 TITLE: How Does a Repayment Plan Work? CONTENT: For many types of loans, a repayment plan refers to the monthly payment and loan term a lender assigns you. The amount you pay per month depends on how much you borrowed and the interest rate. Here are some examples:\n*   **Federal student loans**: Federal student loans come with a range of repayment plan options. In most cases, you'll receive a grace period of six months after you graduate or leave school when you won't be required to make payments.  \n    Once you begin repayment, the standard repayment plan breaks up the amount you owe into 10 years' worth of fixed payments. But you can also choose the 10-year graduated repayment plan, which starts with lower payments and increases every two years; the 25-year extended repayment plan; or one of four income-driven plans, which limit payments to a percentage of your income and provide forgiveness on the remaining balance after 20 or 25 years.\n*   **Private student loans**: Banks and online lenders that provide private student loans generally do not offer the same scope of repayment plan options. Not all private loans offer a grace period, and income-driven plans are not common. You'll typically make fixed payments over five, 10 or 15 years, and the amount you pay corresponds to the interest rate you receive based on factors such as your credit score.\n*   **Personal loans**: Similar to private student loans, you'll generally repay personal loans in fixed monthly amounts, at an interest rate that depends on your credit score. Personal loan terms are often two to five years.\nA repayment plan on a mortgage, by contrast, helps you get back on track after a period of missed payments. While your mortgage lender already charges you a fixed amount per month, a repayment plan adds a portion of the past-due amount to your bill for a period of several months until you're caught up.\nIt's a strong option if you're now in a better financial situation and you're motivated to avoid falling further behind. You'll need to demonstrate to your lender that you can afford the repayment plan, which may incorporate late fees. END