Repaying Your Educational Debt

The majority of veterinary school graduates end up paying off their student loans themselves. Most loans have a six- or nine-month grace period between graduation and when the first loan payment is due.

Don't be late making your loan payments, because this could have serious negative long-term implications. For example, some lenders offer discounts for regular on-time payments, but with even one late payment you will lose this discount.

Avoid penalties

Basic tips for repaying your student debt and avoiding penalties:

  • Keep accurate information on your lenders, the loans and the payment due dates. You can use FinAid's Student Loan Checklist to keep track of your loans.
  • Make your payments on time.
  • Make automated payments (but make sure your account maintains sufficient funds for the payments).
  • Pay off your highest-interest debt first.
  • Deduct your student loan interest on your taxes (if eligible for the deduction).
  • If you have accrued more than $30,000 in debt, you are eligible for a 25-year extended repayment schedule without consolidating your loan(s);. However, consider this option only if it is absolutely necessary to avoid defaulting on your loan.

Student debt repayment plans

Standard and Extended Repayment plans assume that the loan will be repaid in equal monthly installments through standard loan amortization (i.e., 10-years or up to 25-years repayment). The Standard and Extended plans calculate federal education loans (Stafford, Perkins and PLUS) and most private student loans. The federal Stafford Loan has a fixed interest rate of 6.8%, and the federal PLUS loan has a fixed rate of 7.9%. (Perkins loans have a fixed interest rate of 5%).

Income Based Repayment (IBR) has two options, 15% and 10%. The 15% option was established by the College Cost Reduction and Access Act of 2007 and became available on July 1, 2009. The monthly loan payments are capped at 15% of discretionary income with forgiveness of any remaining debt (including accrued but unpaid interest) after 25 years. Discretionary income is defined as the amount by which adjusted gross income exceeds the poverty line. The 10% option was established by the Health Care and Education Reconciliation Act of 2010, which established an improved version of the income-based repayment plan for new borrowers of new loans made on or after July 1, 2014. The improved IBR plan cuts the monthly loan payments by one-third, from 15% of discretionary income to 10% of discretionary income, and accelerates loan forgiveness from 25 years to 20 years. However, borrowers who don't work in public service careers face a taxable event under current law.

Income Contingent Repayment (ICR) makes repaying education loans easier for students who intend to pursue jobs with lower salaries, such as careers in public service. It does this by pegging the monthly payments to the borrower's income, family size, and total amount borrowed. The monthly payment amount is adjusted annually, based on changes in annual income and family size. ICR is available only from the U.S. Department of Education, not from banks or other private institutions making government-guaranteed loans through the Federal Family Education Loan (FFEL) Program.

Both IBR and ICR base the monthly payment on a percentage of discretionary income, but IBR uses a smaller percentage and a smaller definition of discretionary income. For most borrowers IBR will yield a smaller monthly payment than ICR. IBR also offers superior benefits, such as government payment of accrued but unpaid interest on subsidized Stafford loans for the first three years.

Income Sensitive Repayment (ISR) is an alternative to ICR for loans serviced by lenders in the FFEL Program. It is designed to make it easier for borrowers with lower-paying jobs to make their monthly loan payments. The monthly loan payment is pegged to a fixed percentage of gross monthly income, between 4% and 25%. The percentage is determined by the borrower, and the resulting monthly payment must be greater than or equal to the interest that accrues. Some lenders set a minimum threshold on the percentage of income based on your debt-to-income ratio.

Graduated Repayment starts the payments at a low level (usually interest only) and gradually increases the payments until the balance is paid. The loan term is 12 to 30 years, depending on the total amount borrowed.

Consolidation Loans  

Federal consolidation loans are new loans with new discounts, fees and interest rates, similar to refinancing a car or house. There is often a minimum amount that can be consolidated, but the minimum is often only $5,000-7,500. You can consolidate one loan, but you cannot re-consolidate a consolidation loan unless you are combining it with another loan. You cannot consolidate private student loans in the federal consolidation plan (but you can consolidate private loans), and you cannot consolidate loans prior to graduation. Consolidating loans will not affect your credit rating. provides a list of consolidation loan lenders. Consolidating a Federal Perkins Loan will cause you to lose the subsidized interest benefit.
Contrary to popular belief, you do not need to consolidate your loan(s) to get extended repayment. There is a provision in the Higher Education Act of 1965 [section 428(b)(9)(A)(iv)] that allows extended or graduated repayment period of up to 25 years without consolidation as long as you have accumulated more than $30,000 in federal education debt since 1998.
To determine if consolidation is the correct choice for you, use's Loan Consolidation Calculator.

 For more information about consolidation, see FinAid.orgs Frequently Asked Questions about Consolidation, Private Student Loan Consolidation, and Stafford vs. PLUS Loan Comparison Chart.

Additional student loan repayment resources
Quick Reference Guide: Repaying Student Loans (PDF)
Overview of Repaying Your Student Debt (PDF)
Overview of Federal Direct Student Loan Interest Rates 2013-2014 (PDF)