Which Student Loan Repayment Plan is Best For Me? Find Out Below!
In 2019, 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.
But Before I Go Into Details…
Let me give you a quick word of advice: your best bet at reducing your monthly payments, or reducing your outstanding student loan debt is likely to be paying an expert for their assistance.
Student loan debt relief experts can review your financial situation, your loans, and your opportunities for applying to to new programs like the many Federal Forgiveness Benefits available this year, or the several Student Loan Discharge opportunities floating around right now.
If you’re struggling to make your monthly payments, then I recommend calling the Student Loan Relief Helpline, because they can review your situation and tell you exactly what to do to get rid of your debt as quickly, and cheaply, as possible.
Your first call to the Helpline is free, and you’ll only be charged if you agree to let them handle your loans for you, so you’ve got nothing to lose but a few minutes of your time!
To reach the Student Loan Relief Helpline, call: 1-888-906-3065.
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
There are 7 different repayment plan options for people with federal student loans.Â
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
- The Graduated Repayment Plan
- The Extended Repayment Plan
- The Income-Based Repayment Plan
- The Pay As You Earn Repayment Plan
- The Income-Contingent Repayment Plan
- The Income-Sensitive Repayment Plan
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 LoansÂ
Monthly Payments:
- Payments can be either fixed or graduatedÂ
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:
- Â Up to 10 years
Pros & Cons:
- Â 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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Thank you for visiting my site, and thank you so much for your support.
Disclaimer:Information obtained from Forget Student Loan Debt is for educational purposes only. You should consult a licensed financial professional before making any financial decisions. This site receives some compensation through affiliate relationships. This site is not endorsed or affiliated with the U.S. Department of Education.
By: Tim Marshall
Tim's experience struggling with crushing student loan debt led him to create the website Forget Student Loan Debt in 2011, where he offers advice, tips and tricks for paying off student loans as quickly and affordably as possible.
Is there any rule against working for a non profit that you start yourself?
Good Question Myra,
I’ve often wondered this same thing and to tell you the truth, I’m not entirely sure? I would recommend contacting the Student Loan Ombudsman Group to ask them if there’s a way to make this work. These guys are a Government-backed group of attorneys who provide free legal advice on student loan issues. You can find their contact info by Googling their name.
This information was very helpful! I have been approved for the Public Service Loan Forgiveness Plan and will make my first payment in September. I have worked for over 30 years at a government institution, and went to school later in life. Finally received my degree, however, I am planning to retire very soon – within the next few months. How does retirement affect my elegibility for this program? I amassed a rather large amount of debt and am so worried that I will not be able to remain in the Public Service Loan Forgiveness program. I would appreciate any help you could provide .
Thank you!
Hi Yolando,
Retirement will mean you lose eligibility for PSLF, since it requires making 10 years worth of payments (120 monthly payments) on an approved Income-Based Loan Repayment Plan, WHILE WORKING FULL-TIME at a qualifying Public Service position. If you retire before making the required 120 monthly payments, you won’t get forgiveness via PSLF.
I am a recent graduate. My loan debt is huge. It is over 160,000. Repayment will begin soon. I currently work part-time for a non profit agency. I am interested in the forgiveness program but not sure which program would be most beneficial. I am also a senior citizen who will receive social security in a few months. What is your advice?
Hi Deborah,
Any way that you could start working FULL-TIME at your Non-Profit? That would open up the Non-Profit Student Loan Forgiveness Program to you, which is offered under the Public Service Loan Forgiveness Program – the fastest and best forgiveness program on the planet!
Hi Tim
I am with fed loan servicing and have been on ibr since 2012. In 2015 i panicked when i lost my job and went into general forebarence. This caused my interest to capitalizes. Amy way i can fix this it really is not fair.
Also a second queation is how can i switch into paye with out having my loans capitalized. Any thoughts?
A third question would be volunteer work. Any way i can volunteer for a orgamization part time to pay down my loans?
Hi John,
I don’t think you can get rid of interest after it’s already capitalized unless you negotiate some kind of new deal with your lender. Something like a refinance or loan modification is probably the only option there, unfortunately.
You can switch to PAYE, but I do think your loans will capitalize as soon as you make any changes. That’s just the way it works. I’m not aware of any tricks that allow you to avoid capitalization once interest starts accruing.
I don’t have a good resource for a list of organizations offering to help pay down loans in return for volunteer time – but there may be one floating around. I’d try Googling for answers. Most of the time, loans are paid down by company’s you actually work for, or by the Federal Government itself, or by State’s who need more people of a certain employment, and it’s often the Nurses, Doctors, Dentists, etc., who end up being able to take advantage of those sorts of deals.
Check out my guide to State-Based Student Loan Forgiveness for some local options. I’m still building it out, so it’ll be a while before all 50 states are covered, but I’m hitting the big ones first.
Do you think the PAYE and REPAYE will suddenly disappear by Trump changing the student loan plans and we would have to suddenly owe bigger monthly payments? This is something I am concerned about.
Hi Henry,
I think everyone already enrolled in PAYE and REPAYE will be grandfathered into those programs and remain eligible for any benefits they were promised, but that people who haven’t already signed up for them may end up losing the ability to get on board. I don’t think you have to worry about payments skyrocketing if you’re already enrolled. Congress almost never approves things like that, and typically protects everybody who’s already taking advantage of the benefits on offer.
Have a parent plus loan. I am on a fixed income, but spouse is still working. All parent-student loans were taken in my name but the servicer still wants to count my spouses income. How can I get around this.
Hi Diane,
There’s no way to “get around this”, because the laws were changed a couple years back to make everyone count both their own and their partner’s income. This is an IRS tax law thing.
I see that some of the repayment plans offer forgiveness after paying for 25 years if the loan is not finished at this time. Does the federal government forgive loans if you make on time payments for 10 years?
Hi Jen,
Federal loans are forgiven at the 10 year mark IF you qualify for the Public Service Loan Forgiveness Program. Read my page about PSLF here: https://www.forgetstudentloandebt.com/student-loan-relief-programs/federal-student-loan-relief/federal-forgiveness-programs/public-service-loan-forgiveness/
When they say All PLUS loans. Does this include Parent Plus Loans?
Hi Alaina,
Yes.
Can you rehab loans defaulted for a second time
Hi Tina,
It’s kind of the same as when they default for the first time… if the lender allows you to move them back into normal repayment, you’re ok. If they don’t, you’re still in default. You’ve got to work with and negotiate with the lender to get them put back into good standing.
What are the qualifications of student loan forgiveness for federal loans?
Read through my site’s content and you can find out.
Hello,
What if your lender is now using your spouse’s income which dramatically increased your student loan payment? Are they allowed to do this if you filed taxes together? I was told to file taxes separately if my spouse earns twice as much as I do which would cause my income based repayment to increase significantly if we file together. I’m trying to figure out the pros and cons of filing taxes together versus individually so that my monthly payments are within my budget. What do you think?
Thanks!
Hi Lisa,
I think it’s your choice to determine who’s income gets used. As far as I know, you still get to decide whether you file separately or together, and you can still use just your own income for the purposes of determining Income-Based payments.
The lender kind of has final say though, which is the unfortunate part of this whole deal, because they’ll obviously be doing whatever makes the most money the fastest (including your spouse’s income).
It’s hard to say how you should approach filing… you’ll want to consult with a CPA or licensed tax professional to get a clear answer on which approach is better. Good luck!
I currently have been on an IBR for 4 years and have 75k in student loan debt. Would it be beneficial to change to the PAYE program? Or would the forgiveness clock start all over?
Hi Athena,
The forgiveness clock will NOT start over! You can switch between income-based plans without losing any progress.
I would switch to PAYE if you’re eligible for it, and if you think it’ll be a better deal. You need to investigate your financial situation, use the Federal student loan calculator, and determine which plan will work best for you.
My husband and I have significant student loans that we have not been able to pay back. Do they permit husband and wife to consolidate both loans into one payment? We can not affort two student loans at this time. Thank you.
Hi There,
Yes, it’s possible to file for a joint consolidation, though it isn’t always the best option for repayment. Consolidation doesn’t mean that you’ll be able to stop paying one of the loans – it means you combine the two loans into a single loan, with a single payment.
Consolidation often times will reduce monthly payments, since it extends the loan term, but that’s not always the case.
Call whoever services your loan and ask them for details about joint consolidation. Let them know that your goal is to reduce your monthly payments because the current payments aren’t affordable, and find out what they can offer you.
Just be careful, because decreasing your current monthly payment is going to make your loans more expensive in the long-run.
I have student loans I have not been able to pay back. I have a documented disability and am not working. Can someone help me get rid of these student loans?
Would it be easier to consolidate my loan?
Hi JC,
I’d need to know a lot more about your loan before I could give you any advice. How much do you owe? Do you have multiple loans? Are they all Federal, or some Private? Can you afford your monthly payments? etc.
The 7 plans are for repayment options. Where can I get more information on loan forgiveness?
Hi Abby,
For information about Federal Student Loan Forgiveness Programs, visit here. For details on Private Student Loan Forgiveness, check here.
I need a contract info phone number please? Thanks
Contact info for who?
How do I find what plan is right for me? Who do I contact for more information. I am married, just graduated and have a 2 month old child. My loans have been deferred while in school and was financially deferred before my two year program. I am currently unemployed.is loan forgiveness even an option for me? Where do I start?
Hi Kate,
You need to read through the plans to see which one makes the most sense, then sign up for that plan by contacting whoever services your loan to officially request that they put your account on it.
What kind of debt do you have? Is it Federal, or Private? (Hopefully Federal, because Private Student Loans aren’t eligible for any of these plans!).
When were your loans originally taken out? How big are they?
There are lots of factors that go into determining which plan will work best for you, but since you’re already using deferments, it sounds like you’ve got enough debt that it wouldn’t be easy to pay it off quickly in the near-term, so I would recommend signing up for the Pay As You Earn plan.
You can get all the details about Pay As You Earn, here.
Are there any secondary companies to go through if your lender is hard to work with? I have looked into some and most seem like they are a scam.
Are there any trusted secondary companies to help with this process?
Are you talking about federal loans, or private loans?
I have a few different questions.
1: How will this affect my credit score? During the repayment program and after.
2: What will this show up as on my credit report? During the repayment program and after.
3: How often is the interest accrued?
Hi Sam,
1. Changing your repayment plan won’t have any impact on your credit score, either during or after.
2. The repayment plans and forgiveness programs don’t to show up on your credit report. All you’ll see on the report is the amount of outstanding debt you have, and whether or not you’ve been making your monthly payments on time.
3. Interest is accrued monthly, just like any other loan.
Please email me a number to reach
Hi Dominique,
You need to find out who services your loan. Who do you send your monthly student loan payments to? That’s who you’ll want to call for details on your options.
Please contact me with a phone number I can call to help with lowering my student loan payments.
I would like to know what programs are out there in order to clear my student loan debt and I am a substiute teacher for the New York City Department of education. I work part time but I work everyday as if I was full time. I really am having financial dificulties lately and I need some type of a program that will benefit me.
Hi Irene,
You should look at the Public Service Loan Forgiveness Program, and at Student Loan Forgiveness Programs for Teachers to see if you can qualify for anything.