Your Guide to Choosing a Student Loan Repayment Plan
Beginning August 1, federal student loan holders who are enrolled in the SAVE Plan will see interest accrue on their student loans, but payments are still suspended. Eligible borrowers can apply for and recertify under the Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE) Repayment Plans, as well as Direct Consolidation Loans. Many changes to student loans are expected to take effect July 1, 2026. We will update this page as information becomes available. To learn the latest, go to StudentAid.gov.
Federal student loan borrowers can choose a federal student loan repayment plan. The U.S. Department of Education offers a variety of student loan repayment options, and you can choose the best option for you.
Different Student Loan Repayment Plans
Below, we highlight some of the federal student loan repayment plans offered by the U.S. Department of Education:
Standard Repayment
The Standard Repayment Plan is the basic loan repayment plan. It’s available to anyone who’s borrowed a federal student loan under the Direct Loan or Federal Family Education Loan (FFEL) programs. Your fixed monthly payment under this plan would be at least $50. The repayment period is generally up to 10 years but between 10 and 30 years for borrowers with federal consolidation loans.
Graduated Repayment
Federal student loan borrowers may be eligible for the Graduated Repayment Plan. Monthly payments under this plan start out low and increase every two years. The repayment period is generally up to 10 years but between 10 and 30 years for borrowers with federal consolidation loans.
Extended Repayment
Borrowers with federal student loans may be eligible for the Extended Repayment Plan. This plan allows you to repay your federal student loans over an extended period up to 25 years. Monthly payments under this plan could be a fixed or graduated amount.
Income-Driven Repayment
The U.S. Department of Education offers the following four income-driven repayment (IDR) plans to help borrowers pay down their federal student loan debt:
Saving on a Valuable Education (SAVE) Plan, which replaces the Revised Pay As You Earn (REPAYE) Plan
Private student loans are not eligible for any federal repayment options, including IDR plans. Depending on your income and family size, all four IDR plans may offer a lower monthly payment compared with the Standard Repayment Plan.
All IDR plans can end with a borrower’s outstanding balance being forgiven at the end of the repayment period. Forgiveness may come after 20 or 25 years under any of the IDR plans, but forgiveness may come earlier for some SAVE Plan enrollees.
Borrowers with original principal balances of $12,000 or less may be eligible for forgiveness of any remaining balance after making 10 years of payments under the SAVE Plan, according to the Federal Student Aid Office.
Choosing a Student Loan Repayment Plan
You can take the following steps when choosing a student loan repayment plan:
1. Reviewing Your Finances
The first step you can take when choosing a student loan repayment plan is reviewing your finances. This may include reviewing your income, cost-of-living expenses, debt obligations, and personal savings. You can assess your personal financial outlook to determine how much you can afford to pay toward student loan balances each month.
Your annual income may determine whether an IDR plan is right for you. Monthly payments under the SAVE Plan will be 5% of discretionary income for undergraduate loans, 10% for graduate loans, and a weighted average for borrowers who have both.
You can minimize your interest charges by paying off your student loans sooner rather than later. Choosing a longer repayment term may expose you to more interest charges over the life of your loan.
2. Creating a Budget
After reviewing your finances, you can work toward creating a budget that works best for you. Once you determine how much you can afford to pay each month on student loans, you can implement a budget plan for paying down student debt.
As mentioned above, you can minimize your interest charges by paying off your student loans sooner rather than later. Borrowers can make more than the minimum payment when paying off student loans.
What you’re willing to budget toward student debt payments can reflect what’s best for you. Making extra payments may not work for you if it means sacrificing your quality of life.
3. Choosing the Best Option for You
After reviewing your finances and creating a budget, you can choose the student loan repayment plan that works best for you. The federal government has a loan simulator that can help you choose a repayment option that best meets your needs and goals.
Student loan repayment plans offered by the U.S. Department of Education may include specific eligibility criteria. You may qualify for several repayment plans, but your individual circumstances would determine which plan can provide you with the lowest monthly payment.
The 10-year Standard Repayment Plan may not be right for you if you’re eligible for Public Service Loan Forgiveness (PSLF). The PSLF program can forgive the remaining balance on your federal student loans after you have made 120 qualifying monthly repayments as a public employee.
Recommended: How Long Does It Take To Pay Off Student Loans?
Changing Your Repayment Plan by Refinancing Your Student Loans
You may refinance federal and private student loans with a private lender. Student loan refinancing is paying off existing student loans with a private education loan. Refinancing student loans may lower your interest rate. (Refinancing for a longer term may increase your total interest costs.)
You’ll forfeit federal benefits if you refinance federal student loans with a private lender. Refinancing federal student loans will remove your access to IDR plans and PSLF.
When weighing the pros and cons of student loan refinancing, here are some additional points to consider:
It might be difficult to refinance student loans with bad credit
What happens to student loans when you die is the debt might be discharged, although some lenders may demand repayment from your estate
People who serve in the U.S. armed forces may qualify for military student loan forgiveness
Private student loan borrowers may have fewer options for student loan forgiveness than federal student loan borrowers
The difference between private vs. federal student loans is the U.S. Department of Education provides or guarantees federal student loans, whereas banks, credit unions, online lenders, and state-based organizations may offer private education loans not guaranteed by the government.
Recommended: How Does Student Loan Refinancing Work?
The Takeaway
Income-driven repayment plans can help people make payments on their federal student loans. If you want to refinance student loans, Lantern by SoFi can help. Just remember that the amount you refinance is not eligible for federal student loan forgiveness.
Explore student loan refinance rates.
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