Your student loan repayment plan is crucial in how much you must pay each month and how long it takes you to pay off your debt.
If you have yet to choose a repayment plan, do so before the grace period ends if you can. You get the standard repayment plan if you don’t select another plan.
The standard student loan repayment is the most efficient way to repay federal student loan debt, but other options may better suit your situation. Here we explain how standard loan repayment works, why it may benefit 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
| Standard repayment plan | |
| Repayment term | 10 years |
| Number of payments | 120 |
| Variable or level repayment | Level repayment |
| Loan types | Federal student loans |
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 when you take out the loan.
Pros & cons of the standard repayment plan
Pros
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Faster repayment than extended plans that allow for monthly payments over 20 or 30 years
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A lower cost of repayment because less interest accrues in this shorter period
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Predictable payments that make it easy to budget for your student loan repayment
Cons
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Higher monthly payments compared to other federal student loan repayment options
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Monthly payments are calculated based on repayment time frame, not how much you earn or can afford
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 pay less in interest.
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 capped at a percentage of your income. This can be much easier to budget around, though it will take longer to become debt-free.
An 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:
| Standard repayment example | |
| Original loan balance | $50,000 |
| Loan interest rate | 6.80% |
| Loan term (standard) | 10 years/120 payments |
| Minimum monthly payment | $575 |
| Total cost | $69,048 |
| Total interest paid | $19,048 |
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 speed up repayment and save money on interest.
At a minimum, you would pay $575 for 120 equal installments.
Alternatives to the standard repayment plan
The level repayment plan through standard repayment is not the best fit for everyone.
If you cannot afford a higher monthly payment or may be eligible for student loan forgiveness, you may want to select a different plan. 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. Any remaining balance is forgiven after the repayment period as long as you’ve made the required payments.
Most important, 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 that interest continues to accrue on your debt even if you are not making payments. 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 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
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 significant debt and cannot afford the standard repayment plan.