|
Once you're done with law school, you'll have a six month grace period before your federal student loans go into repayment. There are multiple repayment plan options for federal loans, and your monthly payment will depend on which plan you choose. This email provides a quick overview of the current plans available and how you can estimate what your monthly payments might be in a few years.
Overview of Federal Student Loan Repayment Plans
As you can see from the table below, borrowers have many choices when it comes to repaying their federal student loans—it's one of the biggest benefits of borrowing a federal student loan instead of a private student loan from a bank or credit union. Borrowers who don't select (or apply for) a specific repayment plan are automatically enrolled in Standard Repayment. However, you can change repayment plans at any time.
| Repayment Plan |
Payment and Time Frame |
Other Information |
| Standard Repayment |
|
|
| Graduated Repayment |
- Payment increases every 2 years
- 10 years
|
|
| Extended Repayment |
- Fixed or graduated payments
- 25 years
|
- Debt 30k or more
- Lower monthly payment
|
| Revised Pay As You Earn (REPAYE) |
- 10% discretionary income
- 20-25 years
|
- Includes both spouses' income to calculate payment
- Available with PSLF
- Taxed even with PSLF
|
| Pay As You Earn (PAYE) |
- 10% discretionary income
- 20 years
|
- New borrower after 10/1/2007
- Available with PSLF
- May include both spouses' income to calculate payment
- Not taxed with PSLF
|
| Income-Based Repayment (IBR) |
- 15% discretionary income
- 20-25 years
|
- May include both spouses' income to calculate payment
- Available with PSLF
- Not taxed with PSLF
|
| Income-Contingent Repayment (ICR) |
- 20% discretionary income
- 25 years
|
- Repay Direct loans jointly with spouse
- May include both spouses' income to calculate payment
- Available with PSLF
- Not taxed with PSLF
|
Want more details about these plans? Visit the Federal Student Aid website.
Income Driven Repayment Plans
The last four plans listed above are income-driven repayment plans. This means the amount you pay each month is intended to be affordable based on your income and family size. As you can see from the table, your payment amount is generally based on a percentage of your discretionary income. Under all four plans, any remaining loan balance is forgiven if your loans aren't fully repaid at the end of the repayment period.
Public Service Loan Forgiveness
The Public Service Loan Forgiveness Program (PSLF) forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments (typically 10 years) while working full-time for a government or not-for-profit organization. Many students who may qualify for PSLF are enrolled in an income-driven repayment plan. Learn more about this program at StudentAid.ed.gov.
DU Loan Repayment Assistant Program
Did you know DU also offers a loan repayment assistant program for alumni who work in the public interest? Learn more about this program on their website.
Estimating Your Monthly Payments
So now that you have a general overview of repayment plan options, what will monthly payments actually look like? In the table below are sample payment amounts under the five most common repayment plans. These amounts are based on a total student loan debt of $150,000, a 6% interest rate, a starting income of $70,000 and a family size of one.
| Repayment Plan |
Initial Payment |
Final Payment |
Time in Repayment |
Total Paid |
Amt. Forgiven |
| Standard Repayment |
$1,665
|
$1,665
|
10 years
|
$199,837
|
N/A
|
| Graduated Repayment |
$952
|
$2,857
|
10 years
|
$213,180
|
N/A
|
Extended Repayment
(Fixed) |
$966
|
$966
|
25 years
|
$289,936
|
N/A
|
| Pay As You Earn (PAYE) |
$433
|
$1,238 |
20 years
|
$185,794
|
$144,046
|
| Income Based Repayment (IBR) |
$649
|
$1,665
|
20 years, 11 months
|
$293,223
|
$0
|
Actual payment amounts depend on multiple factors, including your total loan debt, interest rate, income, family size, and how quickly your income rises. Want to see what payments might look like with different debt and/or income levels? Use the Federal Student Aid repayment estimator. (Note: You don't actually have to log in to use this estimator. Just click the "view or add your loans" button and you can add any type and amount of loan you want.)
That's it for this week! Up next week: Understanding the Disbursement and Refund Process
Want to review past or future emails? Check out the archives!
|
