Standard Repayment Plan: The Default Plan for Federal Student Loans

Once you borrow money for college, you must decide how to repay it. If you don’t make that decision, the federal government will make it for you by putting you on the standard repayment plan.

That’s not bad—it’s an efficient way to pay off your student loans. However, you may find meeting your student debt obligations financially challenging. That’s why it’s important for every borrower to know what you’re getting into before choosing this student loan repayment plan.

What is the standard student loan repayment plan?

Standard repayment plan
Repayment term	10 years
Number of payments	120
Variable or level repayment	Level
Loan types	Federal

For federal student loans, the standard student loan repayment plan is the default 10-year payment schedule. If you don’t select a plan before repayment begins on your loans, you’re automatically enrolled in this plan.

This plan includes fixed payments throughout the life of the loan. You make equal loan payments for 10 years, totaling 120 monthly payments. Your minimum monthly payment does not change over the 10 years.

Only federal student loans from the U.S. Department of Education use the term “standard repayment plan.” Private loan servicers may offer a 10-year option, among other repayment terms, but you select the term when you take out the loan. 

Pros & cons of the 10-year standard repayment plan

Pros

• Faster repayment

  With the standard repayment plan, your loans are paid off in 10 years. It’s simple and relatively quick. Extended plans allow for monthly payments over 20 or 30 years.

• Less money spent overall

  Because interest accrues for just 10 years, a shorter period than some extended payment plans, you’ll have a lower total loan cost.

• Predictable payments

  Fixed payments make it easy to budget for your student loan repayment.

• Flexibility

  If you find the standard repayment plan too challenging at any time, the federal government allows you to change to a different plan.

Cons

• Higher monthly payments

  You will likely pay more monthly than other federal student loan repayment options.

• Might not be doable for your budget

  Monthly payments are calculated based on repayment time frame, not how much you earn or can afford.

Is the standard loan repayment plan right for you?

If …	Is the standard plan right?
You can afford the monthly payments	✅
You are determined to not be in debt for long	✅
You want to keep your borrowing costs down	✅
You are on a tight budget	❌
You have more financial concerns than student loans	❌

You can afford the monthly payments

If you can easily afford the monthly payments, choosing the federal loan standard repayment plan makes sense. You’ll pay it faster and spend less than opting for the alternatives.

However, the standard repayment plan offers fixed payments for just 10 years, so you’ll likely be burdened with higher monthly payments than other loan programs.

For example, see the example below showing how a 20-year repayment term would have a much lower monthly payment than the 10-year standard repayment plan because the total balance is divided across 240 payments, not 120. Although you would pay more in interest over the life of a 20-year term.

Details	10-year plan	20-year plan
Loan amount	$57,500	$57,500
Monthly payment	$625.99	$395.88
Total payments	$75,118.80	$95,011.20
Total interest paid	$17,618.80	$37,511.20

You are determined to not be in debt for long

If getting your student loans paid off as fast as possible is your overriding financial goal, choosing the standard repayment plan may be best.

Ten years is still a long time, of course, but a decade of student debt is far shorter than many alternatives. The other repayment choices can be good for some borrowers, but they will keep you in debt for over a decade and possibly as long as 20 to 30 years.

You want to keep your borrowing costs down

If you’re concerned about paying a lot of interest on your student loans, selecting the standard repayment plan may be your best option.

Compared to many choices for paying back your federal student loans, the standard repayment plan will cost you the least amount of money in the long run. Some borrowers prefer paying more for their loans in the long run for smaller monthly payments.

You are on a tight budget

If you have a low-paying job or a lot of financial obligations eating into your paycheck and believe the standard repayment plan’s monthly payment will be challenging to meet month after month, then you should consider alternative avenues.

That’s why repayment choices exist. Not every borrower will find it easy to make the monthly payments for the standard repayment plan.

You have more financial concerns than student loans

Everyone’s situation and personality are different. Some borrowers prioritize paying off student loans super fast, while others may be perfectly comfortable stretching the payments out as long as possible.

