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Student Loan Repayment Options

As you prepare to graduate from college or career school,

it’s important to figure out your loan repayment strategy.

It might seem intimidating, but don’t worry.

This overview will help you understand the basics.

Here’s what you should consider.

Consider whether it’s a good idea to consolidate your student loans.

Consolidation combines your loans into one,

so you’ll have just one monthly payment.

And it may lower your overall payment amount each month.

But there can be downsides.

For example, consolidation could increase the total amount of money you pay.

Now, on to repayment plans. Which one should you choose?

Well, it depends on your goals.

With a standard repayment plan, you pay a fixed amount each month.

This plan is designed to ensure you’ll pay off your loan

within 10 years and minimize the interest you pay.

With a graduated repayment plan, you start with a lower monthly

payment, then the payment amount gradually increases every two years.

This plan also ensures you’ll pay off your loan within 10 years, but you’ll pay

more interest than you would under the standard plan.

Then there are income-driven repayment plans.

These plans base your monthly payments on your income level,

so they can go up or down as your income changes.

There’s the Revised Pay As You Earn Plan, also known as REPAYE.

The Pay As You Earn Plan, known as PAYE.

And the Income-Contingent Repayment Plan, or IBR.

And the Income-Contingent Repayment Plan, or ICR.

If you’re in one of these plans, you have to recertify to confirm your income every

year, but it’s easy.

You just confirm or update your income and family size information so your loan

servicer can recalculate your payment.

These plans aren’t designed to be sure that your loan is paid off within

a specific time frame,

but if you don’t within 20 or 25 years, the remaining balance is forgiven.

All of these repayment plans have advantages and disadvantages,

so visit StudentAid.gov/repay for details.

Need help figuring out which repayment plan is right for you?

Use our repayment estimator.

It will help you estimate your payments under each plan.

It’s a tool that gives you a good estimate of how much

your payments would be under each plan.

You can find the repayment estimator at StudentAid.gov/repayment-estimator.

Just fill in a few details, and it does the math for you.

Finally, you need to know how to make monthly loan payments.

You send loan payments to a loan servicer.

They handle the billing and other services on your loan

on behalf of the U.S. Department of Education.

Your loan servicer will provide instructions on how to make a payment.

If you have any questions, make sure to follow up with your servicer.

Not sure who your loan servicer is?

You can look them up and see your federal student aid history.

And here’s a little payment tip:

Once you know where to send your monthly payment, it’s smart to enroll

in automatic debit, or auto-debit, with your loan servicer.

With auto-debit, your payment gets taken from your bank account

automatically each month.

This way, you’ll know your payments will be made on time.

Plus, if you enroll, you get a .25% interest rate deduction on your loan.

And there you have it. If you follow these steps, you’ll be well on your way

to successful—and less stressful—repayment.

As always, if you have questions or need help, Federal Student Aid is here to help.