What is it and how does it work

What is a standard repayment plan?

The standard repayment plan is the default repayment option for federal student loans, which includes 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 repaying them soon after you graduate, and if you don’t apply for and are approved for an income-driven repayment (IDR) plan, your loan servicer will automatically place you in 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 conclusions

The Standard Repayment Plan is the default repayment plan into which federal student loans are automatically placed.
The standard repayment plan involves fixed payments spread over 10 years (or up to 30 years for consolidation loans).
The Standard Plan may have higher monthly payments than the Income-Driven Repayment (IDR) plan, but you’ll typically pay off your loans faster.

Understanding Student Loans

There are several different types of student loans. The most important difference is between federal loans and private student loans. The government funds federal student loans, while private student loans are made by banks, credit unions, and other 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 such as banks and credit cooperatives
Most do not require a credit check or co-signers to qualify	They usually require a credit check and a co-signer if you don’t qualify on your own
Payments typically begin after graduation, after a six-month grace period.	Payments usually start while you’re in school, but you may be able to defer them until you leave school.
Multiple repayment plans with repayment terms exceeding 30 years	Repayment terms are typically shorter than federal loans, extending over 10 or 15 years, depending on the lender.
Most plans provide for debt forgiveness if you qualify.	Many private lenders do not offer debt relief, regardless of the circumstances

Types of Federal Student Loans

There are four basic types of federal student loans:

Direct Subsidized Loans: They are designed for dependent and need-based undergraduate students. The government covers the interest you accrue while you study, which reduces the amount you will owe on top of the amount you borrowed when it comes time to repay.
Direct loans without subsidy: These loans are for undergraduate, graduate, and professional students and are not need-based. Anyone can get a direct unsubsidized loan, but you are responsible for the interest that will accrue while you study.
Direct Loans PLUS: They are designed for graduate students or parents of dependent undergraduate students. You can get Direct PLUS Loans regardless of need, but they are the only loans that require a credit check. If you have a negative credit history, you may have to meet other requirements to get this loan.
Direct consolidation loans: This loan combines all your existing federal loans into one loan serviced by one loan servicer.

Key Features of a Standard Repayment Plan

If you do not choose a repayment plan upon completion of your studies, you will be automatically enrolled in the standard repayment plan.

Repayment period: 10 years (up to 30 years for consolidation loans)
Number of payments: 120 (up to 360 in the case of consolidation loans)
Payment amounts:Fixed monthly amount of at least $50
Types of loans: 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 may be able to lower your monthly payments, but it may take longer to pay off (which could mean paying more interest in the long run).

Repayment Plan Comparison

While the Standard Repayment Plan is the default repayment plan for most borrowers, other repayment options are also available.

Standard and phased repayment plan

A gradual repayment plan starts with lower payments for the first two years and then gradually increases them, usually every two years. Like the standard repayment plan, your loans will be paid off over 10 years. The goal is to pay less when you’re just entering the workforce, then pay more as you earn more money.

Note

With a graduated repayment plan, you’re expected to earn less in entry-level positions and then more as your career progresses. As such, your student loan payments are expected to increase in line with your expected salary increase.

Standard and Income-Driven Repayment Plans (IDR)

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

Some student loans are not eligible for IDR plans. For example, PLUS loans made to parents of undergraduate students are eligible for ICR plans only if they are consolidated into a Direct Consolidation Loan.

All IDR plans require annual income and family size updates. Loans are then forgiven after payments are made over a set period of time—20 or 25 years, depending on the plan.

On July 18, a federal appeals court blocked the SAVE plan until two lawsuits involving the IDR plan are resolved. The Education Department moved borrowers enrolled in the SAVE plan to an interest-free deferral while the lawsuits were pending. It also outlined options for borrowers who were approaching Public Service Loan Forgiveness (PSLF) — borrowers could either “buy back” months of their PSLF loan if they hit 120 months of payments while in deferral, or switch to another IDR plan.

What happens if I am unable to make payments under the standard repayment plan?

If you are unable to make payments under your standard repayment plan, you can contact your loan servicer about deferral or suspension options. You can also ask about IDR plans, where payment amounts are based on income and family size.

Can I apply for loan forgiveness under the standard repayment plan?

No, you will not be eligible for loan forgiveness under a standard repayment plan. To qualify for student loan forgiveness, you must apply for 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.

Do private student loans qualify for the standard repayment plan?

No, private student loans do not qualify for the Standard Repayment Plan. The Standard Repayment Plan only applies to federal student loans.

Summary

The standard repayment plan is the federal student loan repayment plan you’ll be assigned to after you graduate unless you enroll in another repayment plan. While this is one of the fastest ways to pay off your student loan debt, depending on your income, it may not be the most cost-effective. Compare the standard repayment plan with repayment options to determine which one best meets your needs.