Federal Student Loan Repayment and Consolidation

Repayment Options

When it comes time to repay your Federal Direct Student Loan, you will need to select a repayment plan. There are several repayment plans to choose from which can be seen in the chart below. How much you pay and how long you take to repay your loans will vary depending on the repayment plan you choose. Consolidation Loans also have varying repayment plans.

If you don’t make your loan payments, you risk going into default. Defaulting on your loan has serious consequences. Your loan becomes delinquent the first day after you miss a payment. The delinquency will continue until all payments are made to bring your loan current. Loan servicers report all delinquencies of at least 90 days to the three major credit bureaus.

A negative credit rating may make it difficult for you to borrow money – i.e. for a car or home – or sometimes may make it impossible. If you can’t make the payments, look into your repayment options listed below, or talk to your loan provider about other ways to get your monthly payments reduced.

REPAYMENT PLAN	ELIGIBLE LOANS	MONTHLY PAYMENT & TIME FRAME	ELIGIBILITY
Standard Repayment Plan	Subsidized Loans Unsubsidized Loans All PLUS Loans	Payments are a fixed amount Up to 10 years	All borrowers are eligible for this plan. You’ll pay less over time than under other plans.
Graduated Repayment Plan	Subsidized Loans Unsubsidized Loans All PLUS Loans	Payments are lower at first and then increase, usually every two years Up to 10 years	All borrowers are eligible for this plan. You’ll pay more over time than under the 10-year Standard Plan
Extended Payment Plan	Subsidized Loans Unsubsidized Loans All PLUS Loans	Payments may be fixed or graduated Up to 25 years	If you’re a Direct Loan borrower, you must have more than $30,000 in outstanding direct loans. If you’re a FFEL borrower, you must have more than $30,0000 in outstanding FFEL Program loans. Your monthly payments will be lower than under the 10-year Standard Plan or the Graduated Payment Plan
Revised Pay As You Earn Payment Plan (REPAYE)	Subsidized Loans Unsubsidized Loans All PLUS Loans	Your monthly payments will be 10% of discretionary income. Payments are recalculated each year and are based on your updated income and family size. If you’re married, both your and your spouse’s income or loan debt will be considered, whether taxes are filed jointly or separately (with limited exceptions). Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 or 25 years.	Any Direct Loan borrower with an eligible loan type may choose this plan. Your monthly payment can be more than the 10-year Standard Plan amount. You may have to pay income tax on any amount that is forgiven. Good option for those seeking Public Service Loan Forgiveness (PSLF).
Pay As You Earn Repayment Plan (PAYE)	Subsidized Loans Unsubsidized Loans All PLUS Loans	Your maximum monthly payments will be 10% of discretionary income. Payments are recalculated each year and are based on your updated income and family size. If you’re married, your spouse’s income or loan debt will be considered only if you file a joint tax return. Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 years.	You must be a new borrower on or after October 1, 2007, and must have received a disbursement of a Direct Loan on or after October 1, 2011. You must have a high debt relative to your income. Your monthly payment will never be more than the 10-year Standard Plan amount. You’ll pay more over time than under the 10-year Standard Plan. You may have to pay income tax on any amount that is forgiven. Good option for those seeking Public Service Loan Forgiveness (PSLF).
Income-Based Repayment Plan (IBR)	Subsidized Loans Unsubsidized Loans All PLUS Loans	Your monthly payments will be 10% or 15% of discretionary income. Payments will be recalculated each year and are based on your updated income and family size. If you’re married, your spouse’s income or loan debt will be considered only if you file a joint tax return. Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 or 25 years. You may have to pay income tax on any amount that is forgiven.	You must have high debt relative to your income. Your monthly payment will never be more than the 10-year Standard Plan amount. You’ll pay more over time than under the 10-year Standard Plan. Good option for those seeking Public Service Loan Forgiveness (PSLF).
Income-Contingent Repayment Plan (ICR)	Subsidized Loans Unsubsidized Loans All PLUS Loans	Your monthly payment will be the lesser of: 20% of discretionary income, or the amount you would pay on a repayment plan with a fixed payment over 12 years, adjusted according to your income Payments are recalculated each year and are based on your updated income, family size, and the total amount of your Direct Loans. If you’re married, your spouse’s income or loan debt will be considered only if you file a joint tax return or you choose to repay your Direct Loans jointly with your spouse. Any outstanding balance will be forgiven if you haven’t repaid your loan in full after 25 years.	Any Direct Loan borrower with an eligible loan type may choose this plan. Your monthly payment can be more than the 10-year Standard Plan amount. You may have to pay income tax on the amount that is forgiven. Good option for those seeking Public Service Loan Forgiveness (PSLF). Parent borrowers can access this plan by consolidating their Parent PLUS Loans into a Direct Consolidation Loan.
Income-Sensitive Repayment Plan	Subsidized Loans Unsubsidized Loans All PLUS Loans	Your monthly payment is based on annual income. Up to 15 years	You’ll pay more over time than under the 10-year Standard Plan. The formula for determining the monthly payment can vary from lender to lender.

