Student Loans 101: interest-based repayment plans

If you’re in the process of repaying your student loans, counseling might make it a little less stressful. Student loan counseling manager Gordon Oliver explained different interest-based repayment plans.

Standard Repayment Plan

Under this plan, borrowers make monthly payments of at least fifty dollars for up to 10 years. The monthly payment is configured based upon the student loan balance and interest rate. Typically, a borrower pays less interest for their student loan(s) over time under the Standard plan than any other plan.

The following loans are eligible for the Standard Repayment Plan:
Direct Subsidized Loans
Direct Unsubsidized Loans
Direct PLUS Loans
Direct Consolidation Loans
Subsidized Federal Stafford Loans
Unsubsidized Federal Stafford Loans
FFEL PLUS Loans
FFEL Consolidation Loans

Important to Note: For borrowers with consolidation loans, the term on a Standard Repayment Plan may range from 10-30 years, depending on the loan balance.

Graduated Repayment Plan

Under this plan, a borrower’s monthly payments start out low and increase every 2 years, over a maximum term of 10 years. A borrower’s minimum payment will never be less than the amount of interest that accrues between payments and will not be three times greater than any other payment. Typically, a borrower will pay more for the loan on this plan than on a 10-year Standard Repayment Plan.

The following loans are eligible for the Graduated Repayment Plan:
Direct Subsidized Loans
Direct Unsubsidized Loans
Direct PLUS Loans
Direct Consolidation Loans
Subsidized Federal Stafford Loans
Unsubsidized Federal Stafford Loans
FFEL PLUS Loans
FFEL Consolidation Loans

Important to Note: For borrowers with consolidation loans, the term on a Graduated Repayment Plan may range from 10-30 years, depending on the loan balance.

Extended Repayment Plan

Under this plan, the borrower makes monthly payments for 25 years on either a fixed or graduated repayment plan. Payments on the Extended Repayment Plan are usually lower than those made under the previously mentioned 10-year Standard Repayment Plan. Typically, borrowers will pay more in total interest under this plan than on the Standard Repayment Plan.

A borrower is eligible when the following requirements are met:
For borrowers with Direct loans: The outstanding balance must be more than $30,000 on the Direct Loans. Also, the borrower must be a “new borrower” as of Oct. 7, 1998.
For borrowers with FFEL loans: The outstanding balance must be more than $30,000 on the FFEL Loans. Also, the borrower must be a “new borrower” as of Oct. 7, 1998.
Example: If a borrower has $50,000 in Direct Loans and $28,000 in FFEL loans (all new since October 7, 1998), then the borrower can place the Direct loans in an Extended Repayment Plan. However, the FFEL loans will not qualify for an Extended Repayment Plan.

a. The following loans are eligible for the Extended Repayment Plan:
b. Direct Subsidized Loans
c. Direct Unsubsidized Loans
d. Direct PLUS Loans
e. Direct Consolidation Loans
f. Subsidized Federal Stafford Loans
g. Unsubsidized Federal Stafford Loans
h. FFEL PLUS Loans
i. FFEL Consolidation Loans