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If you borrowed federal student loans to pay for college, they will automatically be placed on the standard repayment plan. On this plan, you’ll make fixed payments on your student loans over a period of 10 years.
While the standard repayment plan works for some borrowers’ budgets, it’s not right for everyone. Find out how the plan works so you can decide if it’s the right choice for you. Specifically, let’s answer the following questions:
- What is the standard repayment plan for student loans?
- How does the standard repayment plan work?
- What are the pros and cons of the standard repayment plan?
- What are the alternatives to the standard repayment plan?
If you don’t specifically choose another plan, your federal student loans will automatically be placed on the standard repayment plan, and there they’ll stay unless you decide to switch. The standard plan is designed to pay off your loans in 120 fixed payments over 10 years.
While the monthly payments on this plan may be higher than they would be on other plans, paying off your loan in 10 years could lower the overall interest you pay.
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 private student loans aren’t eligible for federal repayment plans, such as standard repayment, but most do come with the option of a 10-year repayment plan option. You’ll choose your repayment terms when you borrow your loan.
Although you may choose to stick with the standard repayment plan, it’s worth a look at your other options first to see what’s the best choice for your loans.
The Department of Education recommends that you use its Loan Simulator tool. This online tool will reveal what your student loan repayment will look like on different repayment plans.
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. However, specific repayment options can vary based on your own individual circumstances, so it’s always a good idea to check the Loan Simulator, as well as Student Loan Hero’s student loan repayment calculator, before opting for the standard repayment plan.
Payments on the standard plan
When you’re set up on the standard repayment plan for student loans, your monthly payments are generally calculated based on what it will take to pay off your balance within 10 years’ time. That said, the plan requires you to pay a minimum of $50 a month.
However, 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.
Changing your repayment schedule
If you are having trouble making the monthly payment with the standard repayment plan, you can choose to enroll in a different plan at any time, with no cost or penalty to you, providing you continue to make timely payments. Use the Loan Simulator to get some idea of alternative options, and then contact your student loan servicer.
Remember, switching plans should always be free, and servicers can’t charge you for talking to you about your loans. If anyone tells you otherwise, it could be a debt-relief scam.
Now let’s run through the benefits and drawbacks of sticking with your standard-issue 10-year repayment schedule.
There are three key benefits to sticking with the standard plan:
- 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 or travel.
- You’ll save on interest fees. For instance, although income-driven repayment plans can offer lower monthly payments, that’s because they’re spread over a much longer period of time. As a result, the interest will cost you more in the long run.
- It’s just one of your federal repayment options, so you can switch anytime.
There’s really just one major drawback, but it may be very significant, depending on your financial situation. On the standard repayment plan, your monthly payments will likely be higher than with other federal 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. If you can’t afford the daily necessities in your life, you should talk to your loan servicer about a plan that works for you.
The Department of Education offers other repayment plan options for federal loans:
- Graduated repayment plan: You’re on a 10-year plan (or 30-year plan for consolidated loans), but your monthly payment starts out low and gets higher over time, increasing every two years.
- Extended repayment plan: Your monthly payments are either fixed or graduated for up to 25 years and are generally lower than with other plans.
- Revised Pay As You Earn Repayment (REPAYE): You pay 10% of your discretionary income. Any remaining balance is forgiven after 20 years for undergraduate loans or 25 years for graduate loans.
- Pay As You Earn Repayment (PAYE): You pay 10% of your discretionary income, but no more than you would on the standard repayment plan. Any remaining balance is forgiven after 20 years.
- Income-Based Repayment (IBR): You pay 10% of your discretionary income, with any remaining balance forgiven after 20 years for loans taken after 2014. Older loans require 15% of your discretionary income, with forgiveness after 25 years.
- Income-Contingent Repayment (ICR): You pay whichever is lower: 20% 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: You pay a fixed amount based on your annual income for a period of up to 10 years. This plan is only available for Federal Family Education Loans (FFEL).
Note that for these plans, you may need to provide documentation of your income throughout your loan’s repayment period.
As you can see, there are a lot of similarities among these plans. It’s important that you learn about the alternative plans and their requirements.
Generally speaking, the standard repayment plan will save you money in interest, making it a good option for those who can keep up with the payments. But if your finances need the breathing room and you’re willing to make the trade-off of potentially paying more in interest, then you might want to look at other options.
If you don’t need access to any federal repayment plans or programs, you could also consider refinancing your student loans with a private lender for better rates.
Rebecca Safier and Chaunie Brusie contributed to this report.
Interested in refinancing student loans?Here are the top 9 lenders of 2022!
|Lender||Variable APR||Eligible Degrees|
|1.74% – 8.70%1||Undergrad & Graduate|
|1.74% – 7.99%2||Undergrad & Graduate|
|4.44% – 8.09%3||Undergrad & Graduate|
|1.74% – 7.99%4||Undergrad & Graduate|
|1.89% – 5.90%5||Undergrad & Graduate|
|1.74% – 7.99%6||Undergrad & Graduate|
|2.05% – 5.25%7||Undergrad & Graduate|
|1.86% – 6.01%||Undergrad |
|N/A8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 4, 2022.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Student Loan Refinance Interest Rate Disclosure Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 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%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Let us know if you have any questions and feel free to reach out directly to our team.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. 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 0.15% effective Apr 22, 2021 and may increase after consummation.
4 Important Disclosures for SoFi.
Fixed rates range from 3.49% APR to 7.99% APR with a 0.25% autopay discount. Variable rates from 1.74% APR to 7.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
5 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
6 Important Disclosures for Navient.
7 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.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 5/17/2022 student loan refinancing rates range from 2.05% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.93% Fixed APR with AutoPay.
8 Important Disclosures for PenFed.
Fixed Rate Loan Terms: 5 years/60 monthly payments, 8 years/96 monthly payments, 12 years/144 monthly payments or 15 years/180 monthly payments. Annual Percentage Rate is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed rates range from 3.29% to 5.43% APR. Rates are subject to change without notice. Fixed APR: Fixed rates will not change during the term. This rate is expressed as an APR. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.