Whether you’re a recent graduate with grace periods about to end, or a new student or parent of a new student just taking out your first student loan, you may have questions about repayment—what your options are, how long you have to repay, what happens if you have trouble making your payments.
To help answer your questions and make sure you know about all the repayment plans and alternatives available to you on your federal student loans, NextStudent, a leading Phoenix-based education funding company, offers this quick guide to repayment terms and options for federal student loans.
Repayment Plan Options
If you’re having trouble making your monthly student loan payment under the standard repayment plan, you may be able to lower your monthly payment by choosing an alternate repayment plan. Talk to your lender or servicer about these repayment options:
* Standard Repayment: the typical repayment period for a federal student loan. For a fixed-rate student loan in a standard repayment plan, the monthly payment amount will remain the same throughout the repayment period.
* Extended Repayment: a repayment plan that allows certain borrowers to extend the standard repayment period—up to a 25-year repayment term—in order to lower their monthly payment. Extended repayment is available to borrowers who received their first federal student loan on or after October 7, 1998, and who have outstanding federal student loans totaling more than $30,000.
* Income-Sensitive Repayment: a repayment plan that bases the monthly payment amount on a borrower’s monthly income. The monthly payment must be at least enough to cover the monthly interest. You’ll need to submit income documentation to qualify for this repayment plan, and you need to requalify each year.
* Graduated Repayment: a repayment plan that allows borrowers to start with a lower monthly payment and then gradually increases the monthly payment amount over the repayment term. The payment amount generally increases every two years and must be at least enough to cover the monthly interest.
Postponing Payments
In addition to alternate repayment plans that may lower your monthly payment, you also have options for temporarily postponing your payments altogether without affecting your credit rating. If your student loan is in one of the three following statuses, you’re not required to make any payments (although you can choose to make interest payments during any of these postponement periods in order to avoid having any accrued interest added to your principal loan balance):
* Grace Period: the period of time after a borrower has left school (or dropped below half-time enrollment) and before repayment begins, during which no payments are due. For subsidized student loans, any interest that accrues during a grace period is paid by the government; for unsubsidized student loans, any unpaid interest that accrues will be added to the principal loan balance for the borrower to repay once the repayment period begins.
* Deferment: during repayment, a period of time during which no payments are due. For subsidized student loans, any interest that accrues during a deferment period is paid by the government; for unsubsidized student loans, any unpaid interest that accrues will be added to the principal loan balance for the borrower to repay once repayment resumes.
* Borrowers can request an in-school deferment if they’re enrolled at least half-time. They’ll need to provide proof of enrollment each semester.
* Borrowers may also request a deferment in cases of unemployment or financial hardship, for up to a year at a time, up to a total of three years over the life of the student loan.
* Forbearance: during repayment, a period of time during which no payments are due. For both subsidized and unsubsidized student loans, any unpaid interest that accrues will be added to the principal loan balance for the borrower to repay once repayment resumes.
* Borrowers who meet certain criteria may request a forbearance for up to a year at a time.
Repayment Terms for Federal Student Loans
Stafford Loans for Undergraduate and Graduate Students: The standard repayment term for a Stafford loan, either subsidized or unsubsidized, is 10 years. After you graduate, leave school, or drop below half-time enrollment, you’ll have a six-month grace period before you need to begin repaying your Stafford loan. For subsidized Stafford loans, you won’t be charged any interest during your grace period. For unsubsidized Stafford loans, any unpaid interest that accrues will be added to your principal loan amount for you to repay once your repayment period begins.
PLUS Loans for Parents: The standard repayment term for a PLUS loan is 10 years. There is no grace period on a PLUS loan. Repayment will begin 30–60 days after the final disbursement.
Grad PLUS Loans for Graduate Students: The standard repayment term for a Grad PLUS loan is 10 years. There is no grace period on a Grad PLUS loan. Repayment will being 30–60 days after final disbursement. However, you can postpone making any payments until you’ve left school or dropped below half-time enrollment. Any unpaid interest that accrues during this postponement period will be added to the principal of your student loan for you to repay once repayment starts.
Federal Student Loan Consolidation: The repayment term for a student loan consolidation loan depends on the total outstanding amount of your student loans.
Education Debt
Repayment Term
$10,500 – $19,999
15 years
$20,000 – $39,999
20 years
$40,000 – $59,999
25 years
$60,000 +
30 years
There is no grace period on a Federal Student Loan Consolidation.
If your student loan consolidation is in deferment, the government will pay the interest on that portion of your consolidation loan that was originally a Perkins loan or subsidized Stafford loan. You’ll only be responsible for paying the interest on that portion of a consolidation loan that was originally a PLUS, Grad PLUS or unsubsidized Stafford loan.
If your student loan consolidation is in forbearance, you’ll be responsible for paying all interest that accrues.
Whether you have just one or multiple federal student loans, a Federal Student Loan Consolidation might give you more time to repay and could substantially lower your monthly student loan payment. If you have multiple federal student loans, a student loan consolidation allows you to combine them into one easy-to-manage loan with a single monthly payment.
NextStudent believes that getting an education is the best investment you can make, and we’re dedicated to helping you pursue your education dreams by making college funding simple. Learn more about Student Loans, Private Student Loans and Student Loan Consolidation.
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