Student loans can help you pay for your education, but repaying that debt could take decades.
Many borrowers have several options to pay student loans. These might differ depending on whether you have private or federal student loans. (If you’re not sure which you have, try contacting your loan servicer. You may also check your credit report to find this information.)
This guide covers all your student loan repayment options for both federal and private loans, so you can choose the plan that’s best for your situation.
In this guide:
- How does student loan repayment work?
- How to choose the right student loan repayment plan and strategy
- Why don’t federal and private student loans have the same repayment plans?
- How many times can I change my repayment plan?
- Does it cost money to change my repayment plan?
- Is one repayment plan better than the rest?
How does student loan repayment work?
Regardless of whether you have private or federal student loans, expect to start on a default standard repayment plan to repay your student loans.
For federal student loans, the standard repayment plan is a 10-year term length, while private student loans can vary. Often, when you take out private student loans, you can choose term length options from 10 to 25 years that you’ll begin to repay after you graduate.
Many borrowers stay on the standard repayment plan the entire time they’re repaying student loans. Sometimes, though, your post-college life works out differently than you planned, and you want or need to make a change.
In that case, depending on the type of loan you have—private or federal—you’ll have different options.
>>Read more: How to make your student loan payment
How to choose the right student loan repayment plan and strategy
There’s no “right” way to repay student loans. Your financial situation, budget, and other goals will determine the payment plan that’s best for you. Start by finding out how much you owe on your student loans.
Those with extra money to pay toward their loans should choose a different payment option than people who are struggling.
Here’s what you should consider based on five financial situations:
- You can afford your loans
- You want to pay off your loans faster
- You want to pay less each month
- You can barely make any payment on your loans
- You want student loan forgiveness
If you can afford your loans
If you can make payments and want to save money on student loan repayment, two of your best options are the standard repayment plan and refinancing your loans.
Standard plan
- Federal student loans: The standard repayment plan for federal student loans is 10 years.
- Private student loans: The standard repayment plan length varies depending on the lender. You should have chosen a term length when you applied for the loan. Most lenders offer standard repayment plans ranging from 10 to 25 years.
Monthly payment amounts remain the same for the life of the loan, and you’ll be free of the debt once you’ve made your last payment. This is loan servicers’ default repayment plan unless you enroll in a different one, if available.
Many private student loans have much higher interest rates: around 6.5% on average, compared with 3.9% for federal loans. That translates to monthly payments that are $34 higher, with an additional $4,130 in interest charges over the life of the loan for the average graduate of a public four-year college.
Consolidate
If you have federal student loans, and you’re tired of managing multiple loans you took out for each year of study, one option is to consolidate them—i.e., roll them together into one loan with a term length ranging from 10 to 30 years.
If you’re early in your repayment journey (such as still in your grace period) and you select a consolidation loan term length of 10 years, you’ll essentially make the same payments you would have under the standard repayment plan, but you’ll only make one payment instead of multiple.
This often won’t save money since the Department of Education takes the weighted average of all of the individual loans for your interest rate. But it allows you to keep your federal student loan protections while taking advantage of different federal student loan payment options.
There is no option to consolidate private student loans—you can only refinance them.
Refinance
You can refinance federal and private student loans, resulting in two possible outcomes (ideally, both):
- A lower interest rate
- New repayment terms
Refinancing federal loans with a private lender makes sense only if you won’t take advantage of the borrower protections federal loans come with, such as income-driven repayment and loan forgiveness.
Refinancing private loans doesn’t mean giving up borrower protections, so it often makes sense if you can qualify at a more affordable interest rate. Reducing your rates can lower monthly payments and the total interest you pay—unless you extend your repayment timeline.
