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One of the benefits of a Stafford loan (including PLUS loans) is the variety of repayment options available. Most Stafford loan payments are set up on a standard repayment plan with monthly payments that remain the same throughout the repayment period. However, other plans are available that may make your payments more manageable. Keep in mind you must contact your lender/holder in order to change your repayment schedule.
Prepayment
- You can prepay all or part of your loan at any time, without penalty
- Prepayment may substantially decrease your total interest costs
Standard Repayment
- Fixed schedule of equal monthly payments
- Maximum 10-year repayment period
Graduated Repayment
- Monthly schedule that starts with small payments that increase gradually over time
- Maximum 10-year repayment
- You will pay higher total interest than if you had chosen the standard repayment plan
Income-Sensitive Repayment
- Monthly schedule that assigns fixed payments for one year at a time. Scheduled payments may increase or decrease each year as your income changes
- Maximum 10-year repayment period (can be extended up to five more years)
- Substantially increases your total debt. Try to return to a standard repayment plan as soon as possible
Extended Repayment
- Available if your first loan was issued on or after October 7, 1998, and if you total debt exceeds $30,000
- Fixed annual or graduated repayment schedule
- Maximum 25-year repayment period
- Substantially increases your total debt. Try to return to a standard repayment plan as soon as possible
If you borrow through the Federal Direct Loan Program, your repayment options may be different. Also, you’ll be working with the college rather than a lending institution.
Repayment Option Comparison Chart
This chart compares the monthly payments and the estimated interest expenses of the standard and graduated repayment plans, using identical, 10-year terms and an 8.5 percent interest rate.
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Standard Repayment Option |
|
Amount Borrowed |
Monthly Payment for 10 Years |
Total Amount Repaid |
|
$10,000 |
$124 |
$14,879 |
|
$15,000 |
$186 |
$22,318 |
|
$20,000 |
$248 |
$29,756 |
| Graduated Repayment Option |
|
Amount Borrowed |
Monthly Payment for 10 Years |
Total Amount Repaid |
|
$10,000 |
1st stage: $75 for 2 years
2nd stage: $97 for 2 years
3rd stage: $126 for 2 years
4th stage: $164 for 2 years
5th stage: $214 for 2 years |
$16,242 |
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$15,000 |
1st stage: $112 for 2 years
2nd stage: $146 for 2 years
3rd stage: $190 for 2 years
4th stage: $247 for 2 years
5th stage: $321 for 2 years |
$24,363 |
|
$20,000 |
1st stage: $150 for 2 years
2nd stage: $195 for 2 years
3rd stage: $253 for 2 years
4th stage: $329 for 2 years
5th stage: $427 for 2 years |
$32,485 |
Important Note on Repayment Incentives:
Keep in mind, many lenders offer repayment incentives to those who pay their bills on time or pay via electronic payment methods, such as direct withdrawal. Such incentives may include interest rate reductions or cash back. Check with your lender to see if these options are available to you.
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