Federal Student Loans
Understanding your federal loan options, repayment plans, and forgiveness programs
Federal Repayment Plans
Standard Repayment
Fixed payments for 10 years
Payment:
Fixed amount, at least $50/month
Term:
10 years (120 payments)
Best for:
Paying least interest overall
Income-Driven Repayment (IDR) Plans
SAVE Plan (Formerly REPAYE)
10% of discretionary income, forgiveness after 20-25 years
✓ No interest capitalization if payments made
PAYE (Pay As You Earn)
10% of discretionary income, forgiveness after 20 years
IBR (Income-Based Repayment)
10-15% of discretionary income, forgiveness after 20-25 years
ICR (Income-Contingent Repayment)
20% of discretionary income or fixed 12-year payment
Forgiveness Programs
Public Service Loan Forgiveness (PSLF)
Complete forgiveness after 120 qualifying payments while working for eligible employer
- • Must work full-time for government or qualifying nonprofit
- • Must be on IDR plan
- • Tax-free forgiveness
Teacher Loan Forgiveness
Up to $17,500 forgiveness for teaching 5 years in low-income school
IDR Forgiveness
Remaining balance forgiven after 20-25 years of IDR payments
Note: IDR forgiveness is taxable income (except PSLF)
Temporary Relief Options
Deferment
Temporarily postpone payments
- • No interest on subsidized loans
- • Interest accrues on unsubsidized
- • Available for school, unemployment, hardship
Forbearance
Temporarily stop or reduce payments
- • Interest accrues on all loans
- • Available for financial hardship
- • Limited to 12 months at a time
Avoid Default at All Costs
Federal loans default after 270 days of non-payment. Consequences include:
- • Entire balance due immediately
- • Wage garnishment up to 15%
- • Tax refund seizure
- • Loss of federal aid eligibility
- • Cannot be discharged in bankruptcy (usually)
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