Which Student Loan Repayment Plan Is Best for Me?

What is the best student loan repayment plan for you?

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There is no one student loan repayment plan that works best for all students. There is no one-size-fits-all, but there is one deciding factor in which plan is the best student loan repayment plan for you. The student loan that can help you save the most money will depend on how much you can pay back every month.

The Standardized Repayment Plan

The Standard Repayment Plan is the default repayment plan that is associated with all federal student loans. With this option, you repay a set amount of money on your loan for anywhere from 10 to 30 years. Of course, that depends on how much money you borrowed. This offers a nice balance between the amount to pay back every month and the life of your loan.


The Graduated Repayment Plan

Graduated repayment plans are available to all federal borrowers as well, and with this plan, you will see an increase in your repayment amount every two years until you’ve paid your loan off in full. With this plan, your monthly payments increase as your earning potential increases. However, you still pay off your debt without incurring too much interest on your loans.

The Extended Repayment Plan

Extended Repayment may be a good option if you want to pay your loans off in 25 years. You’ll pay more in the long-term, but it will help lower the amount you have to pay back every month. That can come as a relief if you are still struggling financially. Or, if you want to use your money to pay for other necessities such as a house or a car.


Pay As You Earn and Revised Pay As You Earn, also referred to as PAYE and REPAYE, are based on your discretionary income. These options are more complicated, as it may involve spousal income if you are married. They may not help you save money overall but they do make your monthly payments more manageable.

Income-Based Repayment Plans

Income-Based Repayment and Income Contingency Repayment plans are based on your discretionary income, but there is more paperwork involved, and you’ll have to pay income taxes on these types of plans, depending upon your income situation. For some people who intend to work as public servants, this option may work better than the Standardized or Graduated options, and if you’ve consolidated your loans, this option may be helpful.

When it comes to repaying your student loans, you will have to compromise between the life of your loan and the monthly payments. If you have the funds to make larger loan payments every month that will shorten the life of your loan. That, in turn, reduces the overall amount of interest that you pay. Choosing to pay accelerated payments is the best way to save the most money on your loans.

The US Education Department has a handy repayment estimator on its web site that can help you choose the best option for you. Log in to http://studentaid.gov and click the Repayment Calculator link for detailed repayment options.

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