Relationship between loan balance, time until forgiveness, and repayment strategy (IMAGE)
Caption
The shaded areas denote situations in which income-based payments would minimize the cost for direct undergraduate, graduate, and PLUS loans, according to the time until loan forgiveness in an income-based scheme (on the vertical axis, in years) and loan balance (on the horizontal axis, in U.S. dollars). The light gray area represents immediate enrollment and the dark gray area represents later enrollment after a period of maximum payments. In areas with no shading, the optimal choice is to make maximum payments until the loan is fully paid off. The vertical lines denote the maximum loan amounts that are currently allowed for those schemes, indicating that it is always best to make maximum payments on direct undergraduate loans and often best to do so for direct graduate loans as well.
Credit
Figure courtesy of Paolo Guasoni, Yu-Jui Huang, and Saeed Khalili.
Usage Restrictions
The image may only be used with appropriate credit
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