans, which you might not have before consolidation

  • You get the option of switching your varying interest rates to a fixed rate

Drawbacks of Consolidation

  • Increasing the duration of repayment can result in more payments as well as greater interest

  • You may also lose some of the borrower’s benefits available with the original loan

Standard Repayment

Standard loan repayment program is a default plan for all types of federal education loans. With this repayment plan, you can repay your loan within ten years. The monthly payments depend on the amount of your loan with interest calculated over a decade. That said, the minimum amount per month that you have to pay is $50.

Standard repayment plans apply to a variety of student loan programs, including Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans, Direct PLUS Loans, FFEL PLUS Loans, Direct Consolidation Loans, Unsubsidized Federal Stafford Loans, and FFEL Consolidation Loans.

Benefits of a Standard Repayment Plan

  • Nearly all federal student loan borrowers are eligible for standard repayments plans

  • The amount of repayments decreases over time, as compared to other programs

  • Your interest fee is lower than other repayment plans

  • You can estimate the amount of monthly repayments through repayment estimator tools recommended by the Education Department

  • You can easily switch to some other repayment plan without any additional cost if you find it difficult to keep up with the plan


  • Your monthly payments are higher than other repayment options

Extended Repayment

If you have higher debt to pay off, meeting the standard repayment plan deadline may not be enough. The Extended repayment program extends the loan term up to 25 years with lower monthly repayments.

In the extended repayment program, there are two options:

  • Fixed Payments: In this payment plan, you have to pay a fixed amount every month over the duration of the loan

  • Graduated Repayments: In this case, you can start with lower monthly repayments, which increase after every two years

  • The primary advantage of this repayment program is  you can make lower monthly payments

  • It applies to most federal student loan plans

Benefits of Extended Loan Repayment Programs


  • You will remain in debt for a longer duration

  • You will pay more interest on the student loan as compared to a standard plan

  • Other programs offer lower monthly payments

  • This program does not apply to the Public Service Loan Forgiveness program

Graduate Repayment

Graduated repayment programs are especially helpful for borrowers who currently have low incomes but expect a rise in their income with a passage of time. With this plan, you can repay your student debt within ten years. The monthly amount you have to pay gradually increases every two years.

The graduate repayment plan is applicable to a range of loans, including

  • Direct Subsidized Loans

  • FFEL Consolidation Loans

  • Unsubsidized Federal Stafford Loans

  • Direct Consolidation Loans

  • Direct Plus Loans

  • Subsidized Federal Stafford Loans

  • FFEL Plus Loans

  • Direct Unsubsidized Loans

Benefits of Graduated Repayment Programs

  • Nearly all student loan borrowers can qualify for this program

  • The monthly payment amount gradually increases, which allows you to handle monthly payments at entry-level income

  • You have ten years to pay off your debt


  • Nearly all student loan borrowers can qualify for this program

  • The monthly payment amount gradually increases, which allows you to handle monthly payments at entry-level income

  • You have ten years to pay off your debt

Income-Based Repayment

Income-based repayment (IBR) programs help to decrease your monthly loan repayments. If you cannot afford to make high monthly payments due to low income and a high student loan balance, this program can offer some relief.

People often confuse IBR programs with IDR (income-driven repayment) plans. However, actually, it's a sub-type of four IDR programs which the Federal Education Department offers. It assists the borrowers who are unable to make monthly payments under their Standard Student repayment plan.

In the case of IBR, the amount of monthly repayments is directly proportional to your income. It means that as your income rises, the monthly repayment amount also increases, and vice versa. It takes into consideration your current income and family size.

The federal student loan programs that qualify for IBR include Direct Subsidized and Unsubsidized Loans, Direct Graduate PLUS Loans, FFEL Consolidation Loans, and Direct Consolidation Loans.

Benefits of Income-Based Repayment Programs

  • You can efficiently manage monthly payments

  • You get the flexibility of adjusting the monthly payment amount with changes in your income and lifestyle

  • You become eligible for federal student loan forgiveness programs

  • You can benefit from Public Service Loan Forgiveness


  • Repayment of the loan takes a much longer time than other plans

  • You may pay a higher interest over the life of your repayment

  • The balance of your student loan may increase

Pay As You Earn (PAYE)

If you are having difficulties in paying off your loan, you can switch to a Pay as You Earn program. This program makes your monthly payments more affordable and is a part of income-driven plans for repayment of federal student loans. Choosing PAYE means you may not need to repay the entire student loan balance.

For eligible borrowers, the repayment amount is up to 10% of discretionary income. If you pay continuously for 20 years without missing any payment, the lender will forgive the remaining amount.

Benefits of Pay As You Earn

  • The primary benefit is student loan forgiveness after paying continuously for 20 years. It may allow you to get amnesty for student debt

  • You get more favorable subsidies on interest rates

  • It can decrease and cap your monthly repayments

  • It gives you flexibility in filing taxes which help to keep the monthly payment low


  • The rate of interest is more than the interest rate in Revised Pay as You Earn, which is not good for borrowers with a substantial balance

  • Since the repayment period is longer, you will end up paying more money as interest

  • As this repayment option was established under the presidency of Barack Obama, other federal administrations can cancel it anytime

Income-Contingent Repayment (ICR)

Income Contingent Repayment (ICR) is a sub-category of income-driven plans with a 25-year repayment period. The significant difference between ICR and other income-driven options is there is no income eligibility requirement. To become eligible for PAYE, as well as IBR, you need to provide proof of your financial hardships while for ICR, there is no such requirement. This makes it easy for borrowers to qualify.

The income-contingent loan repayment plan applies to several student loans, which include Direct Loans ( subsidized and unsubsidized), Direct Consolidation loans and Direct PLUS loans. Moreover, it applies to some other student loans if the borrower consolidates those loans into Direct Consolidation loan before applying for ICR. These include Federal Stafford loans (both subsidized and unsubsidized), FFEL Consolidation Loans, Federal Perkins Loans, and FFEL PLUS loans.

Benefits of Income Contingent Repayment Plans

  • The primary benefit of this plan is no requirement for partial hardship, which means that even high-income borrowers are eligible

  • Borrowers working in public services can make smaller payments while they remain eligible for the Public Service Loan Forgiveness program even after ten years

  • You can change your payment schedule anytime you want, as per your financial conditions.


  • Not everyone can benefit from ICR, particularly borrowers who expect to make lower monthly payments, but the actual monthly amount might be more than under a Standard Repayment program

  • The program offers the highest cap of income among all other income-driven repayment options

  • Extending the duration of your repayment in ICR means you will be paying more money as interest

  • If you are married, the income of your spouse is also taken under consideration, which is likely to lead to higher monthly payments

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