FedLoan Repayment Plans: A Comprehensive Guide
If you've taken out a student loan, then you're probably familiar with FedLoan Servicing. FedLoan Servicing is one of the country's largest student loan servicers, managing roughly 8 million student loans for borrowers across the nation. For those who have taken out federal direct student loans, you'll automatically be assigned to FedLoan Servicing once your loan is disbursed.
One of the most important aspects of student loans is how you'll be repaying them. Fortunately, FedLoan Servicing offers repayment plans that are tailored to fit the unique needs and financial situations of individual borrowers. Here is a comprehensive guide to the different FedLoan repayment plans available:
Standard Repayment Plan
The Standard Repayment Plan is the default repayment plan for federal student loans. This plan is designed to pay off your loan in equal monthly payments over 10 years. Under this plan, you'll make the same monthly payment until your loan has been paid off entirely. The benefit to this plan is that it keeps your loan payments consistent, allowing you to budget your monthly expenses accordingly.
Extended Repayment Plan
If you're unable to afford the monthly payments on the Standard Repayment Plan, you may want to consider the Extended Repayment Plan. This plan extends your repayment term to up to 25 years, which in turn reduces your monthly payments. However, be prepared to pay more in interest over the life of your loan as a result of the extended repayment term.
Graduated Repayment Plan
The Graduated Repayment Plan is designed for individuals who expect their income to increase over time. Under this plan, your initial monthly payments will be lower and will gradually increase over time. The repayment term can last up to 10 years, and payments will never be less than the total amount of accrued interest.
Income-Based Repayment Plan
The Income-Based Repayment Plan (IBR) is designed for individuals who are experiencing financial hardship. Your monthly payments under this plan are determined by your income and family size, ensuring that you only pay what you can afford each month. You'll need to reapply for this plan each year, and your monthly payments may change accordingly.
Pay As You Earn Repayment Plan
The Pay As You Earn Repayment Plan (PAYE) is a variation of the Income-Based Repayment plan that is specifically designed for individuals with high student debt burdens relative to their income. Under this plan, your monthly payments are capped at 10% of your discretionary income and are recalculated annually based on changes in your income and family size. Any remaining loan balance will be forgiven after 20 years of qualifying payments.
Revised Pay As You Earn Repayment Plan
The Revised Pay As You Earn Repayment Plan (REPAYE) is a variation of the PAYE plan, but is available to all federal student loan borrowers regardless of when they took out their loans. Under this plan, your monthly payments are capped at 10% of your discretionary income and are recalculated annually based on changes in your income and family size. Any remaining loan balance will be forgiven after 20 or 25 years of qualifying payments, depending on whether your loans were for undergraduate or graduate studies.
In conclusion, FedLoan Servicing offers several repayment plans that can help make repaying your student loan more manageable. Before choosing a plan, it's important to fully understand the pros and cons of each one, and to choose the plan that best fits your unique financial situation. And remember, if your financial circumstances change, you can always switch to a different plan that better suits your needs.
fedloan repayment plans