Repayment Plans

The federal government offers a variety of repayment plans to help you stay on track with repayment.  Determining which repayment plan is best for you depends on various factors at different stages in your life.  As a student, you may need to use the deferment and have interest accrue separately, or you could chose to pay interest while enrolled.  When you are first out of school, finding that new employment position, moving and getting settled, you may need lower payments after your initial grace period expires.  That is why the most common answer to what is the best repayment plan is "It depends." 

Options include:

  • Standard repayment (paying off loans within 10 years of end of the grace period
  • Graduated repayment (lower monthly payments during the first year or so of repayment gradually increasing to amortize the loan over a 10 year period)
  • Extended repayment (fixed or graduated monthly payment over an extended period of time, up to 25 years depending on amount borrowed)
  • Income contingent repayment or ICR (available for Direct loans only and bases monthly payment on about earned annually with an annual adjustment)
  • Income based repayment or IBR (available for either Federal Family Educational Loan Program (FFELP) loans or Direct loans based on annual earnings with payments adjusted annually and forgiveness after 20 years)

The AAMC offers a great comparison of repayment scenarios under their FIRST program.  The comparison is based on $170,000 total debt and shows the impact of various repayment options. 

Repayment calculators are available online at StudentAid.ed.gov.  There are separate calculators for ICR and IBR