Federal Student Loan Repayment

Most college students today have significant loan debt when they graduate. For federal student loans, the government offers several flexible repayment plans that can make it easier to pay back the debt:

  • A graduated repayment plan begins with smaller payments after graduation and builds up to larger payments after several years.
  • An income-contingent repayment plan sets the payment amounts based on a fixed percentage of your postgraduate income.
  • An extended repayment plan lowers the monthly payments by stretching out the loan payment schedule from 10 to 15 or even 20 years.

Consolidation and Direct Loans

Under the Student Loan Reform Act of 1993, you may have the option to consolidate your existing student loans into a single direct loan from the government. This plan offers you a more flexible repayment schedule with the same interest rate.

If your original lender refuses to give you an "income-sensitive" repayment option (a plan that adjusts the monthly payments for the loan's capital, but not the interest, to your annual income), you may be eligible for a direct government loan.

With a direct government loan, the monthly payments are contingent upon your income and withdrawn from your wages. As your wages increase, the percentage withdrawn from your pay will also rise, allowing you to pay off your loan more quickly.

For more information about federal student financial aid programs, contact the Federal Student Aid Information Center at 1-800-433-3243.

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