Payment Options

Dear Gwendolyn,

If standard repayment isn’t working for you, you may have the option of switching to another type of repayment plan. Here are some details about these other options:

Extended Repayment
If you owe more than $30,000 in federal student loans, the extended repayment option will stretch your repayment period to 25 years. This plan will reduce the size of your monthly payments, but it will also increase the total amount of interest you repay over the life of your loan.

Graduated Repayment
This option allows you to pay lower amounts, as low as interest only, upfront for up to 4 years. Your payments then increase gradually so that the loan is still repaid in 10 years. Graduated repayment also increases the total amount of interest you repay over the life of your loan.

Income-Sensitive Repayment
If your income is low, you may want to choose income-sensitive repayment. This option lets you pick a monthly payment equal to any amount between 4% and 25% of your gross monthly income. You may be able to use this option for up to 5 years, and it may extend your repayment term to up to 15 years. Income-sensitive repayment will increase the total amount of interest you repay over the life of your loan, as well.

Economic Hardship Deferment
Economic Hardship Deferment is a temporary break from repayment. During this break, you will not accrue any interest on your loan, so the amount you pay remains at its current level. Eligibility for this option is based on an individual’s debt-to-income ratio. You can read more about it at www.amsa.com/bor/forms/#deferment.

You can contact your loan servicer (the company to which you currently make your loan payments) to work out the best payment option for you. Your servicer can also tell you if you meet the criteria for an economic hardship deferment.

Feel free to contact me with any additional questions you might have!

Regards,
Betsy