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Have you been considering student loans to pay for your university, or a recent graduate looking for ways to pay off your student debt? If so then you should probably be aware of the 10 year repayment plan. In this post I’ll share with you three reasons why you should consider this repayment plan when repaying your student loans. Since the creation of 10 year payment plan loans back in 2009, over 5.6 million people have taken advantage of them. For anyone who has weighed up the costs and benefits you can expect to repay the same amount if you took a 30 year repayment plan. However, it’s still worth taking a deeper look and understanding how they work and whether they are right for you.
To learn about; graduated repayment plan, extended repayment plan, standard repayment plan, keep reading this article. To also find out about, 10 year repayment plan student loans calculator, student loan repayment plan calculator, which repayment plan will you be placed on automatically unless you change it, keep visiting collegelearners website.
10 year repayment plan student loans
The 10 Year Standard Repayment Plan is the default repayment plan for federal student loans. It’s also one of several options that borrowers have to choose from when it comes time to pay back what they’ve borrowed.
The 10 Year Standard Repayment Plan is a fixed repayment plan, meaning your monthly payment stays the same for 10 years. If you have more than $30,000 in federal student loans, you can extend your repayment period up to 20 years on this plan. This option would lower your monthly payments, but you will end up paying more in interest over the life of the loan.
The standard 10-year plan is a great choice if you can afford it, as it’s the fastest way to get out of debt. But if you’re struggling to make your payments, there are other repayment options available that may work better for you.
Repayment
The standard repayment plan is a 10-year plan. Under this plan, your monthly payments will be a fixed amount, which will be at least $50. This option usually allows you to repay your loans in the shortest amount of time.
The extended repayment plan is available if you have more than $30,000 in Direct Loans. Under this plan, you can extend your repayment period up to 25 years and lower your monthly payment.
The graduated repayment plan is available if you have more than $6,500 in Direct Loans. Under this plan, your loan term may extend up to 10 years and your monthly payments will start out low and increase (gradually) every two years.
Loan Repayment Plans
There are four main repayment plans for Federal education loans, consisting of Standard Repayment and three alternatives. Each of the alternatives has a lower monthly payment than Standard Repayment, but this extends the term of the loan and increases the total amount of interest repaid over the lifetime of the loan.
Types of Repayment Plans
The repayment plans are as follows:
- Standard Repayment. Under this plan you will pay a fixed monthly amount for a loan term of up to 10 years. Depending on the amount of the loan, the loan term may be shorter than 10 years. There is a $50 minimum monthly payment. Learn more: Department of Education Standard Repayment Plan.
- Extended Repayment. This plan is like standard repayment, but allows a loan term of 12 to 30 years, depending on the total amount borrowed. Stretching out the payments over a longer term reduces the size of each payment, but increases the total amount repaid over the lifetime of the loan.
- Graduated Repayment. Unlike the standard and extended repayment plans, this plan starts off with lower payments, which gradually increase every two years. The loan term is 12 to 30 years, depending on the total amount borrowed. The monthly payment can be no less than 50% and no more than 150% of the monthly payment under the standard repayment plan. The monthly payment must be at least the interest that accrues, and must also be at least $25.
- Income-Contingent Repayment. Payments under the income contingent repayment plan are based on the borrower’s income and the total amount of debt. Monthly payments are adjusted each year as the borrower’s income changes. The loan term is up to 25 years. At the end of 25 years, any remaining balance on the loan will be discharged. The write-off of the remaining balance at the end of 25 years is taxable under current law. There is a $5 minimum monthly payment. Income Contingent Repayment is available only for Direct Loan borrowers.
- Income-Sensitive Repayment. As an alternative to income contingent repayment, FFELP lenders offer borrowers income-sensitive repayment, which pegs the monthly payments to a percentage of gross monthly income. The loan term is 10 years.
- Income-Based Repayment. Similar to income contingent repayment, Income-Based Repayment caps the monthly payments at a lower percentage of a narrower definition of discretionary income.
All six plans are available for student loans, but only the first three plans are available for parent loans.
Loan Term for Extended/Graduated Repayment
For extended and graduated repayment, the following chart shows how the maximum loan term depends on the amount borrowed.
| Loan Balance | Maximum Loan Term |
|---|---|
| Less than $7,500 | 10 years |
| $7,500 to $9,999 | 12 years |
| $10,000 to $19,999 | 15 years |
| $20,000 to $39,999 | 20 years |
| $40,000 to $59,999 | 25 years |
| $60,000 or more | 30 years |
There is a variation on extended repayment in the FFEL program that provides a repayment term of up to 25 years, not 30 years, if you have more than $30,000 in loans with a single lender. This 25-year extended repayment plan does not require you to consolidate your loans.
