Federal Student Loan Repayment Options

September 10, 2011

Federal Student Loan Repayment

There are 5 different methods of federal student loan repayment that you can choose from when looking for a repayment plan that best suits your financial needs as well as how fast or slow you wish to pay off your loans. These plans can also be swtiched any time during your repayment process so you do not have to worry about being stuck with a federal student loan repayment plan that doesn’t fit your particular situation. Below are each repayment plan as well as all encompassing information on each.

Federal Student Loan Repayment

Federal Student Loan Repayment Options

First off this section will discuss the basic programs that are offered for each federal student loan, the next section will discuss specifcs about repayments offered through federal grant programs. Here are the federal student loan repayment options that you can utilize come payment time:

  • Standard – The standard federals student loan repayment option is one that will allow its borrower a timeframe of 10 years to pay back student debt. The payments are a bit higher then longer repayment plans, but will get you out of debt faster as well as you will save money because you will be paying less interest because of the shorter time frame of payment.
  • Extended – The exteneded federal student loan repayment method is one that allows you anywhere from 12 to 25 years to repay your loan. This method is available for borrowers who have over 30,000 dollars in debt. Payments are a lot lower than standard repayment, so this is for those who cannot currently afford a higher monthly payment.
  • Graduated – This method allows the borrower to start with a lower payment and have it increase every two years, which will give you the freedom of low payments right after college and higher payments down the road when you can afford them. This option can also be combined with the extended federal student loan repayment option.
  • Income Contigent – Income contigent repayment bases your monthly payments off of a percentage of your montly income, usually being 15 percent. So whatever you earn, no matter how much or how little, your payments will be at 15 percent of your income.

Federal Student Loan Repayment Specifics

Certain aspects apply to different federal student loan programs, here is an overview to these federal student loan repayment specifics.

  • FEEL Loans can also qualify for income contigent repayment where your montly payments must equal at least what you pay in interest each month.
  • Dircet loans provide income contigent repayment where your montly payments cannot go higher than 20 percent of the discretionary income that you earn. This option also allows one to pay as low as no payments at all if their income is very low, at which if they don’t pay off any part of the loan after the 25 year repaymen period, whatever amount is left on their debt will be considered income and they will be taxed on it.




If you are having trouble making your payments and are looking for relief, click this link: federal student loan repayment, where you find information on different student loan relief methods.

Category: Federal Student Loans

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