Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our opinions or reviews. Learn how we make money.

How the federal Graduated Repayment Plan works

Ideal for both parent and student borrowers interested in low monthly repayments that increase over time.

Updated

If you’re just starting out in your career or looking for low monthly repayments that increase over time, the federal Graduated Repayment Plan might be for you. Unlike other federal repayment programs, it’s open to both parent and student borrowers.

And you don’t need to have consolidated your FFEL Loans to qualify. But you won’t be eligible for federal forgiveness programs on this plan.

Federal Graduated Repayment Plan at a glance

Eligible loansHow much you payRepayment termWho it’s best for
  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS Loans
  • Direct Consolidation Loans
  • FFEL Subsidized and Unsubsidized Loans
  • FFEL PLUS Loans
  • FFEL Consolidation Loans
Repayments start low and increase every 2 years
  • 10 years for unconsolidated loans
  • Up to 30 years for Direct or FFEL Consolidation Loans
Both student and parent borrowers who earn too much money to qualify for an income-driven repayment plan, but are still struggling with standard repayments.

How does the federal Graduated Repayment Plan work?

The federal Graduated Repayment Plan works by giving you lower monthly repayments that slowly increase every two years — ideally as your salary increases. All loans except Direct or FFEL Consolidation Loans receive the same 10-year term.

For consolidation loans, your term varies depending on your total amount of student debt — including any federal loans you chose not to consolidate. Here’s how it breaks down:

Amount of student loan debtRepayment term
Less than $7,50010 years
$7,500 to $9,99912 years
$10,000 to $19,99915 years
$20,000 to $39,99920 years
$40,000 to $59,00025 years
$60,000 or more30 years

This plan might be a good idea for borrowers with high loan repayments who need time to land a higher-paying job.

Am I eligible for the federal Graduated Repayment Plan?

Any borrowers with Direct or FFEL loans can qualify for the Graduate Repayment Plan. There are no other eligibility requirements.

Can I qualify for forgiveness on the Graduated Repayment Plan?

Unfortunately, you can’t qualify for federal forgiveness programs like Public Service Loan Forgiveness (PSLF) or Teacher Loan Forgiveness on the Graduated Repayment Plan. But you might be able to get your loans forgiven with a private or state-funded loan repayment assistance program (LRAP) while on this plan.

If you do get part of your debt load forgiven, keep in mind that the IRS considers this taxable income. This could lead to an unexpected tax bill come April.

Pros and cons of the federal Graduated Repayment Plan

Weigh the benefits and drawbacks before signing up for this plan.

Pros

  • Low starting repayments. Payments start low and increase over time — ideally with your salary.
  • Out of debt faster. The 10-year term for nonconsolidated loans means you’re out of debt faster than if you’d signed up for an income-driven repayment (IDR) plan.
  • Only apply once. Unlike IDR plans, you don’t need to reapply each year.

Cons

  • Not as flexible as other plans. If you find yourself struggling to make repayments, you might need to apply for deferment or forbearance — or even switch plans entirely.
  • Higher repayments later in life. If your salary doesn’t increase as you expected or you want to switch careers down the road, you might struggle to handle repayments.
  • Not eligible for federal forgiveness programs. You won’t qualify for PSLF or Teacher Loan Forgiveness on this plan.

Is the federal Graduated Repayment Plan right for me?

You might want to consider signing up for the Graduated Repayment Plan in

  • You want to pay off your loans as soon as possible, but you don’t have the salary to afford standard repayments.
  • You make too much to qualify for an IDR plan, but not enough to cover repayments on the Standard Repayment Plan.
  • You’re just starting out in your career and expect to get a salary increase in the next few years.

How to apply for the federal Graduated Repayment Plan

If you haven’t started paying off your student loans yet, your servicer should reach out near the end of your grace period with instructions on how to sign up for a repayment plan.

If you’re already making repayments and want to switch to this plan, log in to your account on your servicer’s website or app for instructions. Most allow you to change your plan online, over the phone or by mail.

Do I need to reapply each year?

No, unlike other federal repayment plans, you only need to sign up for the Graduated Repayment Plan once. The only time you’ll need to reapply is if you wish to sign up for a different plan.

3 alternatives to the federal Graduated Repayment Plan

The federal Graduated Repayment Plan isn’t right for everyone. Here are a few alternatives to consider if you’re on the fence:

  • Extended Graduated Repayment Plan. This is similar to the Graduated Repayment Plan, except you have the option of spreading repayments out over 25 years instead of 10.
  • Revised Pay As You Earn Repayment (REPAYE) Plan. With monthly repayments based on 10% of your discretionary income, this is a good option if you’re in a low-paying field or interested in applying for PSLF or Teacher Loan Forgiveness.
  • Income-Based Repayment (IBR) Plan. Ideal for student borrowers with FFEL Loans that haven’t been consolidated, repayments are based on either 10% or 15% of your monthly discretionary income. This plan can also help you qualify for federal forgiveness programs.

Interested in refinancing instead? Compare your options

Data indicated here is updated regularly
Name Product Min. Credit Score Max. Loan Amount APR
Discover Private Consolidation Loan
Good to excellent credit
$150,000
2.80% to 12.49%
Splash Financial Student Loan Refinancing
660
None
Starting at 1.89%
Save on your student loans with this market-leading newcomer.
Credible Student Loan Refinancing
Good to excellent credit
None
1.99% to 9.24%
Get prequalified offers from top student loan refinancing providers in one place.
Education Loan Finance Student Loan Refinancing
680
None
2.39% to 6.01%
Lower your student debt costs with manageable payments, affordable rates and flexible terms.
Earnest Student Loan Refinancing
650
$500,000
1.99% to 5.64%
Get a tailored interest rate and repayment plan with no hidden fees.
SoFi Student Loan Refinancing Variable Rate (with Autopay)
650
Full balance of your qualified education loans
2.25% to 6.09%
A leader in student loan refinancing, SoFi can help you refinance your loans and pay them off sooner.
Purefy Student Loan Refinancing (Variable Rate)
620
$300,000
2.27% to 7.49%
Refinance all types of student loans — including federal and parent PLUS loans.
loading

Compare up to 4 providers

Bottom line

The Graduated Repayment Plan allows you to pay off your loans in as little as 10 years with low repayments that increase over time. It’s ideal if you’re just starting out in your career and expect to get a pay raise in the next few years. But you won’t qualify for PSLF or Teacher Loan Forgiveness on this plan.

See how it stacks up to your other options with our guide to student loan repayment plans.

Frequently asked questions

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and finder.com Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site