No Prepayment Penalty
All Federal education loans allow prepayment without penalty. For loans that are not in default, any excess payment is applied first to interest and then to principal. However, if the additional payment is greater than one monthly installment, you must include a note with the payment telling the processor whether you want your prepayment to be treated as a reduction in the principal. Otherwise, the government will treat it as though you paid your next payment(s) early, and will delay your next payment due date as appropriate. (It is best to tell them to treat it as a reduction to principal, since this will reduce the amount of interest you will pay over the lifetime of the loan.)
Due to the way the income contingent repayment plan treats interest, it is not advisable to prepay a loan in the income contingent repayment plan.
Switching Repayment Plans
If you want to switch from one plan to another, you can do so once per year, so long as the maximum loan term for the new plan is longer than the amount of time your loans have already been in repayment.
Comparing Repayment Plans
The following table compares each of the major repayment plans with standard ten year repayment. As the table illustrates, increasing the loan term reduces the size of the monthly payment but at a cost of substantially increasing the interest paid over the lifetime of the loan. For example, increasing the loan term to 20 years may cut about a third from the monthly payment, but it does so at a cost of more than doubling the interest paid over the lifetime of the loan. This table is based on the unsubsidized Stafford Loan interest rate of 6.8%.
| Repayment Plan and Loan Term | Reduction in Monthly Payment | Increase in Total Interest Paid |
|---|---|---|
| Extended Repayment – 12 years | 12% | 22% |
| Extended Repayment – 15 years | 23% | 57% |
| Extended Repayment – 20 years | 34% | 118% |
| Extended Repayment – 25 years | 40% | 184% |
| Extended Repayment – 30 years | 43% | 254% |
| Graduated Repayment | 50% initial payment 38% average reduction | 89% |
| Income Contingent Repayment (Salary = initial debt, 4% annual raise) | 41% declining to 33% 37% average reduction | 178% |
For example, suppose you borrow a total of $20,000 at 6.8% interest. The following table shows the impact of switching from standard 10 year repayment to 20 year extended repayment.
| Repayment Plan and Loan Term | Monthly Payment | Total Interest Paid |
|---|---|---|
| Standard Repayment – 10 years | $230.16 | $7,619.31 |
| Extended Repayment – 20 years | $152.67 | $16,639.74 |
| Difference | $77.49 reduction | $9,020.43 increase |
Repayment Plan Calculators
Finaid offers calculators to estimate the size of monthly loan payments under various scenarios.
- The Loan Payment Calculator may be used to estimate of the size of your monthly loan payments and the annual salary required to manage them.
- The Loan Prepayment Calculator shows the impact of making regular extra payments on the loan.
- The Loan Consolidation Calculator compares the monthly payments, interest rates and total cost of your current loans with the monthly payment.
A 10 year repayment plan student loans is a great way to get a college education.
This option is especially attractive for the young adult who is trying to pay off their debt.
The most important thing to consider when deciding whether or not this is the best option for you is how much money you will make each month. If you have a steady income, then it may not be worth paying the interest rates that come along with a traditional loan. On the other hand, if you don’t have an income, then it might be worth considering this option.
The problem with this type of loan is that they tend to carry very high interest rates and can be difficult to pay off over time. It’s also important to remember that your monthly payments will change as your income changes over time. This can be difficult for some people to cope with because they may feel like they are being pushed into spending more money on things that they don’t need at the moment.
You should be aware that if you choose this type of loan, there are some things that you will have to do in order to qualify for the program.
graduated repayment plan
The Graduated Repayment Plan starts with lower payments that increase every two years.
Payments are made for up to 10 years (between 10 and 30 years for consolidation loans).
Eligible Federal Loans
The following loans from the William D. Ford Federal Direct Loan (Direct Loan) Program and the Federal Family Education Loan (FFEL) Program are eligible for the Graduated Repayment Plan:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
- Direct Consolidation Loans
- Subsidized Federal Stafford Loans
- Unsubsidized Federal Stafford Loans
- FFEL PLUS Loans
- FFEL Consolidation Loans
Monthly Payments for Federal Education Loans Except Consolidation Loans
Under this plan, your monthly payments
- start out low and increase every two years,
- are made for up to 10 years for all loan types except Direct Consolidation Loans and FFEL Consolidation Loans,
- will never be less than the amount of interest that accrues between your payments, and
- won’t be more than three times greater than any other payment.
Monthly Payments for Consolidation Loans
Under this plan, your monthly payments
- start out low and increase every two years,
- are made for a period of between 10 and 30 years for Direct Consolidation Loans and FFEL Consolidation Loans,
- will never be less than the amount of interest that accrues between your payments, and
- won’t be more than three times greater than any other payment.
If you have a Direct Consolidation Loan or FFEL Consolidation Loan, the length of your repayment period will depend on the amount of your total education loan indebtedness. This total