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Available Repayment Plans for Federal Student Loan Debt

In 2016, there’s a wider variety of student loan repayment programs to choose from than ever before.

When you first take out a federally-funded student loan, you’re likely to be assigned to the standard payment plan (find the details below), but you do have the option to change your repayment plan at any time to select one that better suits your unique financial situation.

To help you decide which repayment plan option is best suited for you, this page introduces the different plans available, explains their pros and cons, and suggests which plan will work best for particular financial circumstances.

What Loans Qualify for These Payment Plans?

Before we get into the specific student loan repayment options, we want to note that these plans are not available for everyone with student loans, but only to those with Federally-funded Direct Loans or Federal Family Education Loans (FEEL Program Loans).

As we’ve stated time and time again on this website, if you do not yet have student loans, but are planning on taking some out, please make sure to rely as much as possible on Federally-funded loans.

Federal loans are far more flexible than privately-funded student loans, as they offer all sorts of debt relief, from loan deferments to loan forgiveness programs.


Available Student Loan Repayment Plans

As of 2016, there are 7 different repayment options available to those with federally-funded student loans. 

This page will present a quick overview of each of the repayment plans, including which loans are eligible for them, what the monthly payment and time frame is like, and a summary analysis of the plan pros and cons.

Here are the 7 available student loan repayment programs currently on offer:


The Standard Repayment Plan

Your student loan is almost guaranteed to begin on the standard repayment plan, as this is the traditional repayment option.

This plan is great for people who don’t have trouble making monthly payments, but it’s not so good for those of us who are living paycheck to paycheck, relying on credit cards to pay the bills, and consistently having trouble meeting our financial obligations.

Eligible Loans:

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • All PLUS Loans

Monthly Payments:

  • Payments are fixed (with the same amount due each month)
  • Payments must be at least $50 per month

Time Frame:

  • Up to 10 years

Pros & Cons:

  • Pro – This plan is best for people who aren’t having trouble meeting monthly repayments, since amounts are fixed
  • Pro – This plan allows you to pay less interest over the course of the loan, which saves you money in the long-run
  • Con – This plan is not good if you don’t have stable employment, a fixed income, or other issues that cause you to have an inconsistent amount of money available for student loan payments

The Graduated Repayment Plan

The graduated repayment plan is great for recent college graduates because it starts off with lower payments that scale higher over time, increasing every two years.

Eligible Loans:

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • All PLUS Loans

Monthly Payments:

  • Payments are not fixed
  • Payments start off low, then increase every two years

Time Frame:

  • Up to 10 years

Pros & Cons:

  • Pro – This plan’s low initial payments are perfect for recent graduates who aren’t making much money
  • Pro – This plan lets you increase your monthly payments over time, so it’ll be good if you expect to start earning more money every couple of years
  • Con – You don’t actually have control over the scaling payments, so if you didn’t get raises in accordance with the graduated plan’s time frame, you might end up running into trouble over time
  • Con – You’ll end up paying more in interest over the course of the loan than with the standard repayment plan, so this plan is more expensive in the long-run

The Extended Repayment Plans

This plan is excellent if you’re having serious trouble meeting your monthly repayments either because you don’t earn enough money, or because you’ve got a huge student loan debt.

The big difference between extended repayment and the previous plans is that this one gives you 25 years to pay off your loans, whereas the last two only allow you a 10 year time period.

