Borrowers may choose from one of the four following repayment options depending on their total loan amount and economic situation.

Standard Repayment. Typically this is the least-expensive option in terms of total interest costs. Most federal education-loan borrowers choose this option. This option provides a fixed monthly payment of at least $50 over a period of up to 10 years. A lender may permit a borrower to make smaller payments than otherwise required if the reduced scheduled monthly payment equals at least the amount of interest due on the loan.

Graduated Repayment. This plan starts off with low payments, which then gradually increase every two years. The loan term varies depending on the total loan amount. Unless you consolidate several federal education loans, the maximum repayment term under this option is 10 years. No single payment will be more than three times greater than any other payment.

Income-Sensitive Repayment. Monthly payments in this plan begin low and increase as the borrower's income increases. Repayment terms can be adjusted annually to adapt to income changes. While this benefits the borrower with smaller initial payments, borrowers should be aware that by reducing early payments, the long-term interest costs will increase.

Extended Repayment. This plan is for borrowers with accumulated loan balances of $30,000 or more received on or after Oct. 7, 1998. Under this plan, you may reduce the amount of your monthly payment by spreading payments over a period of up to 25 years. You may choose to make payments over this extended period under a level or graduated schedule. Because payments are stretched over a longer term, total interest costs will be significantly higher than under the other repayment plans. Although a borrower's monthly payment will be lower, the total amount of money paid back over the life of the loan will be more than standard repayment.