How do I pay back my Stafford Loans?
You’ll repay your FFEL Stafford Loan to a private lender or loan servicer. You’ll repay your Direct Loan to us at our Direct Loan Servicing Center. Direct Loan borrowers can view and pay their bills online, using their PIN, through the Servicing Center Web site: www.dl.ed.gov.

Both the Direct Loan and FFEL programs offer four repayment plans you can choose from, but the terms differ slightly. You’ll receive more detailed information on your repayment options during entrance and exit counseling sessions. This chart shows estimated monthly payments for various loan amounts under each plan.

If you don’t choose a repayment plan when you first begin repayment, you’ll be placed under the Standard Repayment Plan. You can change plans to suit your financial circumstances. Under the FFEL Program, you can change plans once a year. Under the Direct Loan Program, you can change plans anytime.

In some cases, it might be beneficial for you to combine one or more loans into a consolidation loan. Click here for more information on loan consolidation.

Direct Loans—The Direct Loan Program offers the following repayment plans:

* The Standard Repayment Plan: You pay a fixed amount each month—at least $50—for up to 10 years, not including deferment and forbearance periods. The length of your repayment period depends on your loan amount.

* The Extended Repayment Plan: You repay your loan over a period that is generally 12 to 30 years, depending on your loan amount. Your monthly payment might be lower than under the Standard Repayment Plan, but you’ll repay a higher total amount of interest over the life of your loan because the repayment period is longer. The minimum monthly payment is $50.

* The Graduated Repayment Plan: Your payments will be lower at first and then increase, usually every two years. The length of your repayment period will generally range from 12 to 30 years, depending on your loan amount. Your monthly payments will never increase to more than 1.5 times what you’d pay under the Standard Repayment Plan. You’ll repay a higher total amount of interest, though, because the repayment period is longer than under the Standard Repayment Plan.

* The Income Contingent Repayment Plan: Your monthly payment is based on your yearly income, family size, interest rate, and loan amount. As your income rises or falls, so do your payments. After 25 years, any remaining balance on the loan will be forgiven, but you’ll have to pay taxes on the amount forgiven.

FFEL Program—Under the FFEL Program, aspects of these repayment plans will vary by lender because individual lenders can tailor the plans. Check with your lender for complete information.

The FFEL Program also offers Standard and Graduated Repayment plans. In addition, these plans are available:

* The Income Sensitive Repayment Plan: Your monthly payment is based on your yearly income and your loan amount. As your income rises or falls, so do your payments. Each payment must at least equal the interest accrued (accumulated) on the loan between scheduled payments.

* The Extended Repayment Plan is available only to FFEL borrowers who received the first loan on or after October 7, 1998, and who have FFELs totaling more than $30,000. Under this plan, your payments will be fixed or graduated (lower at first and then increased over time) over a period of up to 25 years.

As is true with Direct Loans, spreading your payments out over time might mean lower monthly payments, but you’ll repay more because you’ll pay more interest.


EXAMPLES OF TYPICAL PAYMENTS FOR DIRECT AND FFEL STAFFORD LOAN REPAYMENT PLANS1
(Monthly Payments and Total Repaid Under Different Repayment Plans)



1Payments are calculated using the maximum interest rate of 8.25 percent for student borrowers. For July 1, 2003 to June 30, 2004, the interest rate for loans in repayment was 3.42 percent. Interest rates are adjusted each year on July 1.
2Equal and fixed monthly payments ($50 minimum).
3Loan amounts below $31,000 apply only to Direct Loans.
4Assumes a 5 percent annual income growth (Census Bureau).
5HOH is Head of Household. Assumes a family size of two.
- posted by Mark Pane @ 8:16 AM