Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.
When it comes time to repay your federal student loans, you have to decide what kind of payment plan you want to be on. All borrowers qualify for the Standard Repayment Plan, which ensures you pay off your loan within 10 years.
But that’s not the only option available, and it might not be the best choice for your financial needs.
By learning more about the Standard Repayment Plan, you can decide if it’s the right choice for you or you want to go a different route.
What Is the Standard Repayment Plan for Student Loans?
Upon graduation from college or if you drop below half-time enrollment, you have a six-month grace period for a Direct Loan program loan (nine months for a federal Perkins Loan) when you don’t have to make payments.
Once that ends, you’ll begin the Standard Repayment Plan, the default for all federal student loan borrowers once they have left school. That’s unless you choose a different plan – perhaps one where you make lower monthly payments, extend your repayment period, or both.
Let’s start by looking at the standard plan, which sets your monthly payments at a certain amount so that you will have your loans paid off within 10 years.
Recommended: Getting to Know Your Student Loan Repayment Options
Standard Repayment Plan Eligibility
Unlike some other federal student loan repayment plans, all borrowers are eligible for the standard plan.
Loans That Are Eligible
Federal Family Education Loan (FFEL) Program loans and Direct Loans qualify for the Standard Repayment Plan. They include:
• Direct Subsidized and Unsubsidized Loans
• Direct PLUS Loans
• Direct Consolidation Loans
• FFEL consolidation loans
• FFEL PLUS loans
Keep in mind that you will only be able to use the Standard Repayment Plan if you have federal student loans, not private student loans.
💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.
How Does the Standard Repayment Plan Work?
With the Standard Repayment Plan, borrowers pay fixed monthly payments for up to 10 years. Because the plan offers a relatively short repayment period and monthly payments don’t change, you will save more money in interest than longer repayment plans.
For example, if you just graduated with the average student loan debt of $37,718 at 5.8% interest, you’ll pay $12,078.27 in total interest. Expanding to 25 years at the same rate will lower your monthly payment by almost half, but you’ll end up paying nearly $33,810.20 in total interest.
There’s a variation on the 10-year plan: the graduated repayment plan. Under this plan, repayments start low, and every two years, your payments increase. This is a good option for recent graduates who may have lower starting salaries but expect to see their pay increase substantially over 10 years.
Recommended: Student Loan Payment Calculator
Payments on the Standard Plan
What may make the Standard Repayment Plan less appealing to some borrowers is that payments will likely be higher than on any other federal repayment plan because of the short loan term.
For people with a large amount of student debt or high interest rates, the monthly payments can be daunting or unmanageable. You might face sticker shock when you receive your first bill after your grace period, so don’t let it come as a surprise.
To determine if the Standard Repayment Plan is a good option for you, you can use the federal Loan Simulator to calculate student loan payments. Or contact your loan servicer before your first payment is due to see how much you will owe each month.
Changing Your Repayment Schedule
If you want to change your repayment schedule or plan, call your loan servicer and see what they can do.
You’ll need to contact each loan servicer if you took out more than one loan and want to change repayment schedules.
You can change your federal student loan repayment plan at any time, free of charge.
What Are the Pros and Cons of the Standard Repayment Plan?
There are upsides and downsides to weigh when considering the Standard Repayment Plan.
Pros
You will pay off your loans in less time than you would with other types of federal repayment plans, which may allow you to set aside money for things like purchasing a home.
You’ll save money on interest, since you’re paying your loan back faster than you would on other federal plans.
The plan offers predictability. Payments are the same amount every month.
You don’t need to recertify your loan every year to prove your eligibility.
Cons
Your monthly payments will probably be higher than payments made under other student loan repayment plans with extended repayment periods.
Your monthly payments are based on the number of years it will take you to repay the loan, not on how much you can afford, as with income-based repayment plans.
With some federal income-driven repayment plans, like SAVE or PAYE, your remaining balance will be forgiven after you make a certain number of eligible payments over 20 to 25 years.
The Takeaway
The federal Standard Repayment Plan of 10 years could be right for you if you’re able to keep up with payments and you want to pay off your debt quickly.
Another option is to refinance your student loans to improve your interest rate and possibly change your loan term. Just realize that refinancing federal student loans into a private student loan means giving up federal benefits like income-driven repayment and loan forgiveness.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
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