Repayment Options

Borrowing money means taking on a serious obligation to repay with interest in the future. You should carefully assess your total educational indebtedness and your ability to repay your debts after graduation.  Your repayment plan choice will be based on your financial short-term and long-term goals.  You can generally change your repayment plan up to once per year so you could adjust your plan in the future should your financial goals change.

Before researching different repayment plans that might be available for your federal and campus loans, it is essential that you first locate all of your loans. This process is not as easy as it sounds.  Please view the Guide to Finding Your Loans and Preparing for Repayment sections to help you navigate and prepare for repaying your loans.

Federal Loan Repayment Plans

Generally, there are five different repayment plans available to you for your federal Direct, Stafford, Grad PLUS, and federal consolidated loans. These plans might vary slightly from servicer to servicer, but, in general, you will probably have the option to choose from one of the following five repayment plans:

Standard Repayment

Under the standard repayment plan, the borrower pays equal monthly payments over a maximum 10-year repayment period.  This plan generally consists of higher monthly payments resulting in a lower total interest cost over the life of the repayment period.  If your primary goal is to minimize the total interest cost of your student loan debt, you should strongly consider selecting the standard repayment plan.  Caution:  Should you not contact your servicer to select any repayment plan for your student loans, the standard repayment plan will most often be selected for you. Be informed about your repayment plan options, and select the plan that best fits your financial needs.  To determine what your monthly payments would be under the Standard plan, refer to  Direct Loan Servicing' , FinAid.org's, or your servicer's website for user friendly calculators.

Graduated Repayment

Under the graduated repayment plan, you will spend the first few years making interest only payments on your loans.  Your payments will increase incrementally over time.  No single required payment may ever be more than three times greater than any other payment.  In general, this repayment plan has a maximum repayment period of 10 years although many servicers offer several different versions of this plan.  Before selecting this plan, make certain that you can afford the much higher payments later in the repayment period.  In general, you may be paying slightly higher total interest costs (than a 10 year Standard plan) because the principal of the loan is not paid off as quickly as in a Standard repayment plan, However, this might be a good option for you if you need temporarily relief now and expect an increase in your income in the next few years.  See Direct Loan Servicing' , FinAid.org's, or your servicer's website for calculators to determine your monthly payments under the Graduated repayment plan.

Extended Repayment

The extended repayment plan allows you to stretch out repayment over a period of 25 years. Your required monthly payments are lower over the life of the loan, but you will pay much more in total interest costs.  Please contact your servicer for additional requirements needed in order to qualify for this plan.  For example, for FFEL or Direct Loan servicers, you are generally required to have an outstanding balance of at least $30,000 in order to qualify for an extended repayment plan. Extended repayment might be a good option for you if you are seeking to lower your monthly payment over the long term.  However, this plan can very well be the most costly plan for you in that you could be paying more in total interest costs (i.e., the total interest paid could be more than the amount that you originally borrowed).  Determine your monthly payments under the Extended plan from Direct Loan Servicing' , FinAid.org's, or your servicer's website for helpful calculators.

Income Based Repayment

Income Based Repayment (IBR) is a repayment plan designed to cap your monthly payments at 15% of your discretionary income. Discretionary income refers to the amount of your household adjusted gross income (AGI) that exceeds 150% of the poverty level for the state in which you reside.  You must be experiencing a "partial financial hardship" in order to qualify for this plan.  There are many online IBR calculators available to see if you qualify.

Once you qualify for IBR, your monthly payments will be determined annually based on your household AGI and family size.  If you are married and file a "joint" income tax return with your spouse, your AGI will consist of both your income and your spouse's income.  As of July 1, 2010, you can also include your spouse's eligible educational debt in calculating whether or not you qualify for a partial financial hardship. 

IBR is a good option for borrowers who have high debt to income ratios and who are looking for a lower monthly payment.  This plan is also one of three repayment plans that qualify for Public Service Loan Forgiveness (Standard Repayment and Income Contingent are the other two qualifying plans).

Many medical residents will select IBR for their repayment plan throughout residency.  When you are earning a lower salary, your required monthly payment in IBR is low, many times lower than the accrued interest on your loans.  While you are experiencing a partial financial hardship in IBR, any unpaid interest on your subsidized loans that is not covered by your scheduled monthly payment will be paid by the federal government for up to a period of three years.

Although Income Based Repayment oftentimes offers the lowest monthly payment, it is one of the few plans in which negative amortization is allowed.  Because your monthly payments oftentimes do not cover the entire accrued interest on your loans (remember the partial interest subsidy only applies to your subsidized loans), your loan balance can grow despite you making payments.

For more information about IBR specifics, please go to IBRinfo.org, Studentaid.ed.gov, FinAid.org, and Direct Loan Servicing's Frequently Asked Questions.

Income Contingent (Direct Loans)/Income Sensitive (FFEL) Repayment Plans

Both ICR and ISR are payment plans based on your yearly income and student loan debt.  Because of the more affordable payments often offered through IBR, these repayment plans are not selected as often as the newer Income Based Repayment plan.  Both ICR and ISR must be reapplied for each year and documentation of income is required.  In both plans, your monthly payments will be based on a percentage of your gross income.  The maximum time period offered for ISR is 15 years, and the maximum time limit for ICR is 25 years.  For more detailed information and to determine if you are eligible and what your monthly payments would be under the Income Contingent Repayment Plan, please view the Department of Education's Direct Loan Servicing website or Finaid.org.  Please refer to your servicer's website or Finaid.org for more information about the Income Sensitive Repayment Plan.

University of California, Health Professions, and Federal Perkins student loan funds are revolving. When borrowers graduate and repay loans, the money is "recycled" to other students. Thus, any failure to honor loan obligations hurts future students who need the funds to attend school.

