Federal student loans offer a specific selection of repayment plans that borrowers can choose from. Federal student loan borrowers may be assigned a repayment plan when they begin loan repayment, but they can change their repayment plan at any time without fees.
Choosing the right repayment plan may feel overwhelming, but understanding the repayment plans available to federal student loan borrowers can help.
The student loan repayment options for federal loans covered in this article are:
• Standard Repayment Plan
• Extended Repayment Plan
• Graduated Repayment Plan
• Income-Driven Repayment Plans
The Standard Repayment Plan is 10 years (10 to 30 years for those with Consolidation Loans) and usually has the highest monthly payments, but it allows borrowers to repay their loans in the shortest period of time. That may help a borrower pay less in accrued interest over the life of the loan.
The Extended Repayment plan stretches out the repayment period so that you’re putting money toward student loans for up to 25 years. Payments can be fixed or they may increase gradually over time. This repayment plan may be worth considering for borrowers who have more than $30,000 in federal Direct Loans and cannot meet the monthly payments on the Standard Repayment Plan.
On the Graduated Repayment Plan, the repayment period is typically 10 (10 to 30 years for those with Consolidation Loans). The monthly payments start out low and then increase every two years. This plan may be worth considering for borrowers who have a relatively low income now, but anticipate that their salary may increase substantially over time.
Income-Driven Repayment plans tie a borrower’s income to their monthly payments. These options may be worth considering for borrowers who are struggling to make payments under the other payment plans or who are pursuing Public Service Loan Forgiveness.
Choosing a repayment plan is one of the basics of student loans. For help determining which plan may be a good choice for your situation, you can take this quiz. Or, you can go directly to the overviews of the different repayment plans below to get a better understanding of them.
Quiz: What Student Loan Repayment Plan is Right for You?
Student Loan Repayment Plan Options for Federal Student Loans
Standard Repayment Plan
The Standard Repayment Plan is essentially the default repayment plan for federal student loans. This plan extends repayment up to 10 years (10 to 30 years for those with Consolidation Loans) and monthly payments are set at a fixed amount. The interest on the loan remains the same as when it was originally disbursed.
One of the benefits of the Standard Repayment plan is that it may save you money in interest over the life of your loan because, generally, you’ll pay back your loan in the shortest amount of time (10 years) compared to the other federal repayment plans (20 to 30 years).
A common challenge associated with the standard repayment plan is that payments can be too high for some borrowers to manage. Remember that this is the default option when it comes time to set up a repayment plan, so if you would prefer another option, you’ll need to choose one when the time comes to start repaying your loans.
Student Loans Eligible for the Standard Repayment Plan
The following federal loans are eligible for the Standard Repayment Plan:
• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS Loans
• Direct Consolidation Loans
• Subsidized Federal Stafford Loans
• Unsubsidized Federal Stafford Loans
• FFEL PLUS Loans
• FFEL Consolidation Loans
Extended Repayment Plan
If you have over $30,000 in Direct Loan debt and the payments are too high for you to manage on the standard 10-year repayment plan, you can choose the Extended Repayment Plan for your federal loans. Under this plan, the term is up to 25 years and payments are generally lower than with the Standard and Graduated Repayment Plans. You can also choose between fixed or graduated payments.
If you’re eligible, an Extended Repayment Plan can provide significant relief if you’re struggling to pay your monthly loan payments by lengthening your term and potentially lowering your monthly payments.
This can help keep you out of default (which is important!). But it is critical to be aware that lengthening your loan term usually means you will be paying significantly more interest over the life of the loan — because it will take you longer to pay off your loan — and it may not give you the lowest monthly payments, depending on your circumstances.
Student Loans Eligible for the Extended Repayment Plan
The following federal loans are eligible for the Extended Repayment Plan:
• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS Loans
• Direct Consolidation Loans
• Subsidized Federal Stafford Loans
• Unsubsidized Federal Stafford Loans
• FFEL PLUS Loans
• FFEL Consolidation Loans
Graduated Repayment Plan
With this plan, you would pay your federal student loans back over a 10-year period (10 to 30 years for Consolidations Loans), with lower payments at the beginning of the term that gradually increase every two years.
