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Standard Repayment Plan: What It Is, How It Works

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Published August 01, 2024

A female student calculates how much to pay on student loans with the standard repayment plan in a classroom. — Drazen Zigic / Getty Images

What Is the Standard Repayment Plan?

The standard repayment plan is the default repayment option for federal student loans, which features fixed interest rates and monthly payments for 10 years (up to 30 years for consolidation loans). When you take out federal loans, you’re responsible for paying them back not long after you leave school, and unless you apply and are approved for an income-driven repayment (IDR) plan, your loan service will automatically place you on the standard repayment plan.

Learn more about how the standard repayment plan works and how to tell if it’s the right repayment option for you.

Key Takeaways

The standard repayment plan is the default repayment plan that federal student loans are automatically placed in.
The standard repayment plan involves fixed payments over 10 years (or up to 30 years for consolidation loans).
The standard plan may lead to higher monthly payments than an income-driven repayment (IDR) plan would, but you’ll typically pay off your loans faster.

Understanding Student Loans

There are several different types of student loans. The most significant difference is between federal student loans and private student loans. The government funds federal student loans, while private student loans come from banks, credit unions, and oth🥀er financial institutions.

Federal Student Loans vs. Private Student Loans

Federal Student Loans	Private Student Loans
Funded by the federal government	Offered by private financial institutions like banks and credit unions
Most don’t require a credit check or co-signers to qualify	Usually require a credit check and co-signer if you’re not eligible by yourself
Payments normally start after you leave school, following a six-month grace period	Payments typically start while you’re in school, but you might have the option to defer until after you leave school
Many repayment plans, with terms upward of 30 years	Terms are usually shorter than federal loans, upward of 10 or 15 years, depending on the lender
Most plans have a path to debt forgiveness, if eligible	Many private lenders don’t offer debt forgiveness, regardless of circumstances

Types of Federal Student Loans

There are 澳洲幸运5官方😼开奖结果体彩网:four primary types of 🀅federal student loans:

Direct 澳洲幸运5官方开奖结果体彩网:subsidized loans: These are for dependent undergraduate students and are based on need. The government covers the interest accrued while you’re in school, which reduces how much you’ll owe on top of what you borrowed when it comes time for repayment.
Direct unsubsidized loans: These loans are for undergraduate, graduate, and professional students and aren’t based on need. Anyone can get a direct unsubsidized loan, but you’re on the hook for the interest that’ll accrue while you’re in school.
Direct PLUS loans: These are for graduate students or parents of undergraduate dependent students. You can get direct 澳洲幸运5官方开奖结果体彩网:PLUS loans regardless of need, but they are the only loans that require a credit check. If you have an adverse credit history, you might need to meet other qualifications to get this loan.
Direct 澳洲幸运5官方开奖结果体彩网:consolidation loans: This loan combines all of your existing federal loans into a single loan with one 澳洲幸运5官方开奖结果体彩网:loan servicer.

Fast Fact

Certain loans made under the 澳洲幸运5官方开奖结果体彩网:Federal Family Education Lo🐠an (FFEL) program were also automatically placed under the standard repayment plan. As this program ended in 2010, all new federal loans are made through the William D. Ford 澳洲幸运5官方开奖结果体彩网:Federal Direct Loan Program.

Key Features of the Standard Repayment Plan

You’re automatically enrolled in the standard repayment plan if you don't select a repayment plan when you finish school.

Repayment length: 10 years (up to 30 for consolidation loans)
Number of payments: 120 (up to 360 for consolidation loans)
Payment amounts: Fixed monthly amount of at least $50
Loan types: Direct subsidized loans, direct unsubsidized loans, direct PLUS loans, direct consolidation loans, subsidized federal Stafford loans, unsubsidized federal Stafford loans, FFEL PLUS loans, and FFEL consolidation loans

The standard 10-year repayment plan will help you pay off your loans faster than other repayment options, but it will likely also require higher monthly payments. If you consolidate your federal student debt into a direct consolidation loan, you could lower your monthly payments, but it may take longer to pay off (which could mean paying more in interest in th𓄧e long run).

Comparing Repayment Plans

While the standard repayment plan is the default repayment plan for most borrow🌜ers, other repayment options areﷺ also available.

Standard vs. Graduated Repayment Plan

The graduated repayment plan starts with lower payments in the first two years and then gradually increases, typically every two years. As with the s⛦tandard repayment plan, your loans will be paid off in 10 years. The goal is to pay less when you’re just entering the workforce and then pay more as y𒐪ou earn more money.

Note

The expectation with th🅠e graduated repayment plan is that you’ll earn lower incomes in entry-level positions and then earn more as your career advances. As such, the increase in your student loan payments is intended to match an anticipated pay🃏 raise.

Standard vs. Income-Dri🎉ven Repayment (IDR) Plans

Income-driven repayment (IDR) plans are based on your discretionary income and family size. There are four types of IDR plans:

澳洲幸运5官方开奖结果体彩网:Saviꦛng on a Valuable Education (SAVE) Plan—formerly the REPAYE Plan
Pay As You Earn (PAYE) Repayment Plan
Income-Based Repayment (IBR) Plan
Income-Contingent Repayment (ICR) Plan

Some student loans are ineligible for 𒅌IDR plans. For instance, PLUS loans made to parents of undergraduate students 🦂are only eligible for ICR plans if they’ve been consolidated into a direct consolidation loan.

All IDR plans require annual updates to your income and family size. Your loans are then forgiven once you’ve made payments for a set amount of time—20 or 25 years, depending on the plan.

Important

On July 18, a federal appeals court blocked the SAVE plan until two court cases centered around the IDR plan can be resolved. The Department of Education has moved borrowers enrolled in the SAVE plan into an interest-free forbearance while the litigation is ongoing. It has also outlined options for borrowers who were nearing Public Service Loan Forgiveness (PSLF)—borrowers can either "buy back" months of PSLF credit, if they would reach 120 months of payments while in forbearance, or switch to a different IDR plan.

What Happens if I Can’t Make Payments Under the Standard Repayment Plan?

If you can’t make payments under the standard repayment plan, you can contact your loan servicer about deferment or forbearance options. You can also ask about IDR plans that base൲ your pay🌟ments on your income and family size.

Can I Apply for Loan Forgiveness Under the Standard Repayment Plan?

No, you won’t be eligible for loan forgiveness under the standard repayment plan. To qualify for student debt forgiveness, you’ll have to apply and be approved for an IDR plan. Alternatively, there are also specialized loan forgiveness programs for borrowers working in certain public service, educational, or military professions.

Are Private Student Loans Eligible for the Standard Repayment Plan?

No, private student loans aren’t eligible for the standard repayment plan. The standard repaym🐓ent plan is for feꦚderal student loans only.

The Bottom Line

The standard repayment plan is the federal student loan repayment plan you’ll be placed in after you leave school unless you enroll in a different repayment plan. While it’s one of the fastest ways to repay your student debt, depending on your income, it might not be tꦑhe most cost-effective. Compare the standard repayment plan to repayment options to determine which one would best suit your needs.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

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