Over the course of the last four weeks, we have covered the four different income-based repayment options available. This week we will be touching on the graduated repayment plan.

The graduated repayment plan has a 10 year repayment period unless you have a consolidated loan in which case you could have between 10 and 30 years for repayment.

Under this repayment plan, your student loan payment will start out low and increase every two years. The payment will always be at least the amount of interest that is accruing between your monthly payments but the payment won’t be more than three times what you would be required to pay on any other payment option.

The thought behind the graduated repayment plan is that when your loans initially go into repayment you are likely making less money than you will be later on in life. As you progress in your career, your income should increase and your student loan payment will increase. Under this repayment option, you will end up paying more in interest on your student loans than you would under the standard 10-year repayment plan. This is because you aren’t paying down as much on your principal in the early years of repayment.