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Standard Repayment Plan vs. student loan refinancing

Which is the better choice for your federal loans?


Fact checked
Signing up for the Standard Repayment Plan is one of the least-expensive ways to pay off your federal student loans. But you could pay them off just as fast at lower rates if you refinance with a private lender. Refinancing isn’t for everyone, though: You’ll lose many of the benefits that come with federal loans.

Standard Repayment Plan vs. refinancing

When deciding between the Standard Repayment Plan and refinancing your student loans, the main factor you need to consider is whether you want to keep your federal benefits or not. As you can see from the table below, signing up for the Standard Repayment Plan keeps you eligible for several federal forgiveness programs, as well as deferment and forbearance options you won’t find with private refinancing providers.

FeatureStandard Repayment PlanRefinancing
Typical rates4.53% to 5.3% 2.5% to 18%
Available terms10 years5 to 25 years
Forgiveness options
  • Federal Teacher Loan Forgiveness Program
  • Federal student loan discharge programs
  • Private loan forgiveness programs
  • Loan repayment assistance programs
  • Private loan forgiveness programs
  • Loan repayment assistance programs
Deferment and forbearance
  • In-school deferment
  • Graduate fellowship deferment
  • Rehabilitation training program deferment
  • Unemployment deferment
  • Economic hardship deferment
  • Military service and post-active duty deferment
  • Parent PLUS borrower deferment
  • Hardship forbearance
  • In-school deferment
  • Active military duty deferment
Monthly payment on $10,000 loan balance*$108.53 to $119.22$44.86 to $253.93
Total cost on $10,000 loan balance*$3,023.15 to $4,306.92$648.42 to $35,522.90

*This example assumes a $10,000 balance when the repayments kick in, including interest that added up during in-school deferment.

How the Standard Repayment Plan works

The Standard Repayment Plan for federal student loans works by dividing up your loan into fixed monthly repayments spread out over 10 years. Repayments kick in at the end of your six-month grace period after leaving school.

It’s the shortest term available for federal loans and generally the least-expensive option. However, it gives you higher monthly repayments than other options with longer terms.

How refinancing works

Refinancing works by taking out a new loan with a private lender and using that loan to pay off your existing student debt. Everything about your loan changes: You get new rates, new terms and even a new servicer.

Most private lenders only offer standard repayments for refinancing, which kick in immediately after your funds are disbursed. While you have the option of extending your loan over a longer term for lower monthly repayments, you lose access to benefits that come with federal loans. This includes a wide range of deferment, forbearance and forgiveness options that private lenders don’t offer.

Which should I choose?

If you can comfortably afford repayments on the Standard Repayment Plan, chances are you make enough to qualify for a competitive deal with a refinancing provider. But there are a few situations when one option might be better than the other.

You might want to pick the Standard Repayment Plan if …

  • You’re thinking of going back to school. Not all private lenders offer in-school deferment — and those that do are generally limited. Stick with standard repayments if you think you might need to defer.
  • You have bad credit and no cosigner. Your chances of qualifying for better rates and terms than you already have are low without a cosigner.
  • You might want to apply for forgiveness. Federal loans have more forgiveness options than private student loans. Even though you’ll have to switch to a different repayment plan based on your income, you’re eligible to do so at any time as long as your loans are still federal.
  • You’re not set in your career. Many refinancing companies look at your employment history when you apply and tend to favor borrowers who are on a fixed, reliable career path.

You might want to refinance if …

  • You want lower repayments. You often have the choice to pay back your debt over 15, 20 or even 25 years, which can give you lower monthly repayments than the Standard Repayment Plan.
  • You want a shorter term. While you can pay off your federal loans at any time, it takes extra effort to make sure each repayment goes toward your principal and involves coordinating with your servicer each month. A shorter five- or seven-year repayment plan from a private lender can be easier to manage.
  • You want to save on interest. If you’ve got a high salary and excellent credit — or a cosigner who does — you might qualify for lower rates than you have with your federal loans.
  • You don’t like your servicer. One way to switch up the company that handles repayments is to refinance your loans — though you can also change your servicer using a federal Direct Consolidation Loan.
  • You’re in a traditionally high-paying field. Many refinancing companies like First Republic Bank and Laurel Road have special deals for doctors, lawyers and members of other high-paying professions.

Compare student loan refinancing offers

Data indicated here is updated regularly
Name Product Min. Credit Score Max. Loan Amount APR
Discover Private Consolidation Loan
Good to excellent credit
2.80% to 12.49%
Splash Financial Student Loan Refinancing
Starting at 1.89%
Save on your student loans with this market-leading newcomer.
Credible Student Loan Refinancing
Good to excellent credit
1.99% to 9.24%
Get prequalified offers from top student loan refinancing providers in one place.
Education Loan Finance Student Loan Refinancing
2.39% to 5.99%
Lower your student debt costs with manageable payments, affordable rates and flexible terms.
Earnest Student Loan Refinancing
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)
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)
2.27% to 7.49%
Refinance all types of student loans — including federal and parent PLUS loans.

Compare up to 4 providers

What are the alternatives?

Not convinced the Standard Repayment Plan is right for you, but still want to keep your federal loans? Consider one of these alternatives:

  • Take out a federal Direct Consolidation Loan. While this won’t give you lower rates, you can change servicers and qualify for the Standard Repayment Plan with a 30-year term.
  • Sign up for the Pay As You Earn (PAYE) Repayment Plan. This plan allows you to make repayments of 10% of your income or what you’d pay on the Standard Repayment Plan — whichever is less. It could be a better option if you’re seeking Public Service Loan Forgiveness (PSLF) or just starting your career.
  • Opt for the Graduated Repayment Plan. If you think your salary will increase over the next 10 years, you can start with a plan that gives you repayments that increase over time with a 10-year term.

Bottom line

Refinancing or signing up for the Standard Repayment Plan are both good options to pay off your federal student loans fast. Which one is best for you mainly depends on your career path and how much you want to pay each month. You can learn about more options by reading our guide to student loan repayment plans.

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