Resources that can help you decide on refinancing include:
- Best student loan refinance companies
- Our guide to refinancing federal student loans with a private lender
- Our guide to when it makes sense to refinance student loans
Which is best for you?
| Consider this option if… | Avoid this option if… | |
| Standard repayment plan | You’re happy with your current payments. You don’t want to lose federal protections and benefits. You don’t have the credit or income to get approved for a refinance. | You’re having trouble making your payments. You want to pay off your loan sooner by refinancing. |
| Consolidate | You have federal student loans. You’re early in your repayment journey. You want to keep your borrower protections and loan forgiveness options. | You want to keep your loans separate so you can focus on repaying the highest-interest ones first. You’ve made a lot of payments already and hope to apply for loan forgiveness. You have outstanding interest that hasn’t been capitalized (i.e., added) to your loan balance. |
| Refinance | You want to save money by getting a lower rate or shortening your term length. You have a good credit score. You want to remove a cosigner from the loan. You’re refinancing private student loans, or you’re refinancing federal student loans and aren’t worried about losing borrower protections | You have federal student loans and don’t want to lose your borrower protections. Your credit score is low. You’ll be applying for another important loan in the coming months (for instance, a mortgage). |
If you want to pay off your loans faster
If you’re trying to figure out how to pay off student loans faster, you can make extra payments, refinance to a new loan with a shorter repayment term, or both.
Make extra or larger payments
- Federal student loans: You can make extra payments toward your federal student loans at any time.
- Private student loans: You can also make extra payments toward your private student loans at any time. Check in advance whether your lender charges any prepayment penalties. Most don’t, but you want to make sure before you find out you owe a fee.
Making a larger payment than your plan requires can help you pay off student loans faster. The extra money will go toward the loan principal, reducing the amount you owe and the interest that can generate before your next payment.
You can cut years off your repayment schedule if you make extra payments every month. You can do this manually (i.e., by scheduling one-time payments with your lender) or by setting up autopay for a higher amount than your minimum payment each month.
We can help you determine which student loans to pay off first and how long it will take to pay off your student loans.
>>Read more:
Refinance to a shorter term
- Federal student loans: You can refinance federal student loans, but keep in mind this turns them into private student loans. Thus, you’ll lose your extra borrower protections and opportunities for loan forgiveness and better repayment plans.
- Private student loans: You can refinance private student loans at any time without fear of losing any extra benefits, unless your lender offers uncommon features you like. Private student loan refinancing lenders offer different term length options. Some, such as Laurel Road, offer term lengths as short as five years.
Refinancing to a shorter term can ensure you pay off your loan faster by increasing your monthly payments.
For example, imagine you’re five years into repaying the following loan, and you decide to refinance:
| Example only | |||
| Pre-refinance balance | $27,000 | Post-refinance balance | $27,000 |
| Pre-refinance years to pay off | 15 | Post-refinance years to pay off | 10 |
| Pre-refinance interest rate | 12% | Post-refinance interest rate | 10% |
| Pre-refinance monthly payment | $296.70 | Post-refinance monthly payment | $326.70 |
In this case you’d pay $30 more per month but be free of the debt five years sooner. You would save over $14,000 in interest charges.
You could achieve this on your own by making larger payments. But when you refinance to a shorter loan term, you may qualify for a lower interest rate, especially if you have good credit.
Resources that can help you decide whether to refinance include:
- Our guide to when it makes sense to refinance student loans
- Our guide to paying off student loans early
- Our student loan prepayment calculator
Which is best for you?
| Consider this option if… | Avoid this option if… | |
| Make extra or larger payments | You have federal student loans and want to keep your borrower protections and loan forgiveness options. You have poor credit. You’ll be applying for another important debt in the coming months, such as a mortgage. | You prefer to commit by refinancing and signing up for larger payments so you’re not tempted to pay the minimum and set back your goal. You want a lower interest rate on your loan. |
| Refinance to a shorter term | You want to commit yourself to making higher payments each month. You have a good credit score. You want to remove a cosigner from the loan | You have federal student loans and want to keep your borrower protections and loan forgiveness options. You don’t want to commit to making larger payments, preferring to pay extra as you can. You have a low credit score. You’ll be applying for another important debt in the coming months, such as a mortgage. |
If you want to pay less each month
When you want lower monthly payments, your options may include:
- An extended repayment plan.
- Consolidating student loans.
- Using income-driven plans.
- Refinance to a longer term.
Find out more about changing your student loan repayment plan.
Extend your repayment plan
Federal student loans: A number of extended repayment plan options are available for federal student loans. Extending your term will cost you more in interest over the life of the loan, but since it spreads your payments over a longer term, you’ll pay less each month.
Federal student loan borrowers can also select a graduated repayment plan with lower payments at the start of the loan that increase over time as your income grows.