Eligible Loans:

  • Direct Subsidized and Unsubsidized Loans (with $30,000 or more in outstanding debt, and loans newer than October 1st, 2007)
  • Subsidized and Unsubsidized Federal Stafford Loans (with $30,000 or more in outstanding debt, and loans newer than October 1st, 2007)
  • All PLUS Loans 

Monthly Payments:

  • Payments can be either fixed or graduated 

Time Frame:

  • Up to 25 years

Pros & Cons:

  • Pro – Monthly payments are guaranteed to be significantly lower than the 10 year plans
  • Con – This student loan payment plan is relatively limited in terms of who actually qualifies for it, since you’ve got to have a pretty significant amount of student loan debt
  • Con – You have to have at least $30,000 in debt in either Direct or FEEL loans to qualify for the program
  • Con – If you have only $15,000 in debt in Direct loans, then you can’t use the plan, even if you have $50,000 in debt in FEEL loans
  • Con – This plan ends up costing you more than the 10 year plans, since you pay more in interest over the life of the loan

The Income-Based Repayment Plan (IBR)

This plan is one of the most flexible, best options for anyone, no matter how much money they’re making, or how much they owe, since the payments fluctuate based on the amount of money that you’re making at any given time.

Eligible Loans:

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • All PLUS Loans made to students
  • Consolidation Loans (Direct or FEEL Loans), except for Direct or FEEL PLUS Loans issued to parents of students

Monthly Payments:

  • Payments are not fixed, but capped at 15% of your discretionary income (discretionary income is the different between your adjusted gross income and 150% of the poverty level for your state and family size)
  • Payments fluctuate as your income rises or falls

Time Frame:

  • Up to 25 years

Pros & Cons:

  • Con – This program isn’t available to everyone, because you must have a “Partial Financial Hardship” in order to qualify for the Income-Based Repayment Plan. A Partial Financial Hardship means that the annual amount of money due on your eligible loans (as calculated according to the 10-year Standard Repayment Plan) exceeds 15% of the difference between your adjusted gross income and 150% of the poverty line for your state and family size
  • Pro – Your monthly payments are guaranteed to be lower than the payments under the 10-year plans
  • Pro – After 25 years of making payments, any amount still due is completely forgiven (though you might have to pay income tax on the forgiven amount)
  • Con – You end up owing more money in the long-run, because you’ll end up paying more taxes throughout the course of the loan than you would with a 10 year loan

The Pay As You Earn Repayment Plan

This plan is one of the best student loans payment plans available to those who are having issues making their monthly payments.

It’s almost identical to the Income-Based Repayment Plan, except that it’s monthly maximum payments are set at 10% (instead of 15%) of discretionary income.

This plan is new, and was created as part of the President Obama Student Loan Forgiveness Program.

Eligible Loans:

  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS loans made to students
  • Direct Consolidation Loans, except for Direct or FEEL PLUS loans issued to parents of students

Monthly Payments:

  • Payments are not fixed, but capped at 10% of  your discretionary income (discretionary income is the different between your adjusted gross income and 150% of the poverty level for your state and family size)
  • Payments fluctuate as your income rises or falls

Time Frame:

  • Up to 20 years

Pros & Cons:

  • Con – Like the Income-Based Repayment Plan, you must have a “Partial Financial Hardship” to qualify for this program
  • Con – You must also qualify as a “new borrower” on or after October 1st, 2007, and you must have also received a direct loan disbursement on or after October 1st, 2011
  • Pro – Monthly payments will be lower than the monthly payment amounts on the 10 year plans
  • Con – You’ll end up paying more with this plan in the long-run, since taking 20 years to pay back the loan will add more interest than you’d eat up at a 10 year repayment plan
  • Pro – After you’ve made 20 years of qualifying payments, you’ll be eligible for complete loan forgiveness
  • Con – If you do qualify for loan forgiveness after 20 years of making qualifying monthly payments, you might end up oweing income tax on the amount of debt that gets forgiven

The Income-Contingent Repayment Plan

This student loan payments plan is another great option for those who want a flexible repayment schedule that’s based on their income.

Payments are calculated each year, so there’s some stability within the flexible nature of the plan, and are based on adjusted gross income, family size, and total amount owed.

