When and how do I pay back my loan?
You have a six month grace period after you graduate, leave school, or drop below half-time before you begin repaying your loans. During the grace period, you do not have to make payments on the principal and you will not be charged any interest on the subsidized portion of your total loan amounts. You can, of course, prepay your loans at any time without penalty.
The Federal Direct Loan Program offers a choice of repayment plans to meet your individual needs. You may choose any one of the plans and, in most cases, can change from one plan to another during your repayment period. There is no limit to the number of times you may switch from one plan to another. Each plan has certain features and conditions that you must carefully consider before deciding which plan to use. You will be able to receive information about these plans as well as other repayment options (such as loan consolidation) at your entrance or exit counseling.
- The Standard Repayment Plan requires you to pay a fixed amount each month until your loan is paid in full. Under this plan you will make no more than 120 monthly payments (10 years). For small loan amounts, the number of monthly payments will be fewer than 120. Each monthly payment will be at least $50.00 but may be more, if necessary, to repay the loan within 10 years. If you do not select one of the other payment plans, you will automatically be assigned the Standard Repayment Plan. Use this Loan Calculator to estimate what your monthly payments under the Standard Repayment Plan will be.
- The Extended Repayment Plan requires you to have a minimum loan debt of $30,000 in order to be eligible, but allows you up to 25 years to repay the loan. Under this plan you have the option of making either fixed payments (where the payment amounts are the same each month) or graduated payments (where the monthly amount starts low but increases every two years over the length of the repayment period). With this plan, your monthly payments may be lower than it would be under the Standard Repayment Plan, but you will pay more interest because your repayment period is longer. Use this Loan Calculator to estimate what your monthly payments under the Extended Repayment Plan will be.
- The Graduated Repayment Plan allows you to begin repaying your loan with lower monthly amounts. You will have up to 10 years to repay under this repayment option. The amount you pay each month will increase proportionately every 2 years over the length of the repayment period. Although your monthly payment will gradually increase, no single payment under this plan will be more than three times greater than any other payment. Use this Loan Calculator to estimate what your monthly payments under the Graduated Repayment Plan will be.
- The Income-Based Repayment Plan bases the amount of your monthly payment on your income during any period when you have a partial financial hardship. Your monthly payment may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If you meet certain requirements over a specified period of time, you may qualify for cancellation of the outstanding balance of your loans. Use this Loan Calculator to estimate what your monthly payments under the Income-Based Repayment Plan will be.
- The Income Contingent Repayment Plan gives you the flexibility to meet your repayment obligations without causing undue financial hardship. Each year, your monthly payments will be claculated based on your adjusted gross income [and your spouse’s, if you are married], family size, and the total amount of your Direct Loan balance. The maximum repayment period is 25 years. If you haven’t fully repaid your loans after 25 years under this plan, the unpaid portion will be discharged. Use this Loan Calculator to estimate what your monthly payments under the Income Contingent Repayment Plan will be.
- The Pay As You Earn Repayment Plan will base your monthly repayment amount on your income and family size. Each year, the monthly payment amount will increase or decrease as your income and family size changes. To qualify for this repayment option, you must have a partial financial hardship. A partial financial hardship exists if the monthly amount you would be required to pay under the Standard Repayment Plan is higher than what you would be required to pay under the Pay As You Earn Plan. Use this Loan Calculator to estimate what your monthly payments under the Pay As You Earn Repayment Plan will be.
Use the U.S. Department of Education’s interactive Repayment Calculator to compare the estimated amount of your monthly payments under the various Direct Loan repayment plans.
Learn more about each of the above Direct Loan repayment options here.