Borrowers who decide to repay loans early will have less interest to pay and will make the funds available to others. There is no penalty for early repayment. In many cases, there will be no interest if the loan is repaid before the grace period expires.

Borrowers who have serious problems (e.g., illness or unemployment) and cannot make scheduled repayments should consult the lender to see if special arrangements can be made. It is the borrower's responsibility to notify lenders, including the UCSF Student Accounting Office, of any changes in address or student status.

• Deferring Outstanding Student Loans - Deferring payments on your loans
• Loan Repayment Calculation - Calculating loan costs with interest and with various types of repayment plans
• Loan Forgiveness & Repayment Programs - Information on loan repayment and forgiveness programs, including options for students going into Primary Care fields, public service or teaching
• Lender Contact Information - Getting in touch with your lender

Deferring Outstanding Student Loans
 

Grace Periods

Loans go into default when the lender expects payment and the borrower does not pay. Student loans generally have a "grace period" which starts when borrowers graduate or withdraw from school and lasts six months to one year, depending on the loan type. Repayment on student loans begins at the end of the grace period. However, borrowers who change schools or who return to school can generally defer repayment of their student loans while enrolled in school at least part time. Individuals who have not yet used the grace period, usually because they enter UCSF shortly after completing the undergraduate program, are entitled to a "continuance of in-school status." Students who come to UCSF after their grace period has ended can usually obtain a deferment. During deferment or continuance of in-school status, interest on subsidized loans does not accrue and repayment is not required. Interest on unsubsidized loans will continue to accrue.  To obtain in-school deferment status on your existing student loans, download the appropriate form from your loan servicer, complete the form and come to the Registrar's Office to have your enrollment officially certified, and submit the deferment form to your servicer.  Ensure that your enrollment status has changed by following up with your servicer approximately 1 month after submitting your deferment form.

Default

A default is a serious problem so it is crucial that deferment forms be submitted promptly. At best, new loan applications can be delayed for months while the borrower, financial aid advisor, lender or loan servicer, and State guarantee agency struggle to resolve the situation. At worst, additional loans and all other financial aid are denied until the defaulted loan is repaid in full. Financial aid funds are not available for this purpose. Defaulted borrowers are also subject to adverse credit reports and litigation. Borrowers must stay in touch with lender(s) at all times, even before repayment begins.

This is not always easy, since the lender may hire a "loan servicer" to handle an account or may sell the loan to the Department of Education. When a loan "transfer" occurs, borrowers are notified by mail. If an outdated address prevents mail from reaching borrowers, you are still liable for loan payments. Therefore, borrowers must immediately notify each lender in writing of any address changes. Borrowers must also notify lenders within ten days of withdrawal from school, enrollment of less than half-time, graduation, name changes, or any changes in the anticipated completion date of a school program.

Sallie Mae Calculators

This website (along with studentaid.ed.gov) allows students to compare the major federal loan repayment plans offered by lenders: Standard Repayment, Graduated Repayment, Income-Sensitive Repayment, Extended Repayment, Income Contingent Repayment (for Federal Direct Student Loan only), Consolidation Loan Repayment, and a loan comparison calculator.

FinAid: The SmartStudent Guide to Financial Aid

This website includes different loan payment calculators from basic to more sophisticated calculations. It also includes Income Contingent, Income Sensitive, Income-Based, and Graduated Repayment Loan Payment Calculators; Cost of Interest Capitalization; Loan Comparison; and Loan Discount Analyzer, a very sophisticated calculator that compares loan characteristics. The Student Loan Advisor provides an estimate of the amount of educational debt a student can reasonably afford, given the student's expected starting salary. It is an immensely popular web page with the most basic to the more comprehensive tools students need for college planning.

You may also use the following worksheet to estimate your monthly loan repayments:

Abbreviations:

Perkins/NDSL - Federal Perkins Student Loan
University - University of California Loan
HPSL - Health Professions Student Loan
NSL - Nursing Student Loan
LDS - Loans for Disadvantaged Students
PCL - Primary Care Loan
Stafford/Direct - Federal Stafford/Direct Loan

Loan Repayment Programs

Download Have Your Loans Repaid  to view complete information about a variety of Loan Repayment Programs.

Public Service Loan Forgiveness is a new program that will benefit Health Professionals who plan to work in public-benefit, low income clinics or who plan to teach (i.e., most teaching hospitals qualify as a 501(c)3 non-profit).  In general, if you are working full-time for a 501(c)3 non-profit while making qualifying payments to Direct Loans, after 120 qualifying payments (10 years which do not have to be consecutive), you become eligible to have the balance of your Direct Loans forgiven. For more information, visit FinAid.org, IBRinfo.org, Department of Education's Frequently Asked Questions, or Direct Loan Servicing for more details.

The National Health Service Corps offers a Loan Repayment Program and State Loan Repayment Program for primary care physicians, dentists, dental hygienists, nurse practitioners, and nurse midwives. For details see the Have Your Loans Repaid brochure. The minimum service period is two years. For information call (800) 221-9393. The State of California participates in the above State Loan Repayment Program. All the sites are located in California and applicants must be licensed to practice in California. Call (916) 654-1833 for more information.

The Army National Guard has several programs which include both educational assistance while in school (while active in the National Guard), and also student loan repayment programs for those out of school. For more information contact the National Guard recruiters at (415) 665-6268.

The Army and Army Reserve have student loan repayment programs involving cancellation of a percentage of Stafford or NDSL/Perkins indebtedness for every year of service. The Army Reserve also offers repayment of a percentage of Auxiliary Loans to Assist Students (ALAS) or Supplemental Loans for Students (SLS). The Army Reserve local recruiter's number is (415) 794-2052 or (707) 429-0476.