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Paying for College

Word of the Day Wednesday: Repayment Options

Each Wednesday, MEFA features a Word of the Day, where we highlight a word (or sometimes a phrase) related to the college planning process. This month, we’re focusing on vocabulary related to Federal Direct Student Loans.

Today’s Word of the Day is: Repayment Options

Any type of borrowing is a serious financial undertaking, and it is important that Federal Direct Student Loan borrowers understand not only their loan interest rate and primary borrower, but also the options available for loan repayment. A loan’s repayment plan dictates when repayment begins, how much a borrower will need to repay each month, and the length of repayment. Federal Direct Student Loans have several repayment options.

When a student begins repayment of a Federal Direct Student Loan, he or she is generally put on a 10-year standard repayment schedule, beginning 6 months after the student graduates or drops below part-time enrollment. However, there are many other options for students to adjust their loan repayment. These options allow students to extend their repayment period, thus reducing their monthly repayment amount and allowing them to more effectively manage their loan repayment and overall budget.

Repayment options for Federal Direct Student Loans include:

  • Graduated Repayment Plan

  • Extended Repayment Plan

  • Income-Based Repayment Plan (IBR)

  • Pay As You Earn Repayment Plan (PAYE)

  • Income-Contingent Repayment Plan

  • Income-Sensitive Repayment Plan


All of the various repayment options are explained in full detail on the Federal Student Aid site here.

Why does this matter to you? 

Being a wise borrower means understanding all of the important details of student loans, including repayment options. A decision on which option to choose does not need to be made at the outset of borrowing, but rather is made prior to the student entering repayment. A repayment option can also be changed at any time depending on the life circumstances of the student. Loan servicers can help students set up the repayment plan that’s right for them.

For more information about Federal Direct Student Loan repayment options, visit the Federal Student Aid site here.





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