Compare federal and private student loan repayment programs
usfpl-studentloanrepayment-featured-image

Student loan repayment programs explained

We value our editorial independence, basing our comparison results, content and reviews on objective analysis without bias. But we may receive compensation when you click links on our site. Learn more about how we make money.

Explore the different options for paying back your student debt.

When it comes to student loans, getting one is sometimes the easy part. Repayments, however, can be tricky: Student loans are one of the few types of debt you can take on without knowing exactly how or when you’re going to pay it back.

That’s why they come with multiple repayment options, which you can sometimes choose after you leave school. Here, we help break down repayments so that you can narrow down a plan that fits your budget and long-term goals.

Federal repayment plans

Chances are that if you have student debt, you have federal debt. This type of debt is usually less expensive than private student loans and easier to qualify for.

But one of the major perks of federal loans are repayment plans. Here’s how these repayment plans generally work and how long you can take with repayments.

PlanEligible loansHow it worksHow long you have to repay
Standard Repayment Plan
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • All PLUS loans
  • Direct Consolidation Loans
  • FFEL Consolidation Loans
Make the same fixed repayment each month until you’ve paid off your loan.Up to 10 years for standard loans

Up to 30 years for consolidation loans

Graduated Repayment Plan
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • All PLUS loans
  • Direct Consolidation Loans
  • FFEL Consolidation Loans
Repayments start low and increase every two years.Up to 10 years for standard loans

Up to 30 years for consolidation loans

Extended Repayment Plan
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • All PLUS loans
  • Direct Consolidation Loans
  • FFEL Consolidation Loans
Extends loan terms with either standard fixed payments or graduated payments that increase over time.Up to 25 years
Revised Pay As You Earn Repayment Plan (REPAYE)
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS loans in the student’s name
  • Direct Consolidation loans, not including PLUS loans in a parent’s name
Make monthly repayments that reflect 10% of your monthly income after taxes.

Repayment amounts are recalculated every year and consider both your and your spouse’s income, if you’re married, regardless of how you file your taxes.

After 20 or 25 years of repayments, the government forgives any debt that remains.

Up to 20 years for undergraduate loans

Up to 25 years for graduate loans

Pay As You Earn Repayment Plan (PAYE)
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans in the student’s name
  • Direct Consolidation Loans, not including PLUS loans in a parent’s name
Make monthly repayments that reflect 10% of your monthly income after taxes.

Repayment amounts are recalculated every year and consider your spouse’s income only if you file a joint tax return.

After 20 years of repayments, the government forgives any debt that remains.

Up to 20 years
Income-Based Repayment Plan (IBR)
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • All PLUS loans in the student’s name
  • Direct Consolidation Loans, not including PLUS Loans in parent’s name
  • FFEL Consolidation Loans, not including PLUS loans in parent’s name
Make monthly repayments the reflect 10% to 15% of your monthly income after taxes.

Repayment amounts are recalculated every year and consider your spouse’s income only if you file a joint tax return.

After 20 or 25 years of repayments, the government forgives any debt that remains.

20 to 25 years
Income-Contingent Repayment Plan (ICR)
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans in the student’s name
  • Direct Consolidation Loans, including PLUS loans in parent’s name
Pay the lesser of either 20% of your after-tax income or the amount you’d have paid if you had a fixed plan over 12 years.

Repayment amounts are recalculated every year and consider your spouse’s income only if you file a joint tax return.

After 25 years of repayments, the government forgives any debt that remains.

Up to 25 years
Income-Sensitive Repayment Plan
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • FFEL PLUS loans
  • FFEL Consolidation Loans
Monthly repayments are based on your income. Amounts vary by lender.Up to 10 years

How to choose a federal repayment plan

Picking the best repayment plan for you depends on two factors:

  1. How much you can afford to pay each month.
  2. How quickly you can pay off your student debt.

Ideally, you’ll strike a balance between these two, choosing a plan that gives you affordable monthly repayments without stretching your loan term to 25 years. That way you won’t be in danger of defaulting or potentially paying as much in interest as you did for your education.

The problem? It’s difficult to predict how much money you’re going to make in 10 years when you haven’t even landed your first job. Luckily, you can always go back and adjust your repayment plan by contacting your loan servicer — the company that you make repayments through. You can also pay off your loan early at any time at no extra cost.

You might want to stick with a plan that makes sense for you now and change it when you have a better sense of your career path. But that can get complicated when you factor in forgiveness programs.

Repayment plans and forgiveness programs

As we’ve broken down in the chart above, borrowers who take on income-driven plans are eligible for forgiveness plans after 25 years of repayments. That might not be worth it if you end up making a high salary.

