Standard Repayment Plan. Payments are a fixed amount of at least $50 per month for up to 10 years. The pro of this plan is that you’ll pay less interest over the long haul than you would with other plans.
Graduated Repayment Plan. Payments are lower at first and then increase every two years or so. You have ten years to pay off your loan with a graduated payment plan. This plan assumes that you’ll be making less money at the start of your career, so the payments are less. For the first few years, you’re just paying the monthly interest on your loan. While the smaller payments at the beginning of the payment term can help with the monthly budget, with this plan you will end up paying more in interest than you would with the standard plan.
Extended Repayment Plan. This is a payment plan for folks with over $30,000 in direct and FFEL loans. Instead of having ten years to pay back your loans, you have 25 years. The payments with the extended payment plan are smaller, but you’ll pay more in interest over time than you would with the 10-year standard plan.
Income-Based Repayment Plan. If you have a partial financial hardship, an income-based repayment plan is for you. Your maximum monthly payments will be 15% of your discretionary income, which is defined as the difference between your adjusted gross income and 150% of the poverty guideline for your family size. You’ll have 25 years to pay off the loan on this plan. If you’ve made qualifying monthly payments during the entire 25 years, but still don’t have your loans paid off, then the remainder of the debt will be forgiven. Keep in mind that you may have to pay income tax on the amount that was forgiven.