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Graduating from college means you’re done with tests and homework — but it also starts the timer for repaying your student loans.
Your federal student loans will automatically default to the standard repayment plan — though there are other repayment plans you can choose. Under the standard repayment plan, you’ll have fixed monthly payments spread out over a 10-year period.
Here’s what you need to know about the standard repayment plan:
- How standard repayment plans work
- How much you could pay on a standard repayment plan
- Other repayment options you may qualify for
- Refinancing or consolidating your student loans could help you in the long run
How standard repayment plans work
Unless you choose a different repayment plan, federal student loans typically default to the standard repayment plan.
The standard repayment plan breaks your student loans up into 120 fixed monthly payments. This means you’ll have a predictable monthly payment that doesn’t change over the life of the loan.
The following federal student loans qualify for the standard repayment plan:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
- Direct Consolidation Loans
- Subsidized Federal Stafford Loans
- Unsubsidized Federal Stafford Loans
- FFEL PLUS Loans
- FFEL Consolidation Loans
This process of paying your loans off in equal installments is called amortization and works similarly to how you’d pay off an auto or mortgage loan. The minimum payment for most student loans is $50 per month.
Learn More: Private Student Loan Consolidation
This is how much you could pay on a standard repayment plan
Under the standard repayment plan, your payment will generally be around or a little above 1% of your student loan balance.
For example, if you have a $10,000 balance, your monthly payment would be around $100. With a $20,000 balance, you would pay around $200 per month, and so on.
Borrowers who graduate with a bachelor’s degree leave school with an average student loan debt of $28,500. If that balance was made up of qualifying federal student loans, that would lead to an average monthly payment of about $285 per month on the standard repayment plan. Over 10 years, that would add up to about $34,200 in total payments.
Here are some more examples based on federal student loan interest rates for the 2019-2020 school year:
Monthly payment
| Federal student loan balance | Undergrad Direct Subsidized and Unsubsidized Loans (Interest rate: 4.53%) | Graduate Direct Unsubsidized Loans (Interest rate: 6.08%) | Direct PLUS Loans (Interest rate: 7.08%) |
|---|---|---|---|
| $30,000 | $311 | $334 | $350 |
| $50,000 | $519 | $557 | $583 |
| $70,000 | $726 | $780 | $816 |
| $100,000 | $1,038 | $1,114 | $1,165 |
Total payments
| Federal student loan balance | Undergrad Direct Subsidized and Unsubsidized Loans (Interest rate: 4.53%) | Graduate Direct Unsubsidized Loans (Interest rate: 6.08%) | Direct PLUS Loans (Interest rate: 7.08%) |
|---|---|---|---|
| $30,000 | $37,362 | $40,112 | $41,948 |
| $50,000 | $62,270 | $66,854 | $69,913 |
| $70,000 | $87,178 | $93,595 | $97,878 |
| $100,000 | $124,540 | $133,707 | $139,825 |
Learn More: How Often Can You Refinance Student Loans?
Other repayment options you may qualify for
While the standard repayment plan is the default, it’s not always the most affordable option. If you’re struggling to make your payments, consider these alternative federal student loan repayment options:
- Extended repayment plan: Under the extended repayment plan, loans are amortized over 25 years instead of 10. You must have a balance of at least $30,000 in Direct Loans to qualify. Keep in mind that with a longer repayment period, total interest costs are much higher.
- Graduated repayment plan: Under graduated repayment, you’ll start out with a smaller payment that gradually goes up over a 10-year repayment schedule. Graduated repayment can be a good idea if you have a low income that you expect to increase over time.
- Income-driven repayment plans: There are four income-driven repayment (IDR) plans available. Under an IDR plan, your payments are based on your monthly income, which could lower your payment and help you avoid defaulting on your loans. At the end of the repayment period (20 to 25 years, depending on the plan), your remaining loan balance is forgiven.
- Student loan forgiveness programs: There are several federal, state, and local student loan forgiveness programs that might be available to you. For example, the federal Public Service Loan Forgiveness program requires you to work for a nonprofit or government organization and make qualifying loan payments on an IDR plan for 10 years to have your loans forgiven.
Be sure to compare your total costs over time before making a switch from the standard repayment plan.
Learn More:
Refinancing or consolidating your student loans could help you in the long run
Outside of various repayment plans, there are two other options that might help if you’re struggling with your student loans:
- Federal student loan consolidation: If you have multiple federal student loans, student loan consolidation could help you with repayment by combining your monthly payments into one. With a Direct Consolidation Loan, you could extend your repayment term up to 30 years, which will lower your monthly payment — but remember that an extended term means paying more interest in the long run.
- Student loan refinancing: Another option is to refinance your student loans into a single private student loan. With student loan refinancing, you might be able to get a lower interest rate or lower monthly payment, depending on your credit. However, keep in mind that if you refinance your federal student loans, you’ll permanently lose access to federal benefits, such as income-driven repayment.
If you decide to refinance your student loans, be sure to shop around and consider multiple lenders to find the right loan for you. You can do this easily with Credible — all you have to do is fill out a single form and you can see your rates in two minutes.
See Your Refinancing Options
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Keep reading: Statute of Limitations on Private Student Loans: State Guide
