Graduated Repayment Plan

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A graduated payment plan will allow one to pay off student loans within 10 years, and, as the name suggest, the payments gradually rise during that period. The monthly student loan payment increases every 2 years if one takes advantage of graduated loan repayment. Under the graduated repayment plan for all direct loan borrowers who entered repayment before July 1, 2006, a borrower must repay a loan in full by making payments at two or more levels within a period of time that varies with the total amount of the borrower’s loans, the number of payments or the monthly repayment amount may be adjusted to reflect changes in the variable interest rate identified in § 685.202(a), no scheduled payment under this repayment plan may be less than the amount of interest accrued on the loan between monthly payments, less than 50 percent of the payment amount that would be required under the standard repayment plan or more than 150 percent of the payment amount that would be required under the standard repayment plan.

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