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Affordable Payments

Once you graduate and your federal student loan repayment obligations begin, unless you specifically choose a different repayment plan, the Department of Education automatically enrolls all borrowers in the Standard repayment plan.

Under the Standard repayment plan, the entire balance of the loan is due in equal monthly installments over a 10-year repayment period1. This plan certainly has the advantage of being paid off the quickest, but if you are like many students, you may not be able to afford those payments.

There are, however, several other repayment plan options with lower payments. Many of these repayment options base your payment on your income and family size and have terms that extend for up to 25 years. These repayment plans are called Income Driven repayment plans and range from 10-20% of your discretionary income 2. Moreover, at the end of your loan, if you still have a remaining balance, it is forgiven3.

In other words, instead of having to make payments based on the balance of your loan – which you may not be able to afford – you can simply request to be placed on a different repayment plan and have your payments recalculated based on your income and family size. Payments can literally be $0 and significant portions of your loans may be forgiven.

Income Driven repayment plans have proven to be very helpful to many borrowers. In fact, the Consumer Financial Protection Bureau found that even in borrowers who had previously defaulted on their student loans, once they were placed on such plans, more than 90% of such borrowers were able to stay out of default4.

Sadly, most borrowers are unaware of these options or how to take advantage of them. We’re here to change that.