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Repaying student loans in never an easy task. Deciding how much of your income should go towards your loans is as much of a personal decision as any recommended advice.

1) In General: Under most income-driven repayment plans, between 10-20% of your income determines the monthly payment due within these programs. This can be a good guideline to follow when trying to determine how much you should expect to pay towards your student debt.

2) For Saving: If you are concerned about saving for investment purchases such as a car or home, minimizing your monthly payment may be the ideal solution. Although your total lifetime repayment with likely increase, you will have more monthly cash available to you to jumpstart your future.

3) Income- Driven Plans: For those of you who plan to use income-driven plans, here is a breakdown of what you can expect to pay for the following repayment plans according to Federal Student Aid.

  •  Income Based Repayment (IBR): 25-year repayment plan that requires 15% (Not New Borrower after July 1, 2014) or 10% of your discretionary income (New Borrower after July 1, 2014), but always never more than the 10-year Standard Repayment Plan amount.
  • Pay As You Earn: 20-year repayment plan that requires 10% of your discretionary income, but never more than the 10-year Standard Repayment Plan amount.
  • ICR (Income-Contingent Repayment): 25-year repayment plan that requires the lesser of what you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income or 20% of your discretionary income.

* Several factors such as income and family size can reduce or eliminate payment altogether

4) For Parents: Lenders generally advice to limit their total debt repayments to 37% of their gross income before taxes and deductions.

5) Refinance Your Loans: Always remember to consider refinancing your student loans if you are interested in changing the term of your loans to reduce your monthly payment into your ideal repayment plan to help with repaying student loans. Never forget about the savings that refinancing can also bring!

Note: We are not advisors. Please be sure to consult with your financial advisor to see what repayment options are best for you.

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