If you’re paying off federal student loans, you are one of nearly 37 million borrowers with outstanding student debt. The U.S. government offers you several repayment plans, including some that give you a maximum of 25 years to pay off your student debt, while others are tailored to your income and family size. You can even switch your plan if your needs or living conditions change.
Graduated Plan
In this plan, your payments are not fixed. They are low at first and gradually increase. It’s a good plan if you expect your income to grow steadily over time. No payment will ever be more than three times your lowest payment.
Extended Plan
This plan follows a fixed or graduated monthly payment, but you have up to 25 years to pay it off. You pay more interest than other plans, but payments are lower than a Standard Plan.
Standard Plan
You’ll pay a fixed monthly amount until your loans are paid in full or for up to 10 years. Your monthly payments will be at least $50. If you do not select a repayment option, you will be defaulted into this plan.
Income-Based Plan
Your monthly payment is based on 15 percent of your discretionary income, family size and state of residency during any period where there’s a financial hardship.
Income-Contingent Plan
Your monthly payments are calculated on your adjusted gross income, family size, and total loan amount. You have up to 25 years to pay it off under this plan.
Pay As You Earn Plan
Also known as President Obama’s Student Loan Plan. Monthly payments are calculated on a similar basis to the Income-Based Plan, but payments are capped at 10 percent of discretionary income. It’s adjusted annually and you have up to 20 years to pay the debt.
