If you do not choose a specific repayment plan when you take a federal student loan, the Standard Repayment Plan is considered as your default choice.
Details of the Standard Plan
With a Standard Repayment Plan, you pay off your loans within 10 years. Under the terms of this plan, your entire loan (principal plus accrued interest) spreads equally across 120 months (10 years). The exact amount you pay every month will depend on the amount you borrowed. Regardless of the amount payable every month, you must pay a minimum monthly amount of $50.
Alternate Repayment Plans
The Standard Repayment Plan offers borrowers affordable monthly payments without increasing the overall cost of the loan. However, you are not locked into this plan. If you struggle to make your monthly payments under this plan, you can switch to a different plan that allows you to make lower monthly payments by extending the life of the loan. Some alternatives to the Standard Repayment Plan include the Graduated Repayment Plan, Extended Repayment Plan, and Income-Based Repayment Plans.
You should know, lower payments ease your financial commitments for the moment. But, you will end up paying more by way of interest. Whether you should switch to another repayment plan will depend on your financial circumstances and your long term goals.
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