Option 1: Standard Plan
This is the default plan if you don’t choose one of the other options. It is designed so borrowers can be debt-free in a decade or less.
A fixed amount of $50 or more.
10 years or less. However, if you combine multiple loans, this can increase to up to 30 years.
Shorter repayment period means you’re likely to pay less in interest overall.
Higher monthly payments could strain your budget.
Option 2: Income-driven Plan
If you can’t afford the standard option, you may qualify for a plan based on your income and family size.
10% to 20% of discretionary income.
20 to 25 years.
Lower payments free up more income for essentials. If you meet speciﬁc criteria, you may eventually qualify for loan forgiveness.
The longer repayment period means you could spend more money overall. If you qualify for loan forgiveness, you may owe income tax on the amount forgiven.
Option 3: Extended Plan
This plan is for those with large loan balances. You must have at least $30,000 in outstanding federal student loan debt to use it.
Either a fixed amount or graduated, where payments increase over time.
Up to 25 years.
This plan helps people who struggle with high monthly payments due to a large balance.
The extended time frame means you may pay more interest in the long term.
You can change your repayment plan at any time by talking with your loan servicer. Carefully consider your options, though, as your choices can have a significant impact on your finances.