Eligible Loans:

  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS Loans issued to students
  • Direct Consolidation Loans

Monthly Payments:

  • Payments are not fixed over the course of the loan, but they are fixed annually
  • Payments get calculated based on your adjusted gross income, family size, and total student loan debt
  • Payments fluctuate as your income changes, and as your debt load changes

Time Frame:

  • Up to 25 years

Pros & Cons:

  • Con – You’ll end up paying more over the life of the loan than you would with a 10 year plan, since interest has longer to grow over a 25 year period
  • Pro – Your payments will fluctuate based on your income, making it a great option for anyone who doesn’t have a fixed income stream, set salary, etc.
  • Pro – After you’ve made 25 years of qualifying payments, whatever is left of your debt will be entirely forgiven
  • Con – If you do qualify for forgiveness on the remaining balance of your loan, you might have to pay income tax on whatever amount gets forgiven

The Income-Sensitive Repayment Plan

This plan is yet another excellent option for people who prefer a fluctuating monthly school loans repayment.

Under the ISR plan, monthly payments fluctuate based on annual income, but the maximum loan term is only 10 years, so it’s essentially a short-term Income-Contingent Repayment Plan.

Eligible Loans:

  • Subsidized and Unsubsidized Federal Stafford Loans
  • FEEL PLUS Loans
  • FEEL Consolidation Loans

Monthly Payments:

  • Payments are not fixed, but fluctuate based on annual income

Time Frame:

  •  Up to 10 years

Pros & Cons:

  •  Con – You end up paying more over the life of the loan than you would with the standard 10 year plan, since monthly payments are lower
  • Pro – Your monthly payments are lower than they would be with the standard ten year plan
  • Con – The formula that determines your monthly payment is established by your lender, and each lender has a different formula, so you’ll have to work with them to determine just how much your payments will be

Which Plan Should I Pick?

That’s a tough call!

Like we said at the top of this page, choosing the right student loan repayment plan requires knowing some very specific details about your financial situation.

Most importantly, how much money are you making, how much is left over after you pay for your bills, and how much are your monthly student loan payments?

Once you know whether or not you can really afford to make your monthly payments, then you can start deciding if you need to have a shorter or longer loan term, and whether you want your monthly payments to remain fixed, or fluctuate based on earnings.

Our advice – pick the most expensive monthly payment that you can actually afford. This prevents your loan from accumulating extra costs (in interest), and allows you to get out of debt as soon as possible.

Student Loan Payment Calculator

To help you determine which plan will work best for you, play around with the student loan payment calculators from the Government’s official Federal Student Aid website, here.

Pick the calculator for whatever plan you want to try, run the numbers, and see how it turns out.

Make sure to check each of the individual plans that you qualify for before selecting a plan, as changing your plan does require some legwork, and paperwork, so you wan’t to make the right decision the first time through.

How Do I Apply to Change My Repayment Plan?

To change your plan, you’ll need to contact whoever services your loan.

That’s the group, agency, or company that you send your monthly payments to.

Tell them that you want to switch from the plan you’re currently on to one of the other available plans, and they’ll explain what you need to do to through the process.

Some lenders make this easy, while others will require some significant work.


Other Options

In addition to choosing your repayment plan, you might also want to consider consolidating your federal student loans.

Consolidation allows you to combine your federal loans into a single loan, with a single monthly payment, making it significantly easier to track and understand exactly what you owe.

There are, however, pros and cons, to consolidating your loans, so don’t automatically do it just because you can.

Need More Information?

For more information on consolidating federal student loans, check out this page.

If you’re still having trouble making monthly payments after selecting the easiest repayment plan, then you should also consider signing up for a student loan deferment.

Find a list of the available deferments, and an explanation of how they work, by visiting our page about Federal Student Loan Deferments.



Have Questions?

If you have questions about any of these plans, or about which plan would work best for you, feel free to ask away in the comments section below.

I check our comments 3-5 times per week, and do my best to get a response to each questions within 24 hours.

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Tim's experience battling crushing student loan debt led him to create the website Forget Student Loan Debt, where he offers advice on dealing with excessive student loans and advocates a cautious approach to funding education costs via borrowed money.