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Student Loan Repayment Options for Federal Student Loans

If you need some help making your student loan payments each month, consider your options.

A deferment allows you to temporarily delay repayment of your student loans for a specified period of time. There are many different situations that would make a person eligible to defer their payments. Some of the most commonly used deferments cover unemployment, enrollment in school, or economic hardship.

A forbearance is an option available to people who do not qualify for a deferment. If you are financially unable to make your student loan payments, you may be eligible for a temporary suspension or reduction of payments.

The big difference between deferment and forbearance is that borrowers with subsidized student loans on deferment have the accrued interest paid for them by the federal government. The borrower is responsible for the interest that accrues on unsubsidized loans on deferment and for the interest that accrues on both subsidized and unsubsidized loans on forbearance. If the interest is not paid, it will be capitalized (added to the principal balance) at the end of the deferment or forbearance period.

You can use Edfinancial's Form Selector to determine whether a deferment or a forbearance best meets your needs.

Various repayment plans are also available to help you manage your student loan debt:

Standard Repayment allows you to make equal monthly payments during the entire term of the loan and results in the least amount of interest cost to the borrower.

Here's an example of a $30,000 loan on a standard repayment plan:

Loan Principal: $30,000
Interest Rate: 6.8% Fixed
Term: 10 years, or 120 months
Monthly Payment*: $347.27
Total Interest Paid: $11,324.04

Graduated Repayment lowers your monthly payment amount as you enter the job market after college. Payments increase every two years as you are better able to manage your money and get settled in a job.

Here's an example of that same $30,000 loan on a graduated repayment plan:

Loan Principal: $30,000
Interest Rate: 6.8% Fixed
Term: 10 years, or 120 months
Initial Monthly Payment*: $245.75
Final Monthly Payment*: $509.58
Total Interest Paid: $13,380.41

Extended Repayment is available for new borrowers with their first loan disbursement on or after October 7, 1998, who accumulate student loan debt greater than $30,000. The repayment term for these loans may be extended up to 25 years.

Here's an example of a $30,000 loan on an extended repayment plan:

Loan Principal: $30,000
Interest Rate: 6.8% Fixed
Term: 25 years, or 300 months
Monthly Payment*: $208.22
Total Interest Paid: $32,462.41

Notice the total amount of interest paid on the extended repayment plan is significantly more than the total interest paid on the standard repayment plan. The more time you take to pay off your loans, the more interest you will pay over the life of the loan.

Income-Based Repayment (IBR) is a new repayment option that caps your monthly payment at 15% of your discretionary income. Discretionary income is the difference between adjusted gross income (AGI) and 150% of the federal poverty line that corresponds to your family size and state of residence. The monthly payment amount is adjusted annually based on changes in annual income, state of residence, and family size. IBR is available for Stafford, GradPLUS, and Consolidation loans (consolidation loans must not include any Parent PLUS loans). Any balance outstanding at the end of 25 years will be forgiven with 25 years of eligible payments.

Here's an example of a $30,000 loan on an income-based repayment plan:

Loan Principal: $30,000
Interest Rate: 6.8% Fixed
AGI: $26,000
Family Size: 1
Term: 24.5 years, or 294 months
Monthly PFH Payment: 121.94 (PFH eligibility to be evaluated annually to recalculate monthly payment amount)
Maximum Monthly Payment: $345.24
Total Interest Paid: $36,888.44
Total Amount Paid: $69,036.59

Notice the total amount of interest paid on the IBR plan is significantly more than the total interest paid on the standard repayment plan. Also, the balance would be paid in full after 24 years, so there would be no government forgiveness payments.

If you are interested in IBR, please visit Edfinancial's IBR information page to learn more about this program.

Another option, Income Sensitive Repayment, lowers your monthly payment amount by basing your payments on a percentage of your income (from 4% to 25%), allowing you to extend your repayment period up to 15 years. Individual repayment schedules will vary based on the borrower's income and loan balance. You may use our Income Sensitive Repayment worksheet (pdf) to see if you qualify.

You can use your own loan information in our Repayment Calculator to get a better idea of how much your payments and interest cost will be.

Side-by-Side Comparison

Repayment Plan	Original Balance	Interest Rate	Term in Months	Initial Monthly Payment*	Final Monthly Payment*	Total Interest Paid	Additional Interest Paid*
Standard	$30,000	6.8%	120	$347.27	$347.27	$11,324.04	$0.00
Graduated	$30,000	6.8%	120	$245.75	$509.58	$13,380.41	$2,056.37
Extended	$30,000	6.8%	300	$208.22	$208.22	$32,462.41	$21,138.37
IBR	$30,000	6.8%	294	$121.94	$345.24	$36,888.44	$25,564.40

*All examples are approximate and payment amounts may vary for individual borrowers. Some borrowers may have older variable rate loans as well as fixed rate loans, depending upon disbursement date. The Additional Interest Paid number reflects the amount of interest paid above that which would be paid on a Standard repayment plan. Visit our Interest Rates page for more information on interest rates and disbursement dates.

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