Borrowers may choose one of the following four repayment plans, for either the Federal Direct Subsidized or Unsubsidized Stafford Loan:
- Standard Repayment Plan: The borrower pays a fixed
amount each month ($50 minimum) for up to 10 years.
- Extended Repayment Plan: Borrowers can extend loan
repayment
up to a maximum of 25 years. However, this option is available only to those who were new Direct Loan borrowers on or after 10/7/98, and have an outstanding Direct Loan balance greater than $30,000. The required monthly payment is calculated based on the borrowers Direct Loan debt and the interest rates of the borrower's loans, but the monthly payment due will never be less than the amount of interest that accrues each month.
- Graduated Repayment Plan: The borrower makes
monthly payments that start out low and increase every two years, until the loan is paid in full. The maximum repayment term is 10 years.
- Income Contingent Repayment Plan: The monthly payment is based on the borrower’s loan amount, family size, and yearly income (including spouse’s income, if married). As the borrower’s income rises or falls, so does the payment amount. The maximum repayment term is 25 years.
More information on repayment plans and calculations to determine monthly payments based on your total Direct Loan debt is available at Federal Student Aid Direct Loans. Select the Interactive Calculator option.
Making a monthly budget can help you see what you can afford. A budget could
show you that you can afford larger monthly loan payments than you thought, or
that you need to cut back on nonessential spending so you can meet your loan
obligations. Remember that you don’t necessarily want to choose a plan just because
it has the lowest monthly payments. That may seem tempting, but it may not be
the best course of action for every borrower.
You may find the Direct Loan Servicing Center’s Budget
Calculator helpful.
The Direct Loan Servicing Center can also help you choose a repayment plan. Once you’ve considered your options, call them if you need advice.
If you ever decide that the plan you’ve selected no longer meets your needs, you can switch plans. The maximum repayment period for your new plan must be longer than the amount of time your loans have already been in repayment.
Call or write the Direct Loan Servicing Center if you decide you want to switch plans.
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