There are a number of

loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that d ...

repayment options available to U.S. federal

student loan A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses. It may differ from other types of loans in the fact that the interest r ...

borrowers, including some that are based on the borrower’s

income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. For ...

. Income-sensitive repayment lets

Federal Family Education Loan Program The Federal Family Education Loan (FFEL) Program was a system of private student loans which were subsidized and guaranteed by the United States federal government. The program issued loans from 1965 until it was ended in 2010. Similar loans a ...

(FFELP) borrowers decide what percentage of their income their loan payment will be. Income-sensitive repayment (ISR) is one such option.American Student Assistance
Retrieved on June 9, 2010

How it works

The borrower selects a monthly payment amount between 4–25% of his or her monthly income. The payment must be greater than or equal to the

interest In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct ...

accruing on the loan. The borrower must reapply for this schedule every year. It is available for up to 5 years. After 5 years, the borrower will need to choose another repayment schedule. The borrower may have up to 10 additional years under a new schedule. Income-sensitive repayment extends the repayment period. As a result, the total amount paid in interest may be greater than what the borrower would pay under standard repayment.

References

{{reflist Student financial aid in the United States