Non-income-based repayment loan opportunities

Nearly 70% of Americans who graduate from an institute of higher learning do so with student debt, owing an average of $49,900 each. If you’re one of them, you’ll have to start paying it back by graduation. And while federal loan repayment plans are usually structured to ensure the balance is paid off in 10 years, one national study has shown that the average student loan takes 21 years to be paid off.

If you have a federal student loan, there are several repayment plans available that give you more time to repay your loans, several of which are based on your income. Although you may select or be assigned a repayment plan when you first begin repaying your student loan, you can change repayment plans at any time for free.

While federal loan repayment plans are usually structured to ensure the balance is paid off in 10 years… the average student loan takes 21 years to be paid off.

Before you contact your loan servicer to discuss repayment plans, you can use a repayment estimator to get an advanced look at the plans you may be eligible for, and estimates for how much each would require you to pay monthly and overall.

Options for repaying Direct Loans and Federal Family Education Loans

When it comes time to repay your loans, you have several repayment plan options to choose from. All three of the following options can be used for any loans from the William D. Ford Federal Direct Loan Program and the Federal Family Education Loan (FFEL) Program. Those are:

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• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS Loans
• Direct Consolidation Loans
• Subsidized Federal Stafford Loans
• Unsubsidized Federal Stafford Loans
• FFEL PLUS Loans
• FFEL Consolidation Loans

Standard Repayment Plan

Unless you choose otherwise, you will be placed on the Standard Repayment Plan. This is the basic repayment plan for loans from the William D. Ford Federal Direct Loan Program and the FFEL Program.

Except for the two varieties of Consolidation Loans, monthly payments for these loans under the Standard plan are a fixed amount of at least $50, and are made for up to 10 years. For consolidated loans, monthly payments will also be a fixed amount of at least $50, but will be made for a period of between 10 and 30 years.

Though your monthly payments may be slightly higher than your payments under other plans, the Standard Repayment plan saves you money over time. You’ll pay off your loan in the shortest time, pay the least amount of interest over the life of your loan, and end up paying less in total.

Though your monthly payments may be slightly higher than your payments under other plans, the Standard Repayment plan saves you money over time.

Graduated Repayment Plan

The Graduated Repayment Plan starts with lower payments, and increases them every two years. Payments are made for up to 10 years, or (as with the Standard plan) between 10 and 30 years for consolidation loans. Under this plan, your monthly payments will never be less than the amount of interest that accrues between your payments, and will never become more than three times any previous payment.

If your income is low now, but you expect it to increase steadily over time, this plan may be right for you.

Extended Repayment Plan

The Extended Repayment Plan allows you to repay your loans over an extended period of time (up to 25 years). Under Extended Repayment, your monthly payments are a fixed or graduated amount, made for up to 25 years, and are generally lower than payments made under the Standard and Graduated Repayment Plans.

For Direct Loan borrowers to be eligible for this plan, you must have had no outstanding balance on the date you obtained a Direct Loan and you must have more than $30,000 in outstanding Direct Loans. For FFEL borrowers to qualify, you must have had no outstanding balance on a FFEL Program loan as of the date you obtained it, and you must have more than $30,000 in outstanding FFEL Program loans. (For example, if you have $35,000 in outstanding FFEL Program loans and $10,000 in outstanding Direct Loans, you can choose the Extended Repayment Plan for your FFEL Program loans, but not for your Direct Loans.)

If you need to make lower monthly payments over a longer period of time, the Extended Repayment Plan may be right for you.

FOR MORE INSIGHT

On loan repayment and forgiveness
Learn about how, when, and to whom you make your federal loan payments (Office of Federal Student Aid)
Repay Student Debt (Consumer Financial Protection Bureau)
Income-driven Repayment plans (Office of Federal Student Aid)
Repaying your Federal Student Loans (Office of Federal Student Aid)

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