Federal student loan borrowers have many options to choose from when repaying their loans. Repayment plans can range in length from 10 years to 30 years, with monthly payments that are equal in amount or graduated. The shorter the repayment plan, the less interest a borrower will pay on their loans. Federal Student Aid also offers loan repayment plans that are based on a borrower's income. Borrowers who are temporarily unable to pay, also have access to various deferment and forbearance options.
In most cases, repayment of your federal student loans begins approximately six months after graduation. You can access calculators on the web, such as this one offered by AccessLex, to see how much you would be paying. To learn more about federal loan repayment plan options, you can also visit Federal Student Aid's repayment plan website.
Income-Driven Repayment Plans and Public Service Loan forgiveness
Two programs have been created which are of great importance to graduates who have high debts and lower incomes, particularly for those students who are planning a career in a public interest occupation (government and most non-profit organizations).
Income-Driven Repayment (IDR) Plans
Loan payments are capped at 10 to 15 percent of your monthly discretionary income. Most borrowers should be able to obtain an affordable payment by enrolling in one of these programs. Regardless of occupation, any loan balance remaining after 20 to 25 years of IDR repayment may be forgiven.
Public Service Loan Forgiveness (PSLF) Program
Under this program, loans can potentially be forgiven in as little as 10 years of repayment in an IDR. Borrowers who make 120 on-time payments on their Direct Loans while engaged in a full-time public service occupation can request that their remaining loan balance be forgiven. For more information about the Public Service Loan Forgiveness Program, please see PSLF.
Questions about repaying student loans.
Choosing a repayment plan option can be confusing. Students and alumni who are seeking advice on repayment are encouraged to reach out to the IU Maurer financial aid office for guidance. AccessLex also offers AccessConnex, a free service where law students and alumni can schedule an appointment with an Accredited Financial Counselor. AccessLex also offers this helpful guide, to assist students develop a strategic plan for repaying their student loans.