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8 Federal Student Loan Repayment Plans

If you are struggling to keep up with your standard repayment plan on your federal student loan, you could qualify for a different plan that lets you make lower monthly payments.

According to a report by the U.S. Government Accountability Office, as of 2012, 51% of Direct Loan borrowers were eligible for the Income-Based Repayment Plan, however in 2014, that went down to just 13%. The Department of Education directly issues Direct Loans to students or parents, although loans can be serviced by third parties. 6% of borrowers use a different income-driven repayment plan.

The president and CEO of Student Loan Hero, Andrew Josuweit, says the reason people don’t switch payment plans is that “it is harder for borrowers to figure out which plan they are eligible for and the financial impact of these plans.” In fact, there are some that don’t even know there are different repayment plans available.

If you do not choose a different plan, you will be automatically enrolled in this one. With the Standard Plan, you will make equal monthly payments of at least $50 for a maximum of 10 years. Using this plan, you could pay the least amount of interest over the loan’ lifetime, but your monthly payment could be higher than with other plans. If you can swing this monthly payment, it this can likely be your best option.

With the Extended Plan, your loan term extends to a maximum of 25 years, and you are able to choose either a graduated or fixed repayment schedule. Most times, your monthly payments will be less than they would be on the Graduated or Standard plan; however, you are going to pay more interest over the loan’s lifetime.

If you have more than $30,000 in Direct Loans, you qualify for the extended plan. Either way, you have to be a new borrower and you cannot have any outstanding federal loans as of October 7, 1998. Loans need to be distributed after that date.

The Graduated Plan, like the Standard Plan, has a term of up to 10 years, but with the Graduated Plan, over time your monthly payments are going to increase, generally once every two years. The Graduated Plan could be a smart option for you if right now you cannot afford a high monthly payment, but in the future you will be able to do that. For example, you will have an increase in earning potential. When you use the Graduated Plan, you will pay more in interest over the loan’s lifetime than you would with the Standard Plan, because lower initial payments lead to the accumulation of more interest.

#4 The Pay as You Earn Repayment Plan (PAYE)

The Pay as You Earn Plan offers low monthly payments that are the same or less than the monthly payments would be under the Standard Plan, with a maximum term of 20 years. However, should you pay your loan over a 20-year term, lower monthly payments will result in more interest accruing than with the Standard Plan. After 20 years of qualifying monthly payments, the balance is forgiven.

To qualify for the Pay as You Earn Plan, it is required that you have a partial financial hardship, which happens when your annual loan repayment is greater than 10% of the difference between your adjusted gross income and 150 of the household poverty limit in the state you reside. To remain on this plan you are required to report your income annually.

For you to qualify for the Pay as You Earn Plan, as of October 1, 2007, you have to be a new borrower and on or after October 1, 2011 you must receive a loan disbursement. Also, you may have received disbursements between these dates, but a minimum of one disbursement needs to be after October 1, 2011.

#5 Revised Pay as You Earn Plan (REPAYE)

REPAYE is comparable to the PAYE repayment plan, but there is one main difference. Up until now, to qualify for the PAYE plan on or after October 1, 2007, you had to have taken out your loan. With the REPAYE plan, it doesn’t matter when you took out your Direct Loan, just as long as you are able to meet the other criteria to qualify for the PAYE plan. Over time, it is likely that REPAYE will replace the other income-based plans, but for now you can still enjoy the benefits from these other options that are still available.

#6 Income-Contingent Repayment Plan (ICR)

There is a maximum term of 25 years for the Income-Contingent Repayment Plan, at which point the government will forgive the balance of the loan. The monthly payment will be the fixed monthly payment necessary to repay the loan over a 12 year period, or the least of 20% of your discretionary income, that is based on the difference between your AGI and 100% of your poverty guideline.

With the ICR Plan, there are no income eligibility requirements, but your income and the amount that is owed determine eligibility rather than your income and poverty line determining the monthly payment. With the Income Contingent Repayment Plan, you may have higher monthly payments than you would with IBR or PAYE, and they may even be higher than with the Standard Plan.

The Income Contingent Repayment Plan is the only income-driven option for parents with FFEL loans or Direct Plus loans.

#7 Income-Sensitive Repayment Plan (ISR)

The Income-Sensitive Repayment Plan applies only for FFEL loans, which after July 1, 2010 have not been issued. This plan is based solely on your annual income to determine your monthly payment. You can choose a monthly payment amount between 4% and 25% of your monthly income, but there is a minimum interest payment payable monthly. Annually, you have to report your income or you need to switch to the Standard Plan. The ICR Plan has no loan forgiveness, and because of the minimum payments, you might have to pay more than you would with another income-driven plan.

