Standard Repayment Plan: The Default Plan for Federal Student Loans

Note about changes due to COVID-19:

There have been changes to the federal student loan program as a part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that passed in Congress on March 27, 2020, to help those affected by the Coronavirus.

Until June 30, 2023, borrowers have the option to suspend payments without penalty, if needed. Payments made on federal student loans during this time will first apply to unpaid interest accrued before March 13, 2020, then directly towards the principal balance. In addition, no interest will accrue during this time—effectively setting the rate at 0%.

If you are pursuing Public Service Loan Forgiveness or forgiveness through an income-driven repayment plan, skipped payments will still count towards the monthly payments required to be eligible. The same is true for borrowers working to meet student loan rehabilitation requirements.

Lastly, the government will not garnish tax refunds or money from other federal benefits of borrowers who are behind on student loan payments during this time.

Your student loan repayment plan plays a crucial role in how much you must pay each month, and how long it takes you to pay off your student loan debt.

If you have yet to choose a repayment plan, do so before the grace period ends if you can. If you don’t select another plan the standard repayment plan is selected for you. 

The standard student loan repayment is the most efficient way to repay federal student loan debt, but other options may be a better fit for your situation. Here we explain how standard loan repayment works, why it may ultimately be beneficial for you, and the alternatives. 

In this guide:

• Standard repayment plan: by the numbers
• What is the standard repayment plan?
• Pros & cons of the standard repayment plan
• Is the standard repayment plan right for you?
• How does a level repayment plan work?
• Alternatives to the standard repayment plan

Standard repayment plan: by the numbers

What is the standard repayment plan?

For federal student loans, the standard student loan repayment plan is the default payment schedule you are put on if you don’t select another plan before repayment begins. 

This is a 10-year plan with level payments throughout the life of the loan. You’ll make equal loan payments over the course of 10 years, totaling 120 monthly payments.

When you choose the standard plan, you are given a monthly minimum payment that does not change over the 10-year period. 

Only federal student loans, funded by 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 this is selected at the time you take out the loan. 

Pros & cons of the standard repayment plan

Is the standard repayment plan right for you?

If you can afford it—yes

If you can afford it, the standard plan is the best way to repay your federal student loans because you’ll be debt-free the soonest and you’ll pay less in interest over the life of your loan.

However, because this plan offers level payments for just 10 years, standard repayment will likely come with higher monthly payments than other loan programs.

For example, 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.

If you have a low salary or work in the public sector—no

If you have a low starting salary after school or other monthly obligations that eat up a significant portion of your income, you may want to select an income-driven repayment plan to start.

These repayment alternatives offer lower payments that are capped at a percentage of your income. This can be much easier to budget around, though it will take longer to become debt-free. 

Additionally, and income-driven plan could qualify you for student loan forgiveness. For example, if you work in the public sector in an institution that qualifies for PSLF, your remaining debt could be eliminated after 20 to 25 years of payments.

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 (also called Stafford Loans or Direct Loans)
• Direct PLUS Loans
• Direct Consolidation Loans
• FFEL PLUS Loans
• FFEL Consolidation Loans

How does a level repayment plan work?

Level repayment on your federal student loans is relatively simple. A set monthly payment is calculated based on the total amount you owe, your interest rate, and a 10-year repayment period. 

Other factors, such as how much money you make or your family size, aren’t considered in determining your level monthly payment.

Here is an example from our student loan calculator of what the standard repayment plan requires in terms of a minimum monthly payment:

As you can see, a total balance of $50,000 in federal student loans equates to a total cost of more than $69,000 with an interest rate of 6.80%. 

Your monthly payment does not fluctuate from the $575 minimum, but you can always pay more on the loan each month or periodically to speed up repayment and save money on interest. 

At a minimum, you would be required to pay $575 for 120 equal installments.

Alternatives to the standard repayment plan

The level repayment plan offered through standard repayment is not the best fit for everyone. 

If you cannot afford a higher monthly payment or you may be eligible for student loan forgiveness in the future, you may want to select a different plan. Fortunately, there are several repayment options available for federal student loan borrowers. 

Income-driven repayment plans

Income-driven repayment plans are a feasible alternative for some borrowers with federal student loans. 

These repayment plans base the monthly payment not on a 10-year schedule, but instead, allow for a longer repayment term of 20 or 25 years. Any remaining balance is forgiven after the repayment period as long as you’ve made the required payments.

Most importantly, however, 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.
• Revised Pay As You Earn (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 note, though, that interest continues to accrue on your debt even if you are not making payments. You can end up paying a substantially larger amount of 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 your income is lower as you start your career. Every two years, the payment increases. Repayment can extend up to 30 years if you consolidate your loans 

Similarly, you can select an extended repayment plan, giving yourself up to 25 years to make level payments. 

Either option can be beneficial if you have a significant amount of debt and cannot afford the standard repayment plan.