You can have your student debt forgiven more quickly if you’re eligible to enroll in the Public Service Loan Forgiveness Program or the Teacher Loan Forgiveness Program.

Public Service Loan ForgivenessTeacher Loan Forgiveness
How it worksThe government forgives your student loan balance after you make 120 repayments while working full time at a public service job with a qualified employer.The government forgives up to $17,500 of your federal student debt after you work at a low-income school or education service agency for five consecutive years.
Who qualifies
  • Government employees — federal, state, local and tribal
  • Employees of a 501(c)(3) nonprofits with tax-exempt status
  • Employees of some 501(c)(3) nonprofits without tax-exempt status if they provide a public service
  • AmeriCorps volunteers
  • Peace Corps volunteers
Full-time teachers who have taught five years in a row at a low-income school or educational service agency. To qualify, you must have a bachelor’s degree, state certification and no temporarily waived certifications or licenses.

At least one of your five consecutive years of teaching must be after 1998, and the debt you’d like forgiven must be from education earned before the qualifying years.

You also can’t have any debt from a Direct or FFEL loan issued before October 1, 1998.

Additional requirements may apply depending on your situation.

Eligible loansAll Direct LoansAll Direct and FFEL loans

Think you might want to take advantage of these programs? Federal Student Aid recommends that you choose one of the income-driven repayment plan options, because if you end up taking a job with a low salary (or just have a lower salary that typically comes early in a career), your repayments could be as low as a few dollars a month.

Under Public Service Loan Forgiveness, the earlier in your career that you start working for an eligible employer, the more you’ll likely save on your student debt. That’s because you’ll start working toward your 120 qualifying repayments earlier — repayments based on a starting salary — ultimately leaving a larger student loan balance available for forgiveness after you’ve satisfied the program’s requirements.

The IRS considers most forgiven debt amounts as income — and student loans are no exception. Prepare to pay taxes on any student loans you’ve had forgiven by the government.

What if I don’t qualify for a federal forgiveness program?

Not everyone’s interested in public service or education. You can still choose an income-driven repayment plan and have your debt forgiven after 20 to 25 years. But you might not save the most that way.

In fact, your Standard Repayment Plan might just be the least expensive way to pay off your student debt in the long run. You might also get out of debt faster than through other repayment plans.

If you already have a job lined up, crunch the numbers and see if you can afford a Standard Repayment Plan based on your salary.

You can even use the government’s repayment estimator to see how much you’d have to pay, using these estimates to compare your plan options. Remember, you’ll likely have the chance to change it later on if you take a job with a lower salary than you’d planned for.

Understanding income-driven repayment

Income-driven repayment plans are designed to go up and down with your income. They can be a kind of buffer for long-term unemployment, taking a pay cut or otherwise changing your career path. This protection can be especially comforting for people who actively participate in the gig economy, where staying at a job for more than two years is often unheard of.

It might be a good idea to sign up for an income-driven repayment plan if:

  • You aren’t currently working and you’re still in the process of looking for a full-time job.
  • You aren’t able to afford the monthly repayments on the standard plan.
  • You have a low amount of debt compared to your income.
  • You’re considering changing careers in the near future.
  • You’d rather repay lower monthly amounts than get out of debt quickly.

A closer look at how income-driven repayment plans work

The government offers four income-driven repayment plans: Revised Pay As You Earn Repayment Plan (REPAYE), Pay As You Earn Repayment Plan (PAYE), Income-Based Repayment Plan (IBR) and Income-Contingent Repayment Plan.

At first glance, it looks like they work the same way:

  • You pay a percentage of your post-tax income each month.
  • The government recalculates your repayment amount each year based on your income, possibly your spouse’s income and debts and your family size.
  • The government forgives whatever’s left of your loan balance after 20 or 25 years.

Where they differ is when it comes to who qualifies, how much you repay each month and how long it takes to pay off your debt.

Eligibility criteria for income-driven repayment plans

Income-driven planWho qualifiesMonthly payments
REPAYEAny borrower with eligible federal loans.Typically 10% of your income after taxes
PAYEAnyone whose PAYE repayment amount would be less than a repayment on a 10-year Standard Repayment Plan.

Use the government’s repayment estimator to see if you qualify — though, generally, if your debt is higher than your income, you’re eligible.

  • Generally 10% of your income after taxes

You typically won’t pay more than the equivalent of a monthly repayment on a 10-year Standard Repayment Plan

IBRAnyone whose IBR repayment amount would be less than a repayment on a 10-year Standard Repayment Plan.

You can use the government’s repayment estimator to see if you qualify — though, like PAYE, if your debt is higher than your income, you’re eligible.

