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Repayment

Ready to repay your federal college loans?

Happy New Year, College Seniors!

For many of you, the “new  year” begins the last semester of your time in college. We know you have a lot on your plates right now: career searches, internships, and preparing for graduation. But amid everything, it is worth your time to take a moment to consider the upcoming repayment of your federal student loans that have been in deferment throughout your time in college. Here are some things to understand as your approach this final semester.

Learning about student loan repayment

Prior to graduation, you will attend an exit interview (online or in person) where your total loan balance will be shared with you, along with your rights and responsibilities as a federal student loan borrower. You will also most likely hear from your student loan servicer, the company that manages your student loan repayment, via mail or email. Pay attention to these communications – there will be important information contained in them.

Options for repaying your student loans


Once your graduate, your loan will be automatically placed into the standard loan repayment plan, which begins six months after graduation and lasts for ten years. Your monthly payment will be equal to the amount that will allow you to pay off your loans (with interest) over ten years. Many graduates find that this amount is too much, so it’s important to understand that the federal government offers numerous repayment plan options to lower your monthly payment and manage your repayment obligation. The various options available are outlined below.

  • Graduated Repayment Plan: Your monthly payment amount starts off low and as your earnings increase, the monthly payment amount increases.

  • Extended Repayment Plan: Your monthly payments could extend for up to 25 years and be fixed or graduated.

  • Income-Contingent Repayment Plan (ICR): Your monthly payment amount is based on the lesser of 20% of your monthly discretionary income or the amount for a fixed 12-year repayment plan.

  • Income-Based Repayment Plan (IBR): Your monthly payment amount is based on 10 or 15% of your monthly discretionary income.

  • Pay As You Earn Repayment Plan (PAYE) and Revised Pay As You Earn Repayment Plan (REPAYE): Your monthly payment amount is based on 10% of your monthly discretionary income.

  • Income-Sensitive Repayment Plan: Your monthly payments could extend for up to 15 years. The payment amount is based on your annual income.


Determining which options you are eligible for and which may be right for you can be confusing. For some of these plans, you must show economic need to qualify, and for some, your loans must have been disbursed within a certain time frame. For a full breakdown of all of these options, please visit the Federal Student Aid site here.

Should you not be able to afford any loan payment, certain situations may qualify for federal loan deferment or forbearance, and in some cases, loan forgiveness. Visit the Federal Student Aid site here to learn about deferment and forbearance, and click here to learn more about loan forgiveness.

Finally, these options only exist for federal loans. Any private loans that you may have borrowed to finance your education do not have these same options. If you would like to explore different repayment options for your private loans, contact your private loan servicer. And for a simple tutorial from MEFA on general loan repayment, visit our page here.





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