Repayment plans with your lender

IBR is a repayment option based on income and family size. For most borrowers, IBR payments will be less than 10% of their income. IBR will also forgive any remaining debt after 25 years of qualifying payments, although the Internal Revenue Service may treat any forgiven loan amount as taxable income. Consult a tax professional.

Key features of IBR:

• IBR is available to Direct Loan Program and FFELP borrowers
• You must apply for IBR each year to continue your participation
• You must demonstrate partial financial hardship
• Monthly IBR payments are based on income, family size and the poverty guidelines for your state
• There is no minimum payment amount
• Payments do not have to cover interest
• The government may pay accruing interest for your first three years of IBR
• Loans may be forgiven for Direct Loan Program borrowers after 10 years for those who work in public service or other qualifying careers
• Loans may be forgiven after 25 years for all borrowers

To see if you qualify for IBR, contact your servicer(s)/lender(s) or follow the link below to the U.S. Department of Education's Repayment Estimator.

Income-Based Repayment Estimator

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This program may be a good option if you have a Stafford, PLUS or Grad PLUS loan(s) under the FFELP and want to lower your payments for a relatively brief period of time. With an ISR plan, your servicer(s)/lender(s) determines your monthly payment amount based on your Adjusted Gross Income and will readjust the amount of your payments annually based on your reported earnings.

Key features of ISR:

• Your monthly loan payment amount is based on your annual income
• As your income increases or decreases, so do your payments
• The maximum repayment period is 10 years
• You must reapply for ISR each year
• Ask your servicer(s)/lender(s) for more information on the ISR plan
• ISR is available for FFELP Stafford, PLUS and Grad PLUS loan borrowers

ISR can help you stay current with your payments if you're facing an income shortfall, but if you think you'll need lower payments for more than a year, you may want to consider Extended or Graduated repayment.

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With ICR, monthly payments are calculated based on your income, family size and the total amount borrowed.

If you complete 25 years of repayment under the ICR plan, any remaining debt will be forgiven, although the Internal Revenue Service may treat any forgiven loan amount as taxable income. Consult a tax professional.

Key features of ICR:

• ICR is available for Direct Loan Program borrowers of Stafford loans and Grad PLUS loans
• Payments are based on income, family size and total federal student loan debt
• The payment amount adjusts annually based on your Adjusted Gross Income
• Payments do not have to cover interest, but unpaid interest does accrue
• Accrued interest caps at 10% of the original loan amount
• The federal government subsidizes interest beyond the 10% cap
• If you pay the loan early or switch plans, all accrued interest—including federally subsidized interest—is added to the principal
• The maximum loan term is 25 years
• After 25 years the remaining debt is forgiven

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With PAYE, monthly payments are calculated based on your Adjusted Gross Income and family size. The monthly payment amount is recalculated annually to reflect changes in your income and family size, and is generally 10% of your discretionary income. Any remaining balance is forgiven after 20 years of payments, or after 10 years under the Public Service Loan Forgiveness Program.

Key features of PAYE:

• PAYE is available for Direct Loan Program borrowers (subsidized, unsubsidized, graduate and consolidated)
• Your monthly loan payment amount is based on your annual income and family size
• Your payment amount may increase or decrease if your income or family size changes from year to year
• You must reapply for PAYE each year
• After 20 years, the remaining debt is forgiven

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Standard repayment allows you to pay your loan(s) over 10 years in equal monthly installments. Because you begin paying down the principal immediately, Standard repayment may cost you less over the life of the loan compared to some other plans.

Key features of Standard repayment:

• The same payment amount each month
• Minimum $50 payment amount until the loan is paid in full
• Maximum 10-year term for Stafford and PLUS loans, with a three-year extension if a loan balance remains because of a variable interest rate
• Automatically entered unless a different repayment plan is selected

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Graduated repayment is designed for those who have a low salary early in their repayment period, but anticipate higher incomes in the future. Payments start low and gradually increase over time.

Graduated repayment is a compromise between Standard repayment and the higher lifetime costs of Extended repayment.

Key features of Graduated repayment:

• Lower monthly payments that increase over time
• No payment is more than three times the lowest payment
• Payments must cover interest
• Maximum 10-year term for Stafford and PLUS loans, with a three-year extension if a loan balance remains because of a variable interest rate

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Borrowers with more than $30,000 in FFELP or Direct Loan Program loans—separately, not combined—can lower their monthly payments by extending their payments for up to 25 years. While it does potentially save money in the short-term, Extended repayment may create higher overall costs.

Key features of Extended repayment:

• Designed for borrowers with more than $30,000 in student loan debt in a single loan program (i.e., FFEL or Direct Loan)
• Lowers monthly payments by extending the loan terms up to 25 years
• Fixed or graduated payments
• May result in higher costs due to the longer repayment term

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