How to Pick a Repayment Plan That Fits Your Budget
Compare federal student loan repayment options to find the best plan for your income and financial goals.
Federal Repayment Plan Comparison
Standard Repayment
Payment: Fixed monthly payment
Term: 10 years
Pros:
- • Lowest total interest
- • Fastest payoff
- • Predictable payments
Cons:
- • Highest monthly payment
- • Less flexibility
- • May strain budget
Best for: High earners who want to minimize total interest
Income-Driven Repayment (IDR)
Payment: 10-20% of discretionary income
Term: 20-25 years
Pros:
- • Lower monthly payments
- • Based on income
- • Forgiveness after term
Cons:
- • Higher total interest
- • Longer repayment
- • Annual recertification
Best for: Lower incomes, unpredictable earnings, public service careers
Graduated Repayment
Payment: Starts low, increases every 2 years
Term: 10 years
Pros:
- • Lower initial payments
- • Matches income growth
- • Same term as standard
Cons:
- • Higher total interest
- • Payments increase significantly
- • Less predictable
Best for: New graduates expecting significant salary increases
Extended Repayment
Payment: Fixed or graduated
Term: Up to 25 years
Pros:
- • Lower monthly payments
- • Longer term
- • Fixed or graduated options
Cons:
- • Much higher total interest
- • Requires $30k+ in loans
- • Longer debt period
Best for: Very tight budgets, high debt balances
Income-Driven Repayment Options
PAYE (Pay As You Earn)
- • 10% of discretionary income
- • 20-year forgiveness
- • Partial financial hardship required
- • Payment cap at Standard plan amount
REPAYE
- • 10% of discretionary income
- • 20-25 year forgiveness
- • No financial hardship requirement
- • Interest subsidy benefits
IBR (Income-Based)
- • 10-15% of discretionary income
- • 20-25 year forgiveness
- • Partial financial hardship required
- • Payment cap available
ICR (Income-Contingent)
- • 20% of discretionary income
- • 25-year forgiveness
- • Available for all federal loans
- • Includes Parent PLUS loans
Important Considerations:
- • Tax implications: Forgiven amounts may be taxable income
- • Annual recertification: Must update income/family size yearly
- • Interest capitalization: Unpaid interest may be added to principal
- • Marriage impact: Spouse income may affect payments
How to Choose Your Plan
Decision Questions:
1. What's your current financial situation?
- • Stable high income: Consider Standard repayment
- • Low or variable income: Look at Income-Driven plans
- • Tight budget: Extended or IDR plans may help
2. What are your career goals?
- • Public service: IDR plans qualify for PSLF
- • Private sector: Consider total interest costs
- • Uncertain path: IDR provides flexibility
3. How much debt do you have?
- • Low debt-to-income: Standard plan often best
- • High debt-to-income: IDR plans provide relief
- • Very high debt: Consider forgiveness options
Frequently Asked Questions
Can I change my repayment plan later?
Yes! You can change federal loan repayment plans at any time by contacting your loan servicer. Some plans have eligibility requirements.
What happens if I miss the annual IDR recertification?
Your payment will revert to the Standard 10-year amount, which could significantly increase your monthly payment.
Are private student loans eligible for these plans?
No, these repayment options are only for federal student loans. Private loans have their own refinancing and modification options.
Should I consolidate my loans before choosing a plan?
Consolidation can simplify payments and make some plans available, but you may lose benefits like interest rate discounts or forgiveness progress.
Find Your Perfect Repayment Plan
The right repayment plan can save you money and reduce financial stress. Take time to compare your options.