Alternative Federal Student Loan Repayment Plans

Success Tip Save Money by Paying Off as Much as Possible Each Month Keep in mind it’s to your advantage to pay as much as you can on your student loan. The lower the payment amount, the longer it will take to repay your loan and the more interest you will pay, therefore increasing your total debt over the life of the loan.

Iowa Student Loan offers graduated and income-sensitive repayment plans – in addition to the standard level repayment plan – for Federal Stafford Loans, Federal PLUS Loans and Federal Grad PLUS Loans. Below is information on the different repayment options available and examples for each.

• Level – With this plan you pay an interest and principal payment that remains the same each month for the entire term of your loan. This is the schedule that Iowa Student Loan establishes for all borrowers unless otherwise requested.
• Graduated – This schedule gives you a smaller payment amount in the beginning and gradually increases the payment amount every two years. This schedule will accrue more interest over the life of the loan because principal decreases at a slower rate. You must have a minimum balance of $2,500 to qualify for this plan.
• Income Sensitive – Similar to the graduated schedule, the income-sensitive plan begins with payments that are lower in the beginning and increase later as your income increases. Payments are based on a percentage of your income ranging from 4% to 25% of your gross income (which must be verified). Iowa Student Loan will determine whether you qualify for an income-sensitive repayment schedule based on your expected total monthly gross income. On this schedule, you are required to pay at least the accrued interest on a monthly basis.
• Extended Repayment Plan – This is essentially an extra option that can be used with any of the above repayment plans if your loans were first disbursed on or after Oct. 7, 1998 and your eligible loan balance is $30,000 or more. This plan allows you to extend the repayment term up to 25 years.