Graduated Repayment

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There are a number of loan repayment options available to U.S. student loan borrowers. One option is the graduated repayment schedule. Borrowers can lower their monthly loan payments for a while — without extending their repayment period—by opting for graduated repayment[citation needed]

How it works[edit]

A Graduated Repayment Program lets the borrower make smaller payments back toward their student loans at the start of their new term. Every 2 years on this program your monthly payment will increase between $10–20 and the typical term length is 20–25 years depending on qualifications. However this program gives the new borrower all the power. He or she has the power to overpay on the required monthly payment (with no pre payment penalty). Every time they do so they shrink down the term length for the program and any amount over the minimum monthly obligation goes DIRECTLY to their principal balance saving them money on future interest payments. It is the clients prerogative to be as aggressive as possible in the earlier years of this type of program so as to maximize their overall benefit. This program type is typically recommended to clients with a steady source of income and are not qualified for a Loan forgiveness/ income driven program.

Changing repayment schedules[edit]

There is no form for changing to the graduated schedule, but some servicers will ask for a written request.