Once you graduate, drop below half-time enrollment, or leave school, your federal student loan goes into repayment. If you have Graduate PLUS loan you will be placed on an automatic deferment while in school and for six months after graduating, leaving school, or dropping below half-time enrollment. Repayment ability, total debt and future earnings should be considered when borrowing loan funding.
Your servicer will automatically place you in a Standard Repayment Plan. Students are able to request a new repayment plan at any time. Further details concerning loan repayment plans can be found by visiting the Federal Student Aid website. It is encouraged that you take advantage of the Loan Simulator provided before contacting your servicer.
Types of Repayment Plans
Standard Repayment: Payments are set at a fixed amount over a 10-year period.
Graduated Repayment: Payments start off at a lower amount and increase; usually every two years. Increases are set at an amount to ensure that you will pay off your loan(s) in a 10-year period.
Extended Repayment: Payments can be graduated or fixed over a 25-year period
Revised Pay As You Earn Repayment (REPAYE): Payment amounts will be 10% of your discretionary income; these amounts increase based on your salary and family size. Students are required to report changes in salary and family size, even if there are no changes. If married, incomes for both student and spouse will be considered. Any outstanding debt that is not paid after 25 years will be forgiven.
Income Based Repayment (IBR): Payments will be between 10-15% of your discretionary income over a 25-year period. Any outstanding debt will be forgiven after the 25 years; however there may be tax implications for any forgiven debt. Salary and family size need to be reported every year.
Income Contingent Repayment (ICR): Payments will be 20% of your discretionary income or the fixed amount you will pay over 12 years based on your income. The lesser of the two amounts will be used. Any outstanding debt that is not paid after 25 years will be forgiven.
Income Sensitive Repayment: Payments are based on your annual income; loan will be paid in full over a 15-year period.
Consolidating your federal loans simplifies the students repayment process by combining multiple loans into one monthly payment. Consolidation gives students a 30-year period to pay their loans. Extending the repayment period can cause you to make more payments and pay more in interest. A list of pros and cons concerning consolidation provided by the Department of Education can be found here. You can make a more informed decision by review this list to see if consolidation is right for you. Consolidation is a one-way street and cannot be reversed.
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