When you apply for a Stafford Federal loan, your default repayment period is the Standard Repayment Plan. But this isn’t the only option of repayment you have. You can also choose from the Graduate Repayment Plan, the Income-Sensitive Repayment Plan or the Extended Repayment Plan.

What’s the difference?

Standard Repayment Plan - With a standard repayment plan, you make equal monthly payments over the course of repayment term, which is 10 years. The minimum payment you have to make is at least $50. Most students probably pay according to this plan, considering not many people know that other options are available.

Graduated Repayment Plan - With the graduated repayment plan, monthly payments start low and increase over time. The payment amounts will be determined by your lender and the amount of the loan, and the Stafford Fixed Interest Rate (6.8%).

Income-Sensitive Repayment Plan - Just as it sounds, the payment amounts you make are based on your monthly income. The course of the loan, then, is dependent upon how much money you make. For each year you decrease the amount you pay per month, a proportionate increase will be tacked on to the remaining years of the repayment period. You must provide a W-2 and a copy of your income tax return for the most recent tax year.

For tax deductions college students can benefit from, click here.

Extended Repayment Plan - Eligibility for this plan requires that you have over $30,000 in Federal Family Education Loan Program (FFELP) student loan debt. With this plan, your repayment period can be extended to 25 years. Minimum payment is at least $50, and can be fixed or increasing throughout the course of the loan.

Regardless of your repayment plan or monthly amount you may owe, try not to miss any of these payments. It will hurt your credit score, and late fees can add up fast - up to 6% of your payment amount if it’s more than 10 days past due - with the Stafford fixed rate of 6.8%, that’s 12.8% interest and penalty!

For more articles about credit scores, click here.

To check your credit score, click here.

For your convenience, most lenders provide an automatic payment option - you can have your payment electronically withdrawn and sent to the U.S. Dept. of Education or the lender. This saves you from postage, etc.

Be sure to check with your lender for all these options.

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