Loan tips & repayment options

Whether you have just graduated, are taking a break from school, or have already started repaying your student loans, these tips can help you keep your student loan debt under control.

This means avoiding fees and extra interest costs, keeping your payments affordable, and protecting your credit rating. If you're having trouble finding a job or keeping up with your payments, there's important information here for you, too.

Student loan tips for recent graduates

Know your loans

It's important to keep track of the lender, balance, and repayment status for each of your student loans.

Know your grace period

A grace period is how long you can wait after leaving school before you have to make your first payment. For Federal Direct loans the grace period is six months.

Stay in touch with your lender

Whenever you move or change your phone number or email address, tell your lender right away. If your lender needs to contact you and this information isn't current, it can end up costing you a bundle. Open and read every piece of mail – paper or electronic – you receive about your student loans.

Pick the right repayment option

When your federal loans come due, your loan payments will automatically be based on a standard 10-year repayment plan. If the standard payment is going to be hard for you to cover, there are other options, and you can change plans down the line if necessary. You may want to look into an income-based repayment plan which is capped out at a reasonable percentage of your income each year.

Prepay if you can

If you can afford to pay more than your required monthly payment – every time or now and then – you can lower the amount of interest you will pay over the life of the loan.

Don't panic

If you're having trouble making payments because of unemployment, health problems or other unexpected financial challenges, remember that you have options for managing your federal student loans. There are legitimate ways to temporarily postpone your federal loan payments, such as deferments and forbearance.

Determine what your monthly loan payments may be

Use the online repayment calculator provided by the U.S. Department of Education.

Learn about your loan repayment process and options

Another useful tool is Repaying Student Loans Quick Reference Guide PDF, which includes the student loan interest deduction, consolidation loans, repayment plans, income-based repayment, public service loan forgiveness, dealing with financial difficulty, default, deferments and forbearances, loan rehabilitation, budgeting tips and loan cancellation.

Repayment options

Here is a brief overview of the repayment options offered by the federal government when it is time to repay your student loan.

Standard repayment plan

Payments are a fixed amount of at least $50 per month for up to 10 years.

Graduated repayment plan

Payments are lower at first, but gradually increase every two years for up to 10 years.

Extended repayment plan

Payments may be fixed or graduated, but the term can be extended for up to 25 years. Direct loan borrowers must have more than $30,000 in loan debt.

Income-based repayment plan

Your monthly payments will be 15 percent of your discretionary income, which is the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence. The term can be up to 25 years and payments will change as your income changes. If you have not repaid your loan in full after making the equivalent of 25 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven. You may have to pay income tax on any loan amount that is forgiven.

Pay as you earn repayment plan

Your maximum monthly payments will be 10 percent of discretionary income, which is the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence. The term can be up to 20 years and your payments will change as your income changes. If you have not repaid your loan in full after you made the equivalent of 20 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven. You may have to pay income tax on any loan amount that is forgiven.

Income-contingent repayment plan

Payments are calculated each year and are based on your adjusted gross income, family size, and the total amount of your direct loans. Your payments will change as your income changes and the term can be up to 25 years. If you do not repay your loan after making the equivalent of 25 years of qualifying monthly payments, the unpaid portion will be forgiven. You may have to pay income tax on the loan amount that is forgiven.

Income-sensitive repayment plan

Your monthly payment is based on your annual income. The term can be up to 10 years and your payments will change as your income changes. Each lender has a different formula for determining the monthly payment under this plan.

For an overview of all plans with more detailed information, visit Repayment Plans Federal Student Aid.