Stafford Loan Repayment Options
Stafford Loans must be paid back beginning six months after you leave school or drop below half-time enrollment status. If you have trouble paying because of unemployment, heading back to school or a temporary economic hardship, you may be eligible to postpone or lower repayments for a period of time without hurting your credit.
Regardless of your situation, it’s important that you act quickly to avoid default and maintain your good credit.
Extended Repayment Plan
If you have in excess of $30,000 in outstanding federal Stafford and/or PLUS loans with one or more lenders, and all of your loans were established after Oct. 7, 1998, you may be eligible for an extended repayment plan.
With an extended repayment plan, you may:
- Lower your monthly payment by up to 40%
- Maintain borrower incentives such as interest rate reductions and principal rebates
- Maintain full deferment eligibility
- Pay no fees and incur no credit check
Anytime you extend your repayment term, you will increase the overall interest amount you pay over the life of the loan.
How to Apply
Borrowers may apply for an extended repayment plan during their grace periods, once the loans have entered repayment, or during periods of deferment or forbearance. Just contact your lender(s) or loan servicer(s) and request the extended repayment plan. Make sure to contact all of your lenders if you have loans with more than one.
Delay Payments with a Deferment
To temporarily delay payments on a Stafford Loan, you can apply for a deferment. If you are eligible, your lender is required to honor your request and the government will pay the interest that accrues on your subsidized Stafford Loan during the deferment period. If you have unsubsidized Stafford Loans, you will be responsible for repaying all interest that accrues during your deferment.
You may be eligible for a deferment if you:
- Study at least half time at a post-secondary school, or
- Study in an approved graduate fellowship program or in an approved rehabilitation training program for the disabled, or
- Are unable to find full-time employment, or
- Have economic hardship, and
- Are not more than 270 days behind on your loan payments
Income-Based Repayment
Income-Based Repayment (IBR) is a new payment option for federal student loans. Starting July 2009, it will help borrowers keep their loan payments affordable with payment caps based on their income and family size. For most eligible borrowers, IBR loan payments will be less than 10 percent of their income – and even smaller for borrowers with low earnings. IBR will also forgive remaining debt, if any, after 25 years of qualifying payments.
Who can use IBR?
IBR is available to federal student loan borrowers in both the Direct and Guaranteed (FFEL) loan programs, and covers most types of federal loans made to students, but not those made to parents. To enter IBR, you have to have enough debt relative to your income to qualify for a reduced payment. That means it would take more than 15 percent of whatever you earn above 150% of poverty level to pay off your loans on a standard 10-year payment plan.
Forbearance Option
In other cases of financial difficulty, you may be eligible for forbearance. Forbearance lets you postpone loan payments or reduce their amount for a period of time. Please keep in mind that in some cases, such as temporary financial hardship, forbearance is granted at the discretion of your lender. You will be responsible for all of the interest that accrues during this period, whether the loan is subsidized or unsubsidized.
Download a Deferment or Forbearance Form
Let Us Help
If you need to postpone or reduce your payments, contact our customer service center to speak with a student loan specialist at 1-800-762-1001, Monday through Thursday from 8am to 7pm and Friday from 8am to 6 pm Eastern time. You can also directly contact your loan servicer.