The idea behind the Graduated Repayment Plan is that a borrower’s income will likely increase over time, but may not be much at the start of their career.
Of course, the income boost may not happen. With this plan, because interest keeps accruing on the outstanding principal balance over a longer period of time, even though you’re making payments, the longer you take to repay your loan(s), the more interest you’ll wind up paying in the end. (Remember, more payments with interest = more interest paid total.)
Student Loans Eligible for the Graduated Repayment Plan
The following federal loans are eligible for the Graduated Repayment Plan:
• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS Loans
• Direct Consolidation Loans
• Subsidized Federal Stafford Loans
• Unsubsidized Federal Stafford Loans
• FFEL PLUS Loans
• FFEL Consolidation Loans
💡 Quick Tip: Ready to refinance your student loan? You could save thousands.
Income-Driven Repayment Plans
Each of the three plans listed above (Standard, Extended, and Graduated) are considered traditional repayment plans. Income-Driven Repayment Plans , though, are different because the student loan payment amount is based upon the borrower’s income and family size.
To be eligible for an income-driven repayment plan, you’ll need to go through a recertification process each year, and your monthly payment could change (increase or decrease) annually based upon your current income and family size.
Maximum payments are set at 10% or 20% of what’s considered your discretionary income (the difference between 150% of the poverty guideline and your adjusted gross income), depending on the loan and the plan. There are multiple types of income-driven plans, including:
• Income-Based Repayment Plan (IBR)
• Pay As You Earn Repayment Plan (PAYE)
• Saving on a Valuable Education (SAVE), the new plan announced by the Biden Administration that’s replacing the Revised Pay As You Earn Repayment Plan (REPAYE) plan
• Income-Contingent Repayment Plan (ICR)
A significant advantage of using income-driven repayment plans is that your payment can be adjusted to accommodate a lower income. And, in most cases, if you choose one of these plans, any remaining balance after 20 or 25 years may be forgiven if repayment has been satisfactorily made.
Again, the longer you extend your loan term, the more payments (with interest) you’ll be making. Not all loans qualify for this type of program; you’ll need to be vigilant about recertifying for this repayment program and regularly provide updated information to the federal government. And, if the remaining portion of the debt is forgiven, you may owe taxes on that dollar amount.
Another Option to Consider: Student Loan Refinancing
Refinancing student loans with a private lender allows borrowers to consolidate (that is, combine) the loans. This could help make repayment convenient because there will be just one monthly payment.
One of the other possible advantages of refinancing student loans is that borrowers who qualify for a lower interest rate may be able to reduce the amount of money they spend in interest over the life of the loan.
You typically need a certain credit score to qualify for student loan refinancing, along with other fairly standard lending qualifications (like income and employment verification, among other factors).
And know this: Once federal student loans are refinanced with a private lender, they will become ineligible for federal repayment plans, programs like Public Service Loan Forgiveness, and other borrower protections like deferment or forbearance.
💡 Quick Tip: When rates are low, refinancing student loans could make a lot of sense. How much could you save? Find out using our student loan refi calculator.
Repayment Plans for Private Student Loans
The repayment plans for private student loans are set by the lender. If you have private student loans,you can review the loan terms or contact the lender directly to review the payment options available to you. This private student loans guide may also help you learn more about how these loans work.
The Takeaway
Borrowers repaying federal student loans have three traditional repayment plans to choose from (Standard, Extended, and Graduated) and four Income-Driven Repayment Plans. When selecting a repayment plan, consider factors like your current income and expenses, potential future income, and career goals. For example, borrowers pursuing Public Service Loan Forgiveness will need to be in an income-driven repayment plan.
Those who choose a longer term to lower their payments, should keep in mind that this may mean paying more in interest over the life of the loan. If the goal is to pay off debt more quickly and pay less back in interest overall, potential borrowers may pick a shorter term.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
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.
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