The Standard Repayment Plan offers a fixed payment amount each month until your loans are paid in full. Monthly payments are a minimum of $50, with a maximum term of 30 years to repay your loans with a fixed interest rate. The standard plan does not account for your personal finances.
The Graduated plan offers monthly payments that start out low and will increase every 2 years. This is a good plan for individuals who expect their income to increase steadily over time. The maximum term is 30 years to repay this loan. Monthly payments are never less than the amount of interest that accrues between payments.
The Income Based Repayment (IBR) plan is a plan offered by the Department of Education that can help borrowers who cannot afford their monthly payment. This plan caps your maximum payment to 10% of your income after taxes and other mandatory expenditures.
The PAYE Plan is a financial hardship program. PAYE caps monthly payments for Federal Direct Student Loans at 10% of discretionary income to make them affordable based on annual income as well as state of residency. Payments are recalculated once a year.If filing a tax return as Married Filing Jointly, your spouse’s income will be include in the calculation to determine your monthly payment. The maximum term for this plan is 20 years.
The Income Contingent Repayment (ICR) plan is designed to make repaying education loans easier for students who intend on pursuing jobs with lower salaries, such as careers in public service. It does this by pegging the monthly payments to the borrower’s income, family size, and total amount borrowed.