  • Typically 10% of your income after taxes if your debt was disbursed on or after July 1, 2014
  • Typically 15% of your income after taxes if your debt was disbursed before July 1, 2014

You typically won’t pay more than the equivalent of a monthly repayment on a 10-year Standard Repayment Plan

ICRAny borrower with eligible federal loans.

ICR is the only income-based plan available for Parent PLUS Loans, though it must be consolidated with other federal student debt using a Direct Consolidation Loan.

The lesser of:

  • 20% of your income after taxes
  • What you’d pay on a 12-year Standard Repayment Plan

How much will I pay each month?

Income-driven planMonthly repayments
REPAYETypically 10% of your income after taxes
PAYE
  • Generally 10% of your income after taxes

You typically won’t pay more than the equivalent of a monthly repayment on a 10-year Standard Repayment Plan

IBR
  • Typically 10% of your income after taxes if your debt was disbursed on or after July 1, 2014
  • Typically 15% of your income after taxes if your debt was disbursed before July 1, 2014

You typically won’t pay more than the equivalent of a monthly repayment on a 10-year Standard Repayment Plan

ICRThe lesser of:

  • 20% of your income after taxes
  • What you’d pay on a 12-year Standard Repayment Plan

How long does each plan last?

PlanTime before forgiveness
REPAYE
  • 20 years for undergraduate debt
  • 25 years for graduate or professional debt
PAYE20 years
IBR
  • 20 years if your loan was disbursed on or after July 1, 2014
  • 25 years if your loan was disbursed before July 1, 2014
ICR25 years

How to sign up for a federal repayment plan

Once you’ve decided on a plan, you’re ready to set it up. The straightforward process starts with your loan servicer.

First, your loan servicer will reach out to you to set up an account. Your servicer will ask you to create a username, several passwords and choose a bank account to use for repayments.

It should also guide you through the process of choosing a repayment plan, possibly even calculating for each plan how much your monthly repayments will be and how long you’ll need to pay off your debt.

Private loan repayment plans

Private student loans generally provide fewer options than federal loans when it comes to repayment. Many only offer standard repayment plans, though you can find a few offering income-based or graduated repayments. Some also offer income-based repayment if you’re in danger of defaulting on your student loans or your cosigner’s financial situation has changed (due to a divorce, for example).

That doesn’t necessarily mean you’ll need to make your full repayments all of the time. Nearly all private lenders offer forbearance or deferment options that allow you to pause your loan if you find yourself facing temporary financial hardship or other extreme situations, like deployment to a war zone.

If none of your lender’s options work for you, consider refinancing your private student loan with another lender offering more flexibility.

Interested in refinancing? Compare your options

Rates last updated August 16th, 2018
Name Product Min. Credit Score Max. Loan Amount APR Product Description
Credible Student Loan Refinancing
Good to excellent credit
None
2.57%(As low as ) (variable)
Get prequalified offers from top student loan refinancing providers in one place.
SoFi Student Loan Refinancing Variable Rate (with Autopay)
650
full balance of your qualified education loans
2.480%–7.524% (variable)
A leader in student loan refinancing, SoFi can help you refinance your loans and pay them off sooner.
LendKey Student Loan Refinancing (with AutoPay)
660
$300,000
2.47% (As low as) (variable)
Find competitive rates and unmatched loan benefits from LendKey’s network of not-for-profit lenders.
Education Loan Finance Student Loan Refinancing
Good to excellent credit
None
3.09%–6.69% (fixed)
Lower your student debt costs with manageable payments, affordable rates and flexible terms.
EDvestinU Consolidation & Refinancing Program
700
$200,000
3.85%–7.45% (variable)
Earnest Student Loan Refinancing Variable Rate (w/ autopay)
650
no maximum
2.57%–5.87% (variable)
Get a tailored interest rate and repayment plan with no hidden fees.
LendingTree Student Loans
Good to excellent credit
Varies by lender
3% (As low as) (fixed)
Compare multiple student loans and student loan refinancing options in one place.
Purefy Student Loan Refinancing
620
$90,000
2.00%–7.98% (variable)
Refinance all types of student loans — including federal and parent PLUS loans.

Compare up to 4 providers

Bottom line

Unlike private student loans, federal student loans come with many repayment options. Regardless of the loan you’ve taken on, a Standard Repayment Plan will typically get you out of debt more quickly and save you on interest. That is, unless you intend to apply for a federal forgiveness program.

Want to learn more about what happens after you get a student loan? Read our comprehensive guide to student loans.

Frequently asked questions

Anna Serio

Anna Serio is a staff writer untangling everything you need to know about personal loans, including student, car and business loans. She spent five years living in Beirut, where she was a news editor for The Daily Star and hung out with a lot of cats. She loves to eat, travel and save money.

Was this content helpful to you? No  Yes

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 only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our and .
Go to site