Loan Repayment Options
|Repayment Plan||Eligible Loans||Monthly Payment and Time Frame||Quick Comparison|
|Standard Repayment Plan||
|Graduated Repayment Plan||
|Extended Repayment Plan||
For example, if you have $35,000 in outstanding FFEL Program loans, and $10,000 in Direct Loans, you can use the extended repayment plan for your FFEL Program loans, but not for your Direct Loans.
|Income-Based Repayment (IBR)||
|Pay As You Earn Repayment Plan||
|Income-Contingent Repayment Plan||
|Income-Sensitive Repayment Plan||
All Federal education loans allow prepayment. For loans that are not in default, any excess payment is applied first to interest and then to principal. However, if the additional payment is greater than one monthly installment, you must include a note with the payment telling the processor whether you want your prepayment to be treated as a reduction in the principal. Otherwise, the government will treat it as though you paid your next payment(s) early, and will delay your next payment due date as appropriate. (It is best to tell them to treat it as a reduction to principal, since this will reduce the amount of interest you will pay over the lifetime of the loan.)
Due to the way the income contingent repayment plan treats interest, it is not advisable to prepay a loan in the income contingent repayment plan.
If you want to switch from one plan to another, you can do so once per year, so long as the maximum loan term for the new plan is longer than the amount of time your loans have already been in repayment. (In other words, if you are in year 26 of a 30-year extended repayment plan, you cannot switch to the income contingent repayment plan and have the remaining balance written off.)
FinAid offers several calculators for evaluating the tradeoffs of different repayment plans.
- The Loan Payment Calculator may be used to calculate what your monthly payments would be under the standard and extended repayment plans.
- The Loan Comparison Calculator is like the loan payment calculator, but allows you to compare three loans side by side.
- The Income Contingent Repayment Calculator may be used to calculate an estimate of what your monthly payments would be under income contingent repayment plans, and compares the total payments with the standard and extended repayment plans.
- The Undergraduate Master’s and Doctoral student loan advisor calculators provide an estimate of the debt the student can reasonably afford, given the expected starting salary for their field.
- The Parent Loan Advisor provides parents with an estimate of the amount of educational debt they can afford for their children’s education, given their current salary and other debt obligations.
- The Cost of Interest Capitalization calculates the additional cost over the lifetime of a loan if a student capitalizes the interest of an unsubsidized Stafford loan during the in-school period.
- There are also other loan calculators in the Calculators section of FinAid, including a Loan Analyzer that does a detailed comparison of the financial impact of various loan features, including loan fees, interest rates, repayment terms, interest capitalization, and prompt payment incentives.