Financial Aid Step 4
Stafford Entrance Topic 4 of 6: Repayment of Your Student Loan
When you begin repayment, your lender offers several flexible options to help you easily transition into repayment.
- You may prepay all or part of your loan at any time without penalty. Prepayment may substantially reduce your interest costs.
- Try to pay the interest on unsubsidized Stafford Loans while in school and during the grace period to avoid a higher principal balance that would occur if the interest is capitalized at the end of your grace period.
- Your student loans will have a grace period of six months before you enter repayment.
- This grace period begins the day after you stop attending school at least half time.
- Each loan has only one six month grace period (loan-specific grace period). If you took some time off from school, you already may have used the grace period on some of your loans, so you may go directly into repayment on those loans as soon as you leave school.
- Standard repayment is the traditional approach. Standard repayment requires minimum monthly payments of $50 with a maximum repayment period of 10 years. The payment amount may be higher depending on your loan balance.
- Graduated repayment begins with lower payment amounts that increase over time. This allows payments to be smaller in the beginning of repayment with increases in stages during the repayment period.
- Income-sensitive repayment adjusts your payment annually based on your gross income.
- Extended repayment is only available for loans made after Oct. 7, 1998. The borrower must have a minimum of $30,000 in loans. The payment amounts can be either fixed annual or graduated. The maximum repayment term is 25 years.
- Loan consolidation is available if your loans are in grace period or in repayment. This program enables you to pay your existing student loans in full with one loan, with one interest rate and repayment schedule. While loan consolidation can extend your repayment period and lower your monthly payments, the interest rate (a fixed rate) and total interest you pay on the loan may be greater.
Step 1 - Stafford Entrance Topic 1 of 6: Applying for a Federal Stafford Loan
Step 2 - Stafford Entrance Topic 2 of 6: Loan Types
Step 3 - Stafford Entrance Topic 3 of 6: Understanding Student Loan Borrowing
Step 4 - Stafford Entrance Topic 4 of 6: Repayment of Your Student Loan
Step 5 - Stafford Entrance Topic 5 of 6: Solutions for Loan Repayment Problems
Step 6 - Stafford Entrance Topic 6 of 6: Delinquency and Default
Step 7 - Review what you’ve read and take the Financial Aid Entrance Quiz