#8 Income-Based Repayment Plan (IBR)

Under the Income-Based Repayment Plan, your monthly loan payments change as your income changes. However, you will pay a maximum monthly payment that is no higher than what you would have paid under the Standard Plan.

After July 1, 2014, the maximum monthly payment for borrowers is usually 10% of discretionary income, which is determined by calculating the difference between your AGI and 150% of the federal poverty guideline. From one year to the next, your monthly payments can vary as your situation changes. If you borrowed before July 1, 2014, the maximum payment is usually 15% of your discretionary income.

To be eligible for the Income-Based Repayment Plan you have to be a new borrower and, as of October 1, 2007, you cannot have any outstanding FFEL or Direct loans, and you must meet the hardship qualification, which means your monthly payments on the Standard Plan must be more than 15% of your discretionary income. Unless you annually submit proof you’ll revert to the Standard Plan.

As of July 1, 2014 the IBR Plan can have a term of up to 20 years for new borrowers or 25 years for borrowers with an outstanding loan on July 1, 2014.

The lower monthly payment and longer term mean you will pay more in interest than you would with the Standard Plan. After 25 years of qualifying payments, the government forgives the balance owed. For new borrowers, it happens 20 years. You are responsible for paying income tax on the amount of the loan forgiven.

The cheapest option to repay your federal student loans is to stick to the Standard Plan, but if you are having trouble making your monthly payment, there are a number of alternatives.

heslb.go.tz Online Loan Application System Tanzania : Higher Education Students Loans Board

Name of the Organisation :Higher Education Students Loans Board (heslb.go.tz)

Type of Announcement : Online Loan Application System


The Higher Education Students’ Loans Board was established by Act No. 9 of 2004, inaugurated by the Hon. Minister for Higher Education, Science and Technology on the 30th March 2005 and became operational in July 2005.

OLAS Higher Education Students Loans Board Application Status Online Tanzania : http://www.statusin.org/4006.html

The objective of the Board is to assist, on a loan basis, needy students who secure admissions in accredited higher learning institutions, but who have no economic power to pay for the costs of their education. The Board is also entrusted with the task of collecting due loans from previous loan beneficiaries in order to have a revolving fund in place so as to make the Board sustainable

The Higher Education Students’ Loans Board has streamlined the loan application process through the use of the Online Loan Application System (OLAS). The web based system is for both first time applicants and continuing students.

Interested and eligible applicants are advised to visit the Online Loan Application System at olas.heslb.go.tz where they will be able to make online application.

1 Applicants are strongly advised to familiarise themselves with the Guidelines and Criteria for issuance of Loans for the 2012/2013 application cycle before they attempt to apply. The loan Issuance Guidelines can also be accessed through the Board’s Website.

2 Brochures detailing each step to be followed on OLAS are available online (heslb.go.tz), at HESLB Head Office and at Zonal Offices based in Dodoma and Zanzibar, at all Higher Education Institutions as well as District Education Offices. Prospective loan applicants are strongly advised to read and use the brochures before and during the application process.

3 Before beginning the loan application process, one must have the following information:

a) The Form Four Index/Examination number including the year he/she sat for the exam, EXACTLY as appearing on the certificate

b) Guarantor’s details such as full name, postal address, mobile phone and e-mail.

1 Applicants are REQUIRED to provide CORRECT information. Any person who, while filling a loan application form, knowingly makes a false statement whether orally, in writing or online relating to any matter affecting the request for a loan shall be guilty of an offence and shall be liable to a fine of not less than Tanzanian shillings one million five hundred thousand (Tzs 1,500,000) or to imprisonment for a term of not more than six months or both (sections 23 (1) of the HESLB Act No 9 of 2004 as amended).

2 Where it is discovered that the loan was granted due to false information furnished by the loan applicant or by the Guarantor, the Board shall cancel the loan and subject the loanee or the Guarantor to prosecution.

2.0 THE ONLINE LOAN APPLICATION PROCESS : The loan application process MUST follow the following order:

a) Pay the Loan application fee via M-Pesa

b) Do self registration with OLAS (the M-Pesa Transaction ID is required)

c) Fill in the Online application form

d) Print the completed Loan Application forms.

e) Append the relevant attachments to the application forms.

f) Take your application forms for attestation by a Magistrate or Public Notary/Advocate and by Local Government Authorities

g) Send the completed application package by EMS to HESLB (address is provided below)

Note : Applicants are advised to keep the EMS receipts and a copy of the completed application forms for future reference and follow up.

