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Repayment of Stafford Loans

Note that details provided on this page reference loans made under the Federal Family Education Loan Program (FFELP). Effective July 1, 2010, all new federal student loans come directly from the U.S. Department of Education (ED) under the William D. Ford Federal Direct Loan Program (Federal Direct Loans). For information regarding Federal Direct Loans, refer to the Loans page of ED’s Federal Student Aid website or contact the college's financial aid office. Specifics about Direct Loan repayment options - such as the Income Contingent and Pay as You Earn plans - can also be found at the Federal Student Aid website.

Student loans offer multiple payment options based on the borrower's financial situation. You won’t need to start repaying your loan until you’ve graduated, unless you’ve dropped out or have fallen below half-time enrollment. Before your first payment is due, you typically will be given a grace period of six to nine months, starting the day you drop below half-time enrollment status. This will give you time to find a job and get your finances together.

If you have a subsidized loan, the federal government will pay the interest during the grace period.  If you have an unsubsidized loan, you are responsible for paying the interest that accrues from the date your loan was disbursed.  With both loan types, you can choose to add the interest to the balance of your loan and pay it as part of your monthly payment after your grace period ends.  You may, however, want to consider setting up a payment plan to pay the interest on your unsubsidized loan while you’re in college.  This will help lower your future monthly payment and the total cost of the loan.  

When the time comes to begin repaying your loans, it's important that you speak with your lender about a repayment plan. Use this chart to review information about effective interest rates. 

If you miss or fall short of a payment, your loan will become delinquent and may even default.  A defaulted loan will have a negative impact on you, costing you more money and leaving you with a bad credit rating for up to seven years after the loan is paid in full. A bad credit rating can affect your opportunities for employment, credit approval, future loans and buying or renting property. Avoid default altogether by discussing alternative payment arrangements with your lender. Remember, if you are experiencing extreme financial difficulty, are back in school, or have other extenuating circumstances, you will need to contact your lender to discuss if you are eligible for a deferment or forbearance.  To bring a loan out of default, you can either pay the loan in full, agree to repay it through a loan rehabilitation program, or apply for loan consolidation.

Loan forgiveness is an option that allows you to cancel all or part of your loan(s) due to volunteer work (AmeriCorps, Peace Corps), military service, teaching in certain low-income communities, medical or law practice for certain groups/areas, a closed school, false certification or an unpaid refund. Your loan will be forgiven if you are totally and permanently disabled, or upon your death. 

To help you manage your student loan debt and to repay your loan, stay in touch with your lender, financial aid office or ISAC, if your loan is guaranteed by the Illinois Student Assistance Commission. Also, read any mail you receive regarding your loan, keep records in a safe place, stay current with your payments, and write your loan-account number on all correspondence pieces with your lender, and on your payments.

If you have any questions about your loan and/or grant amounts, outstanding balances, disbursements, loan statuses, and loan servicers, check with the My Federal Student Aid website or the National Student Loan Data System (NSLDS).

Visit the National Council of Higher Education Resources (NCHER) Successful Student Loan Repayment Information page for additional resources regarding the student loan repayment process, including the NCHER brochure entitled You’ve Got Questions, We’ve Got Answers: Helping You Successfully Repay Your Student Loans.

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Repayment Options

One of the benefits of a student loan is the variety of repayment options available. Most student loan payments are set up on a standard repayment plan with monthly payments that remain the same throughout the repayment period. However, other plans are available that may make your payments more manageable.

The information below compares the "monthly payments" and the "total amount repaid" of the standard and graduated repayment plans using identical 10-year terms and a 6.8 percent interest rate. Additional information is also provided regarding other payment plan options. Repayment calculators are useful tools that can help you estimate your monthly payments. Remember that changes in interest rates and federal regulations that govern the loan programs can affect your payments.

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Standard Repayment Option

This option allows you to make monthly payments of principal and interest for up to 10 years, excluding periods of deferment and forbearance. Depending on the amount borrowed, $50 is the minimum monthly payment.

Amount BorrowedMonthly Payment for 10 YearsTotal Amount Repaid
$10,000 $115 $13,810
$15,000 $173 $20,714
$20,000 $230 $27,619

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Graduated Repayment Option

Borrowers choosing this option can start with reduced payments and gradually increase the payments over time.

Amount BorrowedMonthly Payment for 10 YearsTotal Amount Repaid
$10,000
  • 1st stage: $68 for 2 years
  • 2nd stage: $89 for 2 years
  • 3rd stage: $115 for 2 years
  • 4th stage: $150 for 2 years
  • 5th stage: $195 for 2 years
$14,812
$15,000
  • 1st stage: $102 for 2 years
  • 2nd stage: $133 for 2 years
  • 3rd stage: $173 for 2 years
  • 4th stage: $225 for 2 years
  • 5th stage: $292 for 2 years
$22,220
$20,000
  • 1st stage: $137 for 2 years
  • 2nd stage: $177 for 2 years
  • 3rd stage: $231 for 2 years
  • 4th stage: $300 for 2 years
  • 5th stage: $390 for 2 years
$29,626

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Income Sensitive Repayment Option

Monthly payments are based upon a percentage of your gross monthly income.

Amount BorrowedMonthly Gross Income% of IncomeRequired Monthly Payment
$10,000 $1,000 4% $57
$20,000 $2,000 4% $113

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Income-Based Repayment Option

Borrowers who meet the conditions of partial financial hardship (based on income and family size) may qualify for an income-based repayment plan.

The payment amount will not be more than 15% of the amount by which the borrower's adjusted gross income exceeds 150% of the poverty line for the family size. If the monthly payment amount is not sufficient to pay accrued interest on a subsidized Stafford loan, the U.S. Department of Education (ED) will pay the remaining interest for a period of 3 years; any outstanding loan balance after 25 years will be forgiven.

More information about income-based repayment, including a chart of examples of IBR payments, is available on Federal Student Aid’s StudentAid.gov and the IBR info website. Additionally, a June 7, 2012 Presidential Memorandum released by the White House announced enhancements to the income-based repayment option

Effective as of December 17, 2015 a new income-driven repayment plan called Revised Pay As You Earn (REPAYE), which is the result of a June 9, 2014 Presidential Memorandum, is available. Under this new plan, all borrowers with federal Direct student loans may cap their monthly payments at 10% of discretionary income, regardless of when they borrowed or their debt-to-income ratio. Further details are provided in an announcement at the Federal Student Aid and IBR info websites.

An Income-Driven Repayment Comparison chart is provided at the NCHER website.

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Extended Repayment Plan Option

Depending on the amount borrowed, eligible borrowers can lengthen their repayment terms to a maximum of 25 years. Borrowers have a choice of either standard or graduated payment plans.

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Early Payoff Option

Paying off your student loan in full carries no prepayment penalties and keeps interest costs to a minimum.

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Loan Consolidation Option

You can find more information on repaying your student loans at Federal Student Aid’s StudentAid.gov.

Federal Consolidation Loans allow you to combine any number of existing federal educational loans into a single, more manageable loan.

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