List of Federal Repayment Options

 Here is a list of Federal Repayment Options available:

1. Standard payment: Standard payment is the payment schedule every borrower is automatically assigned. (FFEL borrowers have 45 days to switch from this plan after being notified by their lenders to choose a repayment plan.) Standard plans have the highest monthly payments because the terms are between five and ten years, which means you may pay less on your loan overall. Note that your monthly amount due may fluctuate if you have a variable interest rate.

2. Extended payment: If you have total outstanding student loans that exceed $30,000, you may repay your debt on a fixed or graduated payment schedule for up to 25 years (most repayment plans are within the 10 year range). Because you're extending the term of the loan, your monthly payments will be quite a bit lower, but you will pay more in interest over the life of the loan.

3. Graduated payment: Graduated payment is exactly what it sounds like, with payments starting out low and gradually increasing during the repayment period. Graduated plans are helpful for borrowers who are just beginning their careers and are more likely to have higher incomes over time.

4. Income Contingent Repayment: This type of repayment plan is another one that is essentially what it sounds like. Available only to Direct loan holders, payments are calculated according to income and your total amount of debt. The loan term is up to 25 years and is regularly adjusted according to any changes in income. Payments increase as income increases, but your required payment can be no greater than 20% of any earnings above the poverty level. When the 25 year term is over, if there is a balance remaining, it will be discharged.

5. Income Sensitive Repayment: Under an income sensitive repayment plan, borrowers with FFELP loans are allowed to make payments calculated according to gross monthly income. The loan term is 10 years long.

6. Income Based Repayment: Income based repayment is a more generous option than the two prior income-based repayment plans, but will not go into effect until July 1, 2009. Unlike income-contingent repayment and income-sensitive repayment, it is available in both the Direct Loan and FFELP programs. The payments operate much like the above income based repayment plans, but the payments are calculated based on a lower percentage of your income.

7. Perkins loan payment: Perkins loans function differently than other federal loans. The government establishes a consistent minimum payment per month, which is currently $30 for an NDSL loan or a Perkins Loan made before October 1, 1992 and $40 after that date.

SOURCE: www.mahalo.com