With the Standard Plan, borrowers make fixed monthly payments of at least $50 for up to 10 years. Borrowers pay less interest under this plan than the other plans because the repayment period is shorter. In general, the shorter the repayment period, the lower the total interest paid.
With the Extended Plan, borrowers make fixed monthly payments of at least $50 over a 12 to 30-year period, depending on the borrower's total education loan debt.
Education loans that are not included in the consolidation may be considered when calculating the length of repayment under the Extended Plan; however, they may not exceed the amount of the Direct Consolidation Loan. Borrowers with a small loan balance may repay in less than 10 years.
Because most borrowers take longer than 10 years to repay their loans under the Extended Plan, their monthly payments are lower than they would be with the Standard Plan. However, the total amount borrowers repay is greater because they pay more interest.
Under the Graduated Plan, payments start out low and increase, generally, every two years. The length of the repayment period varies from 12 to 30 years, depending on the borrower's education loan debt.
Education loans that are not included in the consolidation may be considered when calculating the length of repayment under the Graduated Plan; however, they may not exceed the amount of the Direct Consolidation Loan.
This plan works for borrowers who expect their income to increase steadily over time. A borrower's monthly payment will be equal to either the interest that accumulates on the borrowers' loans or half of the payment the borrowers would make each month using the Standard Plan. A borrower's monthly payment will never increase more than 1.5 times what borrowers would pay under the Standard Repayment Plan.
Generally, borrowers repay more over the term of the loan in the Graduated Plan than in the Extended Plan. However, the Graduated Plan offers lower payments for borrowers who are just starting their careers.