Learn about additional repayment options:

Forbearance

If you can’t make your scheduled loan payments, but don’t qualify for a deferment, your loan servicer may be able to grant you a forbearance. With forbearance, you may be able to stop making payments or reduce your monthly payment for up to 12 months. Interest will continue to accrue on your subsidized and unsubsidized loans (including all PLUS loans).

Deferment

A deferment is a period during which repayment of the principal and interest of your loan is temporarily delayed.

Under certain circumstances, you can receive a deferment that allows you to temporarily postpone or reduce your Federal Student Loan payments. Postponing or reducing your payments may help you avoid default. You’ll need to work with your loan servicer to apply for deferment. Be sure to keep making payments on your loan until the deferment or forbearance is in place. You are eligible for an In-School Deferment if you are enrolled at least half-time in school and your loan has been fully disbursed. During a deferment, you do not need to make payments. In addition, depending on the type of loan you have, the Federal Government may pay the interest on your loan during a period of deferment.

Consolidation

Why?

• Your old Federal Student Loans are likely still owned by your old FFELP lender and servicer.
• The U.S. Department of Education has assigned one of their contractors to service your new student loan(s) and this servicer may be different from your FFELP loan servicer.
• Therefore, once you enter repayment with multiple lenders and servicers, you will receive separate bills from each one, for the statutory minimum payment each month – multiplying your monthly loan repayment obligation.
• Student borrowers with multiple loans at multiple lenders and/or servicers can have a higher rate of loan default because of the difficulty in tracking and managing their monthly payments.
• Your interest rate and loan balance will not change if you consolidate.

When?

• We recommend that you begin the consolidation process 4 months after graduating or leaving school, so that the consolidation takes place at the very end of your statutory 6-month grace period. (It can take 6 to 8 weeks for the consolidation process to be completed.)
• If you consolidate before the grace period begins or before it expires, you will lose the grace period and repayment will begin right away.

How?

• Review your loans and who your loan holders are at nslds.ed.gov
• If your loans are held by multiple lenders and/or servicers, consider consolidating.
• If your loans are held by the same government servicer but are both FFELP and DL loans, consider consolidating.

Who?

• For more information about the benefits of consolidating and whether or not it’s right for you, check out the Department of Education’s webpage about consolidation.

Prepared by the National Direct Student Loan Coalition (NDSLC), a non-profit organization comprised of schools dedicated to the continuous improvement and strengthening of the Federal Direct Loan Program.

Public Service Loan Forgiveness

The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

Employment with the following types of organizations qualifies for PSLF:

• Government organizations at any level (federal, state, local, or tribal)
• Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
• Other types of not-for-profit organizations that provide certain types of qualifying public services

Serving in a full-time AmeriCorps or Peace Corps position also counts as qualifying employment for the PSLF Program.

The following types of employers do not qualify for PSLF:

• Labor unions
• Partisan political organizations
• For-profit organizations
• Non-profit organizations that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code and that do not provide a qualifying service