There are four distinct approaches to making payments on federal student loans available to select from. Nevertheless, depending on your objectives, the conventional or income-driven repayment plan is the best option for you.

Standard Repayment

The typical strategy for repaying student loans involves making payments that are the same monthly repayment for a loan of ten years. If you have the financial means, enrolling in the standard plan to repay your federal student loans will result in lower interest payments and a quicker payoff of your debt than participating in any other federal repayment plan.

How to enroll

When you start making payments on your student repayment, you will immediately be moved into the regular plan.

Income-Driven Repayment

There are four income-driven repayments that may be chosen from via the federal government: income-contingent repayment, income-based repayment, PAYE, and REPAYE. If your salary is too low to afford the normal repayment, you may consider one of these options instead.

The monthly payments required under income-driven programs are typically between 10 and 20 percent of the total income you have available. If you are jobless or underemployed, your payments might be as low as zero dollars and are subject to adjustment every year. Depending on the kind of debt you have, income-driven programs may extend the duration of your loan to either 20 or 25 years. The period can be extended to 20 years for just undergraduate loans, or it can be extended to 25 years if you have any graduate debt. Any leftover loan debt will be forgiven after that period; however, you will be responsible for paying taxes on the amount that was forgiven.

How to enroll

You may apply for income-driven repayment to the loan that services your student loans or on studentaid.gov. When you submit your application, you will have the opportunity to choose your chosen plan or the option with the lowest cost. Taking the payment that is the least expensive is the wisest course of action in most circumstances. Still, if you are married and filing jointly for tax purposes, you may want to investigate your other options.

Graduated Student Loan Repayment Plan

A graded plan can make sense for you if you have a high income but are nonetheless interested in having reduced monthly payments. Your payments will initially be lower than they would be under conventional repayment (and might even be lower than the interest collected on your loan). Still, they will gradually climb every two years until they reach the full repayment owed after ten years.

If your income is high in comparison to your debt, a graded repayment plan may allow you to pay initial payments that are lower than those required under an income-driven plan. This may free up money for a different objective in the near term, such as a down payment on a house, and it would not cost you as much interest as an income-driven strategy would have. Your overall interest costs would be higher than they would be under the regular repayment plan.

How to enroll

Student loan servicer can modify your current repayment plan to one with graduated repayments.

Extended Student Loan Repayment Plan

Your monthly payments may be reduced under the extended plan since the repayment term is extended to as much as 25 years. To be eligible for a repayment extension on your federal student loans, you must have a balance of at least $30,000 due.

You can make payments that gradually increase over the course of the new loan term, or you may choose to pay installments that remain the same amount each month, as is the case with the regular repayment plan. You will have a decent sense of how much you will have to pay every month in the future, regardless of whether you choose equal or graded extended payments.

Your payments may be adjusted yearly under the income-driven repayment plan, depending on how much money you make. Your payments will increase in proportion to any increase in your wage. However, extended repayment does not grant loan forgiveness the same way as income-driven repayment plans; you are still required to pay off the loan in full by the time the repayment period is through.

How to enroll

Student loan servicer can modify your current repayment plan to allow longer repayment payments.

Have Private Student Loans?

Even while income-driven repayment is not available for private student loans, certain lenders provide loan repayment options that temporarily cut payments. If you need help making payments on private student loans, you should contact your lender to discuss the available options.

There is very little risk involved with refinancing private student loans at a reduced interest rate if you have a credit score at least in the upper 600s or a cosigner whose credit score is in that range. Many financial institutions provide refinancing for student loans; examine all your options before submitting an application to ensure that you get the best loan rate.