But sometimes, the math works out in a way where even a borrower in a hurry should take their time. 

If you have credit card debt that you want to pay down or feel that you won’t be able to properly save for retirement if you choose the standard repayment plan, you’ll want to examine the other alternatives and see if they can better help you reach your financial goals.

Student loans eligible for the standard repayment plan

The following federal loans are eligible for the standard repayment plan:

• Direct Subsidized Loans (sometimes called Direct Stafford Loans or Federal Direct Loans)
• Direct Unsubsidized Loans (sometimes referred to as Stafford Loans or Direct Loans)
• Direct PLUS Loans
• Direct Consolidation Loans
• Federal Family Education Loan (FFEL) PLUS Loans
• FFEL Consolidation Loans

Ask the expert

Erin Kinkade

CFP®

When deciding if you can afford the standard repayment plan, I recommend prioritizing these additional expenses in your budget: 1) contributions to your employer’s retirement plan, if it has one and has a percentage match. 2) Establishing at least one month’s worth of lifestyle expenses as an emergency fund. 3) Paying off accrued debt beginning with the highest interest rate loan. This may mean adjusting payments to your federal loan until your other higher-interest debt is paid off.

How does a fixed or level repayment plan work?

A level repayment, more commonly known as fixed repayment, is a set monthly payment. It is based on the total amount you owe and your interest rate, and then the amount is divided up into 120 monthly payments (10 years).

Other factors, such as your income or family size, are not considered in determining your monthly payment level.

Here is another example from our student loan calculator of what the standard repayment plan equates to in minimum monthly payment:

Standard repayment example
Original loan balance	$40,000
Loan interest rate	5.50%
Loan term (standard)	10 years (120 payments)
Minimum monthly payment	$434
Total cost	$52,093
Total interest paid	$12,093

As you can see, a total balance of $40,000 in federal student loans equates to a total cost of more than $52,093 with the 2024 Direct Subsidized and Unsubsidized Loan interest rate.

At a minimum, you would pay $434 for 120 equal installments. Your monthly payment doesn’t fluctuate from the $434 minimum, but you can always pay more on the loan each month or speed up repayment and save money on interest. 

Alternatives to the standard repayment plan

The level repayment plan through a standard repayment isn’t always the best fit for everyone. 

For instance, you may want to select a different plan if you cannot afford a higher monthly payment or believe you may be eligible for student loan forgiveness. Fortunately, several repayment options are available for federal student loan borrowers. 

Income-driven repayment plans

Income-driven repayment plans are a feasible alternative for borrowers with federal student loans. These repayment plans allow for a longer repayment term of 20 or 25 years. As long as you’ve made the required payments, any remaining balance is forgiven after the repayment period.

Most importantly, income-driven repayment plans determine the monthly payment amount based on your discretionary income and family size. This can mean a payment as low as $0. 

Here are the options:

• Income-Based Repayment Plan (IBR): For loans taken out on or after July 1, 2014, payment is 10% of your discretionary income for a period of 20 years.
• Pay As You Earn (PAYE): Payment is 10% of discretionary income, never more than your standard repayment would be. The repayment period is 20 years.
• Saving on a Valuable Education (SAVE): Until recently, it was called Revised Pay As You Earn, or REPAYE. Payment is 10% of your discretionary income for a 20-year period for undergraduate loans and 25 years for graduate loans.
• Income-Contingent Repayment Plan (ICR): Payment is no more than 20% of your income for a 25-year period.

It is important to remember that interest continues to accrue on your debt even if you are not making payments. As a result, you can end up paying more interest over time. 

Extended and graduated repayment plans

Federal student loan borrowers also have access to graduated and extended repayment plans. 

Graduated repayment plans start with a smaller monthly payment amount, assuming that your income will be lower as you start your career. The payment increases every two years. If you consolidate your loans, repayment can extend up to 30 years.

You can select an extended repayment plan, giving yourself up to 25 years to make level payments. (The length of time you have depends on how much you owe.)

Either option can be beneficial if you have significant debt and can’t afford the standard repayment plan.