The majority of student loan borrowers rely on federal loans to fund their education. These are loans disbursed and serviced by a federal agency directly, such as Direct loans. They can also be loans from private loan servicers approved to provide federal loans, like FFEL loans.
Basically, if you received your loans by applying for Financial Aid through FAFSA, then your student loans are federal. You can use the programs described below. Eligibility for each program varies based on which federal programs your loans originated from and who issued them. Please use the links below to a list of qualified federal loans and a description of how each program works.
There are a few key points to note that apply to all of the programs collectively:
- You do not have to include all eligible debts within a single repayment plan. In fact, you can set up multiple plans at the same time. In some cases, splitting them up provides a strategic benefit in loan repayment.
- You may change plans if your financial situation changes. Let’s say you enrolled in a hardship-based program and your financial situation improves. You can switch to a plan for faster repayment and lower interest charges, or vice versa.
If you have private student loans, you will use different options to address those debts, such as Private Student Loan Consolidation.
Spectrum of Federal Repayment Plans
Standard Repayment Plan
This plan offers the most efficient and cost effective method of repaying your federal student loan debt. The payments and term are based on the total amount of debt you include in the program, so payments can be high relative to your income.This program is recommended for borrowers with steady income and good cash flow.Explore the Standard Repayment Plan Solution »
Graduated Repayment Plan
This program is designed to gradually increase the required monthly payment to match increases in your income as you advance through your career. Payments start lower than with Standard Repayment, but increase by 7% every two years.This program is recommended if you have challenges with entry-level income now, but expect more income as you advance.Explore the Graduated Repayment Plan Solution »
Income Based Repayment (IBR) Plans
This is an income-driven repayment plan that’s designed for borrowers who are facing income challenges and financial hardship. If you need to reduce the monthly payment requirements for your federal loans, this program generally reduces payments to around 15% of your Adjusted Gross Income (AGI), depending on your family size. It’s also one of the three programs that can qualify you for Public Service Loan Forgiveness. This program is recommended if you’re facing financial hardship due to low income challenges.Explore the Income Based Repayment (IBR) Plans Solution »
Income Contingent Repayment (ICR) Plans
This is another income-driven plan, but in this case the monthly payments are slightly higher than they would be with an IBR. In most cases payments equal out to roughly 20% of your Adjusted Gross Income (AGI), depending on your family size. This program can also qualify you for Public Service Loan Forgiveness. This program is recommended if you’re having some trouble paying what you owe, but have more income available than what you need for the IBRExplore the Income Contingent Repayment (ICR) Plans Solution »
Income Sensitive Repayment (ISR) Plans
This is a hardship-based program that’s specifically designed to address challenges with Federal Family Education Loan (FFEL) Program. This includes FFEL loans and FFEL PLUS loans, as well as Stafford Loans. Monthly payments are typically equivalent to the 20% AGI that you see with an ICR plan. This program is recommended for FFEL loans, since other programs may require an extra step (and extra work) to consolidate these loans.Explore the Income Sensitive Repayment (ISR) Plans Solution »
Pay As You Earn (PayE) Plans
This plan provides the lowest monthly payments possible, with monthly payments equaling out to roughly 10% of your Adjusted Gross Income (AGI), depending on your family size. PayE also provides a way to reduce payments to zero without penalties if you’re in a situation of extreme financial hardship. Only “new” debts are eligible for the programs. This program is recommended for people who fall at or below the Federal Poverty Line for your state. It is intended for the most extreme cases of financial hardship.Explore the Pay As You Earn (PayE) Plans Solution »