Strategies to Pay Back Federal Student Loans

By Becca Stanek · June 30, 2022 · 8 minute read

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Strategies to Pay Back Federal Student Loans

If you borrowed money from the government to help cover the cost of tuition, you’ll someday get hit with the reality that you do have to pay back federal student loans. This could lead you to wonder how to pay back federal student loans. Luckily, there are a number of student loan repayment strategies to consider to pay back the money you borrowed and become debt-free.

Read on for a full explanation of the strategies that could help you when it comes time to start paying back federal student loans.

Paying Back Your Student Loans

The prospect of paying back your student loans may seem daunting, but there are strategies you can take to pay off your federal student loan debt. This includes choosing from the number of repayment plan options available or opting to refinance your student loans.

Of course, before you start making payments, you’ll want to know when you need to pay off your loans — and how — so you can determine an appropriate plan of action.

Types of Student Loans

To determine the right student loan repayment strategy, it’s important to know what type of student loans you have. Here are the types of federal student loans you may have taken out:

Direct Subsidized Loans

Direct Subsidized Loans are a type of federal student loan only for undergraduates who have demonstrated financial need. With these loans, borrowers generally do not have to pay interest while they are in school or during a grace period or deferment.

You may also hear this type of federal loan referred to as a Subsidized Federal Stafford Loan.

Direct Unsubsidized Loans

With Direct Unsubsidized Loans, borrowers are not required to demonstrate financial need. Also called Unsubsidized Federal Stafford Loans, these federal loans are offered to undergraduate, graduate, and professional students. Interest is charged during all periods.

When Do You Have To Pay Back Federal Student Loans?

Before you start worrying about how to pay off your federal student loans, you should know when you have to pay them back. If you just graduated or left school, you may have some time before you’re required to start paying back your student loans.

New grads generally have a grace period of six months before they are required to start throwing their hard-earned cash at their federal student loans. The exact length of the grace period depends on the type of loan and your specific circumstances.

Direct Subsidized Loans and Direct Unsubsidized Loans have a six-month grace period. This means that if you graduate in the spring, you may not need to make federal student loan payments until around October, depending on the date you graduate. If you’re a winter grad, you can expect to start repayment around June.

Unfortunately for graduate students, Direct PLUS Loans don’t have a grace period. This means you’re on the hook for making payments 60 days after your final loan disbursement (though you may be able to get a six-month deferment).

You may also lose your grace period if you consolidate your federal student loans with the government during your grace period. One caveat: If you’re a member of the armed forces on active duty, you may be eligible to extend your grace period during a deployment.

Private student loans are a different story, as these are loans from private lenders that set their own terms when it comes to loan grace periods. This means that private student loans may not offer a grace period at all, or that it may be shorter or longer than the federal student loan grace period.

How Do I Pay Back My Federal Student Loans?

Even though you may not be required to start paying off your student loans while they’re in a grace period, you might want to think about starting payments early.

Why start making payments before they’re due? During a grace period, some loans may still be accruing interest. That means that every month you wait to start making payments is another month that the total loan amount grows larger. Starting loan payback as soon as possible may help save on those capitalizing interest costs.

Figuring out how to pay federal student loans can be confusing. Paying back federal student loans starts with getting to know your loan servicer. There are several different loan servicers throughout the country who are responsible for managing federal student loans. Luckily, most loan servicers have robust websites where you can manage your student loan payments online.

Your loan servicer’s website should allow you to view your loans, choose a payment plan, and set up automatic payments. Generally, you can make payments directly through the website, which means that you can avoid having to write out a check and worrying that it will get lost in the mail on the way to your loan service provider.

Choosing a Loan Repayment Plan

One integral loan repayment strategy is choosing a student loan repayment plan. While you’ll automatically be put onto the Standard Repayment Plan if you do nothing else, you may want to consider choosing a different repayment plan depending on your financial situation.

If you’re paying off federal loans, you may be able to choose between a few different repayment plans depending on which best fits your financial situation, such as:

The Standard Repayment Plan

The Standard Repayment plan is the default loan repayment plan for federal student loans. Under the Standard plan, you pay a fixed amount every month for up to 10 years in order to pay off the full balance of your loan.

The Extended Repayment Plan

Extended Repayment plans work similarly to the Standard Repayment plan, but the term of the loan is longer. Extended Repayment plans generally have terms of up to 25 years. The longer term allows for lower monthly payments, but you may end up paying more over the life of your loan thanks to additional interest charges.

The Income-Driven Repayment Plan

For qualified applicants, there are also loan repayment options that are tied to the amount of your discretionary income. With income-driven repayment plans , the amount you owe on your student loans is tied to the amount of money you make. Income-based repayment plans are generally capped at 20 or 25 years, and any remaining balance on your loan may be forgiven after that term.

Refinancing Student Loans

Another strategy you may consider for paying back federal student loans is student loan refinancing. For some grads, loan refinancing may help save money over the term of your loan.

What are the benefits of refinancing with a private lender instead of just paying off the federal loans you currently owe? Student loan refinancing combines all of your current federal and private student loans into one new loan from a private lender, hopefully with better terms.

This means that you may be able to snag a lower monthly payment or even a shorter repayment term, both of which could save some serious cash over the life of your loan — depending on the term you choose, of course.

There are downsides to refinancing though. If you refinance your federal loans, they will no longer be eligible for any federal repayment assistance, like the Public Service Loan Forgiveness Program or any federal repayment plan. You also will no longer be eligible for federal repayment protections and will lose any remaining grace periods.

The Takeaway

As you can see, you have a number of options for paying back your federal student loans. You will want to consider your financial situation and which options you’re eligible for in order to choose the student loan repayment strategy that makes the most sense for you.

If loan repayment plans don’t seem like the right path for you, consider the option to refinance your student loans. While you’ll lose some federal loan protections, you may secure a lower interest rate.

Finding the right strategy to pay off your student loans can help you take control of your finances. See if refinancing with SoFi is right for you.


Is there a way to get rid of federal student loans?

One way to get rid of them is by paying back federal student loans through one of the available student loan repayment strategies. However, you may also explore student loan forgiveness, though this is generally only an option in select circumstances. Bankruptcy could also allow you to get your loans discharged if you can prove “undue hardship,” but this should be viewed as an absolute last resort due to its financial implications.

What is the best option for repaying student loans?

The best student loan repayment strategy will vary depending on your personal situation. For instance, if you need lower payments, you might look into Income-Driven Repayment. Meanwhile, if you’re focused on paying as little interest as possible, the Standard Repayment plan may be a better option due to its shorter term. To decide what’s right for you, check which plans you’re eligible for and then calculate potential payments on those plans to determine what might fit into your financial circumstances.

What can the federal government do if you do not pay back your student loans?

If you’re wondering, ‘do you have to pay back federal student loans?,’ the answer is yes. The government can garnish your wages and withhold your tax refunds if your loan goes into default. Further, when a loan goes into default, it’s reported to the credit bureaus, which can damage your credit and make future borrowing more difficult.

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.


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