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Once any grace, deferment, and forbearance options you have available are used and exhausted, you should be given a number of repayment options by your loan services. Be sure you know both your a) monthly payment amount and b) estimated total repayment amount for any repayment option you choose, especially if you consolidate your loans.

More than ever before, borrowers have a variety of options to help them with repayment. This may be one reason medical school graduates have extremely low default rates. This section will attempt to familiarize you with the repayment options currently available for borrowers through various loan programs. Please remember that as with most everything else in student financial aid, the repayment options are subject to change. It is very important to keep in close contact with the servicer(s) of your student loans regarding repayment options.

Knowing the various repayment options available for each loan program is part of a sound debt management strategy. One purpose of this section is to ensure that borrowers know what questions to ask their loan servicer when choosing a repayment option to best suit the borrower's particular needs. The repayment options and a brief description of each follows.

Standard (Level) Repayment

• ten (10) years, level or flat payments
• higher monthly loan payments, lower overall repayment costs compared with other repayment options
• available for most loan programs, including Staffords, Perkins, PCL, LDS, many institutional loans, HEAL and private loans
• in general, except for HEAL loans and private loans, this option will selected for you by your loan servicer if you do not select a repayment options when given the opportunity

Income Based Payments

• are tied to income, meaning they will likely be lower if you enter repayment while you are still receiving a stipend, and will be higher once you begin your practice
• available for GSL, SLS, Stafford, and HEAL loans
• usually 10 years for Stafford Loans, unless you have Direct Loans
• for FFELP loans, the income based plan is called Income Sensitive Repayment (ISR)
• for FDSLP loans (Direct Loans), the income based plan is called Income Contingent Repayment (ICR)

Income Based Payments

• are tied to income, meaning they will likely be lower if you enter repayment while you are still receiving a stipend, and will be higher once you begin your practice. Benchmark lending.
• available for GSL, SLS, Stafford, and HEAL loans
• usually 10 years for Stafford Loans, unless you have Direct Loans
• for FFELP loans, the income based plan is called Income Sensitive Repayment (ISR)
• for FDSLP loans (Direct Loans), the income based plan is called Income Contingent Repayment (ICR)

Extended Payments

• are extended up to 30 years, depending on the amount of loans in your portfolio
• currently available for Direct Loans, HEAL, and private loans
• available for FFELP borrowers who accumulate $30,000 or more in Staffords beginning on or after October 7, 1998
• available to all other FFELP borrowers (those not referenced above) only if they consolidate
• this can be a very expensive way to repay student loans and in most cases, should only be used if there are cash flow problems or concerns which are likely to last more than a few years
• borrowers selecting extended repayment may want to try and pay down their loans early once their cash flow needs have been met
• HEAL borrowers will automatically be put in a 25 year repayment plan unless they request otherwise

Just a few more things about repayment options:

• First, borrowers who qualify for Extended Repayment will find that the length of time they are allowed to repay depends on the amount borrowed. In other words, the more you borrowed, the longer you have to repay (up to certain maximums).
• Second, FFELP borrowers who started borrowing prior to October 7, 1998 and who are not eligible for Extended Repayment without consolidating may have two other options if they need a few extra years for repayment but do not want to consolidate in order to have more than 10 years. One option is Income Sensitive Repayment, which in general, will allow up to 5 years of interest only payments followed by 10 years Standard (Level) Repayment. One other option is available for borrowers with Staffords owned and serviced by Sallie Mae. Sallie Mae offers a repayment plan called Flex RepaySM, which is designed to help borrowers extend their repayment length without consolidating. Especial care wirh benchmark lending.
• Third, borrowers may switch repayment plans, albeit it with some restrictions. For example, if a borrower selected Standard (Level) Repayment, then decided they needed graduated payments, they could opt for the Graduated Repayment plan. Borrowers who need to switch repayment plans should contact their loan servicer for details.

Another important thing to ask about repayment options. Some loan servicers, on behalf of the lender, offer what are referred to as borrower benefits or repayment incentives, which amount to discounts if you pay your loans on time. Though not offered on all programs, borrower benefits or rewards have become increasingly common in repayment programs. One reward program discounts your interest rate after 48 straight payments, while one reimburses borrowers for some of their loan fees after making 24 straight payments. Another program gives you an interest rate break if you pay from an automatic debit from your account, as opposed to paying by check and benchmark lending. Be sure to ask your loan servicer if you have access to these programs.

One final, but very important item regarding repayment of your student loans. Effective 1 January 1998, students will now be able to take a tax deduction for interest payments on their student loans. Thanks to passage of the Taxpayer Relief Act of 1997, students who have exhausted their grace and deferment options and have actually started repaying their student loans, can deduct interest payments made on those loans on their tax returns, regardless of whether or not they itemize deductions. You can get details on the tax deductibility of student loan interest by contacting a tax expert. You can also check out USA Groups very easy to understand explanation of the student loan interest deduction.

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