Generally, there are two different kind of federal student loan repayment, balance-based repayment and income driven repayment.
Balance based repayment plans are based on the borrower’s balance (rather than income). These balance-based plans are fixed and made for up to 10 years.
Federal student loan borrowers have options on which repayment plan to choose. The standard balance-based repayment plan is the default plan that the loan servicer will put the borrower in unless the borrower applies and is approved for a different plan.
The standard balance-based plan is cheaper in the long run for the borrower. While monthly payments may be slightly higher than payments made under other plans, the loan will be paid off in the shortest time thereby accruing the lowest amount of interest over the life of the loan.
If federal student loan payments are high compared to a borrower’s income, the borrower may qualify to repay his or her loans under an “income-driven repayment” plan (often referred to as “IDR”).
An income-driven repayment plan sets the borrowers monthly student loan payment at an affordable amount based on the borrower’s income and family size. The Unites States Department of Education offers four income-driven repayment plans:
- Pay as You Earn Repayment Plan (PAYE Plan)
- Revised Pay as You Earn Repayment Plan (REPAYE Plan)
- Income-Based Repayment Plan (IBR Plan)
- Income-Contingent Repayment Plan (ICR Plan)
Most federal student loans are eligible for at least one income-driven repayment plan. If the borrower’s income is low enough, the payment could be as low as $0 per month.
Under some circumstances, enrollment in an IDR repayment plan may be a prerequisite to federal student loan forgiveness.
What Should You Hope to Get from Working with Us?
Don’t pay more than the law requires!
Generally, there is no one single way to repay a Federal student loan. Federal student loan regulations offer a variety of student loan repayment options based on the borrower’s income and family size. Working with us will help you to understand and apply for the best repayment plan that meets your needs.
Under some circumstances, some borrowers may qualify for student loan forgiveness. Repaying under the appropriate repayment plan is usually a prerequisite to qualifying for student loan forgiveness.
Federal student loans are subject to a complicated and confusing web of laws. We are licensed and experienced lawyers who understand the law, how it applies to you and how to navigate towards the best possible student loan resolution for you.
Start getting your federal student loans in order by contacting us to schedule your 30-minute federal student loan resolution session.