Repaying federal student loans

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Ask a Lender
February 6, 2017 | Updated September 25, 2017


Key Points

Paying off your student loans takes time

  • Depending on how much you owe, you may pay on your student loan for up to 30 years.
  • Some repayment plans take into account your income level and debt load to lower payments.
  • The longer you take to pay off your student loan, the more you pay over the life of the loan.
  • Refinancing through a private lender helps lower payments or pay off your loans faster.

The length of time it takes to pay off government student loans  varies depending on how much student loan debt you accrued during college and what payment plan you choose. The standard repayment plan for loans administered through the U.S. Department of Education offers fixed payments for up to 10 years after an initial six-month grace period.

PLUS loans taken out by graduate or professional students use the same repayment plans as Direct Federal Student Aid loans, but have no grace period. Repayment begins as soon as the last disbursement is made. Perkins loans are administered through participating colleges and universities, and those plans can differ from school to school.

The grace period on Direct and Stafford loans lasts for six months after you graduate or leave school. This grace period resets if you return to school as at least a half-time student or if you are called to active military duty for more than 30 days before your grace period ends. In those cases, the full six-month grace period will be renewed once an individual stops attending school or when the person returns from active military duty.

Direct, Stafford, and PLUS loans made to students offer a number of different repayment plans, most of which extend the amount of time you have to pay back the loan, allowing you to make smaller payments. You can switch your payment plan at any time by contacting the servicer of your loan, although some plans can only be used if you can show a financial hardship, such as a high debt relative to income. Your options include:

Standard plan

The monthly payments are fixed and you can take up to 10 years to repay the loan. You pay less over time with this plan than with other repayment plans.

Graduated plan

Payments begin low, but increase over time. The payment period lasts up to 10 years.

Extended plan

Make fixed or graduated payments that increase over time for up to 25 years. This plan is only available to students with large student loan debts.

Pay-as-you-earn plans

Monthly payments are 10 percent of your discretionary income. You may need to have a high debt-to-income ratio to qualify. The repayment period lasts up to 20 or 25 years. Unpaid debt at the end of the loan term is forgiven, but the forgiven amount may be subject to income tax.

Income-Based Plan

Payments are 10 or 15 percent of your discretionary income. You must have a high debt-to-income ratio to qualify. Pay for up to 20 or 25 years. Unpaid debt at the end of the loan term is forgiven, but the forgiven amount may be subject to income tax.

Income Contingent Plan

Payments are either 20 percent of your discretionary income or based on a 12-year, fixed-payment plan. Pay for up to 25 years. Unpaid debt at the end of the loan term is forgiven, but forgiven amount may be subject to income tax.

Income Sensitive Plan

Payments are based on annual income, and the payment period lasts for up to 15 years.

Most of these plans are available even if you have consolidated several federal student loans together, although the time to repay for the standard plan and the graduated plan can go up to 30 years for consolidation loans. Speak with the servicer of your loan or read the plan overviews on the Department of Education's Federal Student Aid website to learn more about your options. The Federal Student Aid office also offers a repayment estimator that can help you choose which repayment plan works best for you.

Remember, you can change repayment plans any time you want, as long as you qualify for the new plan. In addition, you may want to compare private lenders to see if you can refinance your government student loans to secure better terms or lower interest rates. Refinancing can help you lower your monthly payments or even pay off your student loans faster.

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