managing student loans

Graduated & Extended Repayment Options

The graduated repayment plan is for federal loan borrowers who currently have low incomes, but who expect to earn more in time. This plan offers low monthly payments at first. These payments may be as little as half a standard payment, but are never lower than the interest owed. As time goes on, what happens to payments under this plan?

1. They decrease every five years.
2. They increase every two years.
3. They stay the same until your income increases.

"B" is correct. This option usually has to be repaid in 10 years. If you owe $30,000+, you can combine this option with an extended payment plan, which will reduce your payments by extending them over a time period -- up to 25 years.