Repayment Plans for Federal Student Loans

November 30, 2022

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With medical school behind you, you’re certainly due for congratulations. But that’s not all that’s due – loan repayment is just around the corner – either beginning now or after residency. Fortunately, when it’s time to repay, you have flexibility in structuring your repayment schedule by choosing the plan that works best for you. 

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Comprehensive details about each repayment plan, can be viewed on the Federal Student Aid website and within the Education Debt Manager for Matriculating and Graduating Students.

Traditional Repayment Plans

Standard Repayment
  • Fixed monthly payment with possibly the lowest interest-cost
  • 10-year repayment term (longer if consolidated)
  • Default plan if no other plan is chosen
Extended Repayment
  • Reduced payments stretched over a longer term (without consolidating)
  • 25-year repayment term; to be eligible, must owe more than $30,000
  • May be more costly because of longer term and total interest paid
Graduated Repayment
  • Initially smaller payments that increase after two-years
  • 10-year repayment term (longer if consolidated)
  • May result in higher costs compared to the Standard plan

Income-Driven Repayment Plans

Pay As You Earn Repayment (PAYE)
  • Lower monthly payment “capped" at 10% of your discretionary income (based on family size and AGI) – verified annually
  • While in this plan, capitalization cannot exceed 10% of the loan balance when entering PAYE
  • Partial Financial Hardship (PFH) needed to qualify to enter repayment plan
  • Up to 20-year repayment term and then remaining balance forgiven (but taxable)
  • Must be a new borrower on or after 10/1/2007, and have a Direct Loan disbursement on or after 10/1/2011
Revised Pay As You Earn Repayment (REPAYE)
  • Monthly payment based on 10% of discretionary income, AGI and family size - verified annually (no cap on monthly payment)
  • When monthly payment doesn’t cover interest, borrower is responsible for only 50% of the interest (interest subsidy provided by the government)
  • Up to 25-year term (for graduate/professional borrowers) and then remaining balance forgiven (but taxable)
  • No PFH requirement
Income-Based Repayment (IBR)
For new borrowers on or after July 1, 2014
  • Monthly payment based on family size and Adjusted Gross Income (AGI) - verified annually
  • Payment "caps" at 10% of your discretionary income
  • Up to 20-year term and then remaining balance forgiven (but taxable)
  • Partial Financial Hardship (PFH) needed to qualify to enter repayment plan
For those who are not new borrowers on or after July 1, 2014
  • Monthly payment based on family size and AGI - verified annually
  • Payment "caps" at 15% of your discretionary income
  • Up to 25-year term and then remaining balance forgiven (but taxable)
Income-Contingent Repayment (ICR)
  • Offers lower monthly payments based on income and family size
  • Interest accrues annually but capitalization of unpaid interest is limited to 10% of the loan balance when entering ICR
  • Payments based on the lesser of either 20% of monthly discretionary income or a monthly payment on a 12-year plan times a percentage factor based on your income
  • Up to 25-year term and then remaining balance forgiven (but taxable)
  • Need to provide income and family size verification annually, need to re-certify each year
    Reviewing Your Repayment Options

    Select a plan that provides a manageable payment, but keep in mind that the longer it takes you to repay your loan, the more interest you could pay over the life of the loan. Aim for a repayment schedule that allows you to meet your financial needs and goals. If your financial situation changes, you can change your repayment plan by contacting your servicer(s). Review repayment estimates with the MedLoans® Organizer and Calculator.

    When Will You Repay Your Loans?

    About 30 to 60 days before your first payment is due, you’ll receive a notice from your loan servicer(s) notifying you of your loan’s due date, the payment amount, information about interest rates, and your total outstanding balance. Be sure your loan servicer(s) have your accurate contact information because whether you receive a billing statement or not, the servicer requires that your payments be received on time each month. Set up an online account with your servicer(s) so that you can better manage your loans. Borrowers who select auto-debit of payments will receive a .25% interest deduction. See the Next Steps brochure to learn about what you will need to do to enter loan repayment. 

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