The above steps are explained in detail here under.


3.1 Mode of payment :

All applicants MUST FIRST PAY the required loan application fee through VODACOM M-Pesa. Once the loan application fee has been paid and the TRANSACTION ID obtained, the applicant can then proceed to apply online. The received TRANSACTION ID can be used only once to self register with OLAS. This mode of payment was selected for ease of keeping track of all loan application fee payments on the part of the Loans Board and ease access of payment on the part of applicants.

3.2 Application Fees Payable :

i) First time applicants must pay a non refundable one off application fee of Tzs 30,000/=.

ii) All fifth year and sixth year continuing loan beneficiaries students must continue to pay Tzs 10,000/=.

iii) All second, third and fourth year continuing students who paid a one time loan application fee of Tzs 30,000/= for the academic year 2009/10, 2010/2011 and 2011/2012 shall not be required to pay any fee.

3.3 How to pay the application fee through M-Pesa :

Each applicant shall use the Form Four Index number as a Reference Number when making the electronic payment. The mobile money payment systems will generate a unique Transaction ID which will have to be input into the Online Loan Application System before the applicant is allowed to self register.

3.3.1 How to pay via M-Pesa :

** A registered customer dials *150# from the mobile handset

** Choose option 4 for “Pay Bill” (“Lipa bili yako”)

** Choose option 2 for “Select registered company number” (“majina ya kampuni yaliyohifadhiwa”)

** Enter 10 (for HESLB)

** Enter the amount in Tshs to pay (30,000 or 10,000)

** Enter your 15 character reference number which is your Form Four index number e.g. S0143.0012.2009 (Ingiza namba yako ya kumbukumbu)

** Enter your 4 digit M-Pesa PIN

** Enter 1 to confirm

** A confirmation Message will be displayed

3.4 How to Format the Form Four Index Number :

The Form Four index number is a combination of School or Centre Number, Candidate Examination Number and Year of Completing Form Four Secondary Education. For example the index number S0143/12/2009 is a combination of S- School Candidate, 0143- School or Centre Number, 0012= Candidate Examination Number and 2009 = Year of Examination. For the purpose of mobile payment systems the reference number shall be a 15 character represented as E.g. S0143.0012.2009


4.1 Self Registration can only be done after appropriate loan application fee has been paid, for which a valid Transaction ID will be required as proof.

4.2 Candidates who resat for Form Four examination, are required to register using the oldest index number.

4.3 Candidates who sat for National Examination Council of Tanzania (NECTA) examinations fall under two categories namely, School and Private candidates

4.4 Candidates of other examination bodies such as Cambridge, Ugandan, Malawian, Zambian, Kenyan etc will include the examination number of respective body and year as appearing on the certificate. A different link is provided for self registration for such applicants.

4.5 During self registration, prospective candidates will be required to provide their Mobile phone numbers and E-mail addresses.

4.6 There are four possible Applicant categories for both First time Applicants and Continuing Students from which to select, namely:

4.7 To assist the system to identify an applicant in case one forgets his password, applicants must select a secret question and provide a secret answer.

4.8 After successful registration, the system will display the username (based on the Examination Index Number) and Applicants’ names as used during Form Four Exams.

The applicants must use the username and password given to the Online Application System when self registering to log in and continue with the loan application process.


Provision has been made to enable applicants to change their passwords to another whenever they forget or need to enhance security.

In case an applicant forgets the password, the system will ask for the secret question and answer previously selected, or by resetting to e-mail (if provided).

The new password must be at least 6 characters in length.


7.1 The Loan application form consists of several subforms appearing on the left side menu after the applicant has logged in. The applicant is required to fill in all the subforms by providing information on each of the fields of the subform.

7.2 The order of filling the subforms is predetermined. The application process can be stopped at any given time and when the applicant logs in again, the process can be continued from where one left off.

7.3 Some of the fields are mandatory. An applicant will not be able to proceed to the next step if no information is supplied in any mandatory field. Some fields are optional, applicants are free to supply the information if available or leave them blank.

7.4 When a subform has been duly filled the applicant shall click on the Submit Button. The successfully submitted forms will move from the left hand side menu to the right hand side of the main application page.