Private student loans: Private student loan lenders rarely offer permanent adjustments to your repayment plan, but it never hurts to ask.
Consolidate your loans for a longer term
Federal student loans: Student loan consolidation—through a Direct Consolidation Loan—also opens the door to extend your repayment period, sometimes for as long as 30 years. This can shrink your monthly payment, but keep in mind it can ramp up your overall loan costs because you’ll be paying interest on that loan for a longer time.
Private student loans: Most private student loan lenders don’t offer loan consolidation options.
Use an income-driven repayment (IDR) plan
Federal student loans: Income-driven plans cap monthly payments at a percentage of your discretionary income. This keeps payments affordable, but you’ll likely pay off your loans over a longer period.
Income-driven plans include:
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
You can learn more about your options in our guide to IDR plans.
Private student loans: Many private student lenders are less willing to work with borrowers on permanent adjustments to make the loan more affordable in the long term.
Refinance to a longer term
You can refinance both federal and private student loans with a student loan refinance company. But a word of caution if you have federal loans: If you refinance them, you lose all your loan protections, handy repayment options, and even loan forgiveness opportunities.
Refinancing to a longer term stretches out your repayment over as long as 20 years, depending on your lender. That makes each payment smaller. But you should be aware of the caveats.
Longer-term loans often carry higher interest rates. And if you’re paying a higher rate for longer, the long-term cost of your loan will be higher.
Let’s return to the example scenario where you took out a 20-year loan for $27,000 at 12% APR. Now you have five years left before you repay it. You decide instead to refinance it to another 20-year loan with the same interest rate.
| Example only | |||
| Pre-refinance balance | $27,000 | Post-refinance balance | $27,000 |
| Pre-refinance years left to pay off | 5 | Post-refinance years to pay off | 20 |
| Pre-refinance interest rate | 12% | Post-refinance interest rate | 12% |
| Pre-refinance monthly payment | $296.70 | Post-refinance monthly payment | $146.86 |
That would almost cut your monthly payments in half, but you’d pay that debt for another 15 years. In that time, you’d pay another $17,000 in interest.
Which is best for you?
| Consider this option if… | Avoid this option if… | |
| Extend your repayment plan | You have federal student loans. You want a lower payment, but you want more certainty that it’ll stay the same going forward. | You want payments that update each year based on your income. You want your loan balances forgiven after 20–25 years on an IDR plan. |
| Consolidate your loans | You have federal student loans. You want to combine all your individual loans into one. | You’ve made a lot of payments already and hope to apply for loan forgiveness. You have a lot of outstanding interest that hasn’t been capitalized (i.e., added) to your loan balance. |
| Use an IDR plan | You have federal student loans. You want your payments to scale to match your annual income. You want to have your loans forgiven after 20–25 years. | You’re not comfortable sussing out the many options and rules for each program. You wouldn’t be able to pay the tax bill if your loans were forgiven. |
| Refinance to a longer term | You have private student loans and need to permanently lower your payment amount. You have a good credit score. You want to remove a cosigner from the loan. | You have federal student loans and want to keep your borrower protections and loan forgiveness options. You have a low credit score. You’ll be applying for another important debt in the coming months, such as a mortgage. |
If you can barely make any payment on your loans
If you’re struggling with your student loan payments, consider these options.
IDR Plan
Federal student loans: As we mentioned, income-driven plans cap federal loan payments at a percentage of your monthly income. When your income is low, an IDR plan could result in minimal or even no monthly payments.
And after a certain number of years, your remaining loan balance will be forgiven. The number of years you’ll have to pay depends on which income-driven plan you choose. You can check out our guide to income-driven repayment plans to explore options.
Private student loans: Private student loan lenders don’t offer IDR plans.
Deferment
Federal student loans: Deferment allows you to pause payments. If you qualify for deferment while you’re in school, based on financial hardship, or for other reasons, the federal government might waive the interest on your Direct Subsidized Loans while your payments are deferred.
Learn more in this guide to student loan deferment.
Private student loans: Lenders may offer this option, but it often doesn’t mean the same as for federal loans. If your lender offers deferment, your loan will accrue interest in most cases.
Forbearance
Federal student loans: Forbearance also pauses payments, but it’s less favorable than deferment because interest continues to accrue even on Direct Subsidized Loans. However, it may be your only option.
Private student loans: Private student loan lenders use the terms “forbearance” and “deferment” interchangeably. There aren’t any standards private lenders must adhere to, and it’s up to your lender whether—and how long—you can put your loans in forbearance.
If you have a $27,000 loan with an interest rate of 6.5%, putting that loan into forbearance would mean $0 payments for up to a year. But in that time, an extra $1,750 in interest would accrue that you must repay later.
Learn more in our guide to student loan forbearance.
Which is best for you?
| Consider this option if… | Avoid this option if… | |
| IDR plan | You have federal student loans. You want your payments to scale to match your annual income. You want to have your loans forgiven after 20–25 years. | You’re not comfortable sussing out the many options and rules for each program. You wouldn’t be able to pay the tax bill if your loans were forgiven. |
| Deferment | You’re in school. You can’t afford to make payments at all for a temporary period. You meet certain requirements for your federal loans, such as getting cancer treatment or military service. | You don’t want to pause payments entirely. You need a permanent adjustment to your payment amount. |
| Forbearance | You don’t meet requirements for interest-free deferment. You’re experiencing a temporary financial hardship | You don’t want to pause payments entirely. You need a permanent adjustment to your payment amount. |
>>Read more:
- Does your employer offer student loan repayment benefits?
- Should you transfer your student loans to a balance transfer credit card?
- Should you pay off your student loans with your 401(k)?
If you want student loan forgiveness
Student loan forgiveness sounds like a dream, but in some cases, it’s reality. In general, only federal student loans offer defined student loan forgiveness plans.
Private student loan lenders may discharge your loans if you become permanently disabled or die (meaning they won’t seek repayment from what’s left of your assets), but they aren’t required to.
Public Service Loan Forgiveness
Federal student loans: You could get your student loans forgiven if you qualify for the Public Service Loan Forgiveness program and make 120 monthly payments on a qualifying income-driven repayment plan. PSLF is available if you work for the government, a nonprofit, or in certain other industries.
Our guide to Public Service Loan Forgiveness can help you figure out whether you qualify.
Private student loans: Private student loan lenders do not offer loan forgiveness.
IDR loan forgiveness
Federal student loans: Forgiveness is also possible if you make the requisite number of payments on an income-driven plan and have a loan balance remaining after 20–25 years of payments. Check out our income-driven repayment plan guide to see how long you’d need to pay on different plans to qualify for forgiveness.
Private student loans: Private student loan lenders do not offer loan forgiveness.
Which is best for you?
| Consider this option if… | Avoid this option if… | |
| Public Service Loan Forgiveness | You have federal student loans. You work in public service, and it would take you more than 10 years to repay your loans. You’re diligent about making sure you meet annual reporting requirements. | You don’t want to limit your career options to the public sector for the next 10 years. You have anxiety about future legal changes to the program. You’re unsure how to meet the fine-print program requirements. |
| IDR loan forgiveness | You have federal student loans. You’re on an IDR plan. | You wouldn’t be able to pay the tax bill if your loans were forgiven. You have anxiety about future legal changes to the program |
>>Read more:
Why don’t federal and private student loans have the same repayment plans?
Congress regulates federal student loans and often steers them toward being the most consumer-friendly option.
Private student loans, on the other hand, are more of a free-for-all. The individual companies and organizations who offer them have freedom to decide what features or benefits they offer, if any.
Unlike other types of debt, such as credit cards or car loans, even fewer consumer protections are written into law for private student loan lenders.
For example, special rules in bankruptcy law make it nearly impossible to discharge your private student loans. And since most private student loan lenders offer a maximum of one year in forbearance, many borrowers end up feeling stuck if they run into financial problems.
How many times can I change my repayment plan?
There are no limits on how many times you can change your repayment plans with federal student loans.
Most private student loan lenders don’t offer alternative options once you’ve taken out the loan. If yours does, you will need to contact it to find out the limitations.
Does it cost money to change my repayment plan?
No; there is no charge to change your federal student loan repayment plan.
If you have private student loans with the option to change plans, your lender will decide what fee, if any, it will charge.
Is one repayment plan better than the rest?
No repayment plan that is better than the others. It depends on your situation, what you’re looking for help with, and what your lender offers.
View our tables above for more information about which plans may and may not be right in certain situations.