Federal Stafford Loan Repayment Options – Graduated Repayment

This blog is the second one in our series focusing on the Stafford Loan repayment options. This week, let’s discuss the Graduated Repayment plan. It is currently available to all Federal Stafford loan borrowers. With this plan, the borrower will fully repay the loan in 10 years with monthly payments that will start low and then increase every two years.

Similarly to the Standard Repayment option, the borrowers will pay off their loans in 10 years, which is faster than with most other repayment plans. In addition, their payments will start lower, so they may be a little more affordable to those borrowers whose jobs out of college are not very high paying. With that being said, over time, these borrowers will end up paying more in interest (this is due to lower initial payments) than they would have if they had chosen the Standard Repayment plan. It is important to keep in mind that eventually the borrowers will have to make substantially higher payments to make up for the smaller amounts they paid in the beginning of their repayment period.

For more information, please visit http://studentaid.ed.gov/repay-loans/understand/plans or contact your financial aid counselor.