Federal student loan borrowers have multiple repayment plan options that determine their monthly payment amount, repayment timeline, and total interest paid. The default plan is Standard Repayment (fixed payments over 10 years), but borrowers can switch to Graduated, Extended, or Income-Driven Repayment (IDR) plans depending on their financial situation.
10 steps across 1 sections
1. Steps Process
- Know your loans. Log into studentaid.gov to review:
- All outstanding federal student loans
- Loan servicer for each loan
- Interest rates, balances, and disbursement dates
- Current repayment plan
- Understand available repayment plans.
- Fixed monthly payments over 10 years (up to 30 years for consolidation loans)
- Highest monthly payment but lowest total interest cost
- Default plan if you do not select another option
- Payments start low and increase every 2 years
Common Mistakes
- Staying on the default Standard plan when you cannot afford it
- Choosing Extended just for lower payments
- Not recertifying IDR annually
- Ignoring the Graduated plan sunset
- Not considering forgiveness in the total cost calculation
Pro Tips
- Match your plan to your career
- Use autopay for the interest rate reduction
- Pay extra when possible
- Review your plan annually
- Understand the new Repayment Assistance Plan (RAP)