Which student loan repayment plan is best for you?

OCCU  -  09.21.2016

Deciding how to pay back student loans after college can be overwhelming when you’re unsure of your financial situation. Thankfully, Federal Direct Loans offers a variety of loan repayment plans to choose from so you can pick the most affordable option.

Standard Repayment Plan

This plan is ideal if you can start paying back what you owe as soon as you graduate. You’ll also start out with this payment plan unless you’ve chosen otherwise. The nice thing is that payments are fixed with the standard repayment plan and require a minimum of $50 a month, ensuring you pay off the loan within 10 years.  

Graduated Repayment Plan

Depending on the job you land right after college, you might not be able to pay much on your student loans, which is why the graduated repayment plan is a good fit. Payments start lower and then increase over time as you climb the career latter. And, like the standard repayment plan, your loans will be paid off within 10 years if you can make the payments.      

Extended Repayment Plan

If paying off your loans in 10 years seems impossible with your current income, then the Extended Repayment Plan might work best for you. The payments will be smaller than the standard and graduated repayment plans, so you’ll be able to afford payments each month. The only downside is that you’ll be making payments for the next 25 years.

Income-Based Repayment Plan

This plan is contingent upon your gross income and family size. So if you have a lower paying job and are married, your monthly payments will be adjusted accordingly. Also, instead of loan forgiveness after 25 years like the extended repayment plan, the income-based plan grants forgiveness after only 20 years of qualifying payments.


If you can’t afford payments at all, then you can always choose a deferment or forbearance option. A simple call to the loan office will let you defer payments for a fixed time if you’re qualified, until your financial situation is improved. Just remember, the longer you defer, the more interest you’ll accrue, adding more to your student loan debt.

When choosing the right plan, thoroughly evaluate your finances for today and the future. Because, while it may seem enticing to pay chump change every month for right now, you must remember that the longer it takes to pay your off your student loans, the more interest you’ll earn, prolonging your debt. 

Sources: https://myfedloan.org/borrowers/repayment-plans/