Is the 10-Year Standard Repayment Plan Right for You?

standard repayment plan

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.

Payments

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.

Making changes

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?

Pros

  • 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.

Cons

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.

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