Whether you’ve already started repaying your debt or will be soon, the 10-year Standard Repayment Plan is something every borrower needs to understand when paying off student loans. It might be your best option, but the Standard Repayment Plan is not your only option. Find out how it works and make sure it works for you.
What is the Standard Repayment Plan?
The Standard Repayment Plan is the default payment plan for all federal student loans, through which you can pay off your loans within 10 years.
You are welcome to work with your student loan servicer to choose a different plan. However, if you make no changes your servicer will automatically apply the Standard Repayment Plan to your loans.
Standard Repayment Plan eligibility
All borrowers with the following loans are eligible for the Standard Repayment Plan:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
- Direct Consolidation Loans
- Subsidized Federal Stafford Loans
- Unsubsidized Federal Stafford Loans
- FFEL PLUS Loans
- FFEL Consolidation Loans
Note that the Standard Repayment Plan does not apply to private student loans. Borrowers must address the payment options that are offered with whichever student loan servicer is handling the private loans.
How the Standard Repayment Plan works
Setting up the plan
Though you may choose to let the Standard Repayment Plan automatically kick in, it’s worth a look at your other options first.
The Department of Education recommends that you use its Repayment Estimator. This online tool will ask you for your loan balances, interest rates, tax filing status, income, and family size. Based on this information, the Repayment Estimator will tell you:
- Which plans you’re eligible for
- Your first monthly payment
- Your last monthly payment
- Total amount paid
- Projected loan forgiveness (if any)
- Repayment period
The results will include the Standard Repayment Plan as well as alternative options.
The two most important numbers to focus on are your monthly payments and the total amount paid. You need a monthly payment you can afford, but you also want to pay as little as possible in the long run. The Standard Repayment Plan tends to be a good balance of both.
When you are set up on the Standard Repayment Plan, your monthly payments are dependent on whatever it takes to pay off your balance within 10 years’ time. That said, you are required to pay a minimum of $50 a month — a fixed amount that you pay over the life of the loan.
Consolidated loans are the exception. If you have Direct Consolidation Loans or FFEL Consolidation Loans, your payment term may range between 10 and 30 years. The $50 monthly minimum still applies. However, the payment amount is determined not only by what you owe on the consolidated loans, but also any other student loan debt.
If you are having trouble making the monthly payment with the Standard Repayment Plan, you can choose a different plan at any time and at no cost. Use the Repayment Estimator to get some idea of alternative options, then contact your student loan servicer to discuss.
How does the Standard Repayment Plan impact you?
- Your student loans will be paid off within 10 years, allowing you to free up cash to work toward other financial goals, like buying property, saving for retirement, and travel.
- You’ll save on interest fees. For instance, although Income-Based Repayment plans offer lower monthly payments, that’s only possible because they’re spread over a much longer period of time. Yes, the monthly payments are smaller, but interest fees cost you more in the long run.
- You’re not locked into the Standard Repayment Plan. You can switch anytime if you’re having trouble making ends meet.
There’s just one, really, but it may be significant depending on your financial situation. On the Standard Repayment Plan, your monthly payments will be higher than some other options.
That’s fine if you can swing it. But saving money over the life of the loan won’t do you any good when you’re barely scraping by today.
Alternatives to the Standard Repayment Plan
The Department of Education has seven other repayment plan options for federal loans:
- Graduated Repayment Plan
You’re on the same 10-year plan (or 30-year plan for consolidated loans), but your monthly payment starts out low and gets higher over time.
- Extended Repayment Plan
Your payments are either fixed or graduated for up to 25 years.
- Revised Pay As You Earn Repayment Plan (REPAYE)
You pay 10 percent of your discretionary income. Any remaining balance is forgiven after 20 or 25 years.
- Pay As You Earn Repayment Plan (PAYE)
You pay 10 percent of your discretionary income. Any remaining balance is forgiven after 20 years.
- Income-Based Repayment Plan (IBR)
You pay 10 or 15 percent of your discretionary income. Any remaining balance is forgiven after 20 or 25 years.
- Income-Contingent Repayment Plan (ICR)
You pay 20 percent of your discretionary income or however much your monthly payment would be over a 12-year fixed payment period. Any remaining balance is forgiven after 25 years.
- Income-Sensitive Repayment Plan
You pay a fixed amount based on annual income for a period of up to 15 years.
As you can see, there are a lot of similarities among these plans. It’s important that you learn about alternative plan eligibility requirements and use the Repayment Estimator to get an idea of which plan will actually work for you.
These alternatives exist for a reason, so use them if you need to. Generally speaking, though, the Standard Repayment Plan will save you money in interest, making it a good option for most.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
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1 Important Disclosures for SoFi.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.54% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of March 18, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 0318/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.5% effective February 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.54% – 7.12%3||Undergrad & Graduate|
|2.54% – 7.27%1||Undergrad & Graduate|
|2.67% – 8.96%4||Undergrad & Graduate|
|3.23% – 6.65%2||Undergrad & Graduate|
|2.69% – 7.43%5||Undergrad & Graduate|
|2.98% – 9.72%6||Undergrad & Graduate|