Loan Repayment

How do I pay back my Stafford Loans?

You’ll repay your FFEL Stafford Loan to a private lender or loan servicer. You’ll repay your Direct Loan to the U.S. Department of Education’s Direct Loan Servicing Center. Direct Loan borrowers can view and pay their bills online through the Servicing Center Web site: www.dl.ed.gov.

Both the Direct Loan and FFEL programs offer four repayment plans you can choose from, but the terms differ slightly. Your school will provide more detailed information on your repayment options during entrance and exit counseling sessions.

If you don’t choose a repayment plan when you first begin repayment, you’ll be placed under the Standard Repayment Plan. You can change plans throughout the life of your loan, as long as the maximum repayment period under your new plan is longer than the length of time your loans have already been in repayment. Under the FFEL Program, you can change plans once a year. Under the Direct Loan Program, you can change plans any time.

In some cases, it might be beneficial for you to combine one or more of your loans into a Consolidation Loan.

Direct Loans - The Direct Loan Program offers the following repayment plans:

• The Standard Repayment Plan requires you to pay a fixed amount each month—at least $50—for up to 10 years. The length of your repayment period will depend on your loan amount.
• The Extended Repayment Plan allows you to repay your loan over a period that is generally 12 to 30 years, depending on your loan amount. Your monthly payment might be lower than it would be if you repaid the same total loan amount under the Standard Repayment Plan, but you’ll repay a higher total amount of interest over the life of your loan because the repayment period is longer. The minimum monthly payment is $50.
• Under the Graduated Repayment Plan, your payments will be lower at first and then increase, usually every two years. The length of your repayment period will generally range from 12 to 30 years, depending on your loan amount. Your initial monthly payments will be equal to either the interest that accumulates on your loan between payments or half the payment you’d make each month using the Standard Repayment Plan, whichever is greater. However, your monthly payments will never increase to more than 1.5 times what you’d pay under the Standard Repayment Plan. You’ll repay a higher total amount of interest, though, because the repayment period is longer than it is under the Standard Repayment Plan.
• The Income Contingent Repayment Plan bases your monthly payment on your yearly income, family size, interest rate, and loan amount. As your income rises or falls, so do your payments. After 25 years, any remaining balance on the loan will be forgiven, but you’ll have to pay taxes on the amount forgiven.
• Loan payments are made to the U.S. Department of Education. For more information on repayment options, you can access the Direct Loans Repayment Book on the Internet at:
  www.ed.gov/offices/OSFAP/DirectLoan/index.html.