Repayment Options for Direct Loan Borrowers
When you are ready to begin repayment of your Direct student loans, you may choose from seven repayment plans, including:
- the standard repayment plan, which is spread over ten years, with a minimum monthly payment of $50; this plan results in the highest monthly payment but least total finance charges;
- the extended repayment plan, which has lower fixed monthly payments over 25 years; you must have borrowed at least $30,000 to be eligible for this option;
- the graduated repayment plan, which has lower initial payments, which increase every two years during repayment; loan term is only ten years, so payments may increase dramatically over the ten years to pay off the amount borrowed; initial payments are lower than the standard plan, but most likely will exceed the standard plan payments over time; more interest is paid than with the standard plan; designed for a student's increasing annual wages over time;
- the income-contingent repayment plan, which has repayment amounts set annually according to borrower's income and family size, with repayment extending as far as 25 years; depending on income, payments could be as little as $0 or $5 per month; may result in the most interest being charged overall;
- the income-based repayment plan; if the borrower is eligible, the borrower's monthly payments will be capped at an amount that is intended to be affordable based on the borrower's income and family size;
- the revised pay as you earn repayment plan (REPAYE), which has monthly payments limited to 10% of one's discretionary income; and
- the pay as you earn repayment plan (PAYE), which includes one's spouse's income or loan debt only if one files a joint tax return.
If a repayment plan is not chosen by the borrower, the borrower will be placed in the standard repayment plan. Borrowers may change repayment plans at anytime with certain restrictions. Borrowers may NOT change out of the income-based repayment plan.
Use the interactive calculator to determine your monthly payments under each of the repayment plans. View a sample of the monthly payments for the available repayment plans.
Borrowers may prepay all or part of the unpaid balance of a Direct loan at any time without penalty. See Repayment Tips section for instructions on paying down loan principal.
Monthly payments are sent to a designated post office box. Contact your loan servicer for the correct mailing address or to arrange for automatic payment.
If the monthly payments under the payment plans listed above are too expensive, consider other options such as loan consolidation; a general forbearance with reduced payments; or an alternative repayment plan by calling your loan servicer. Repayment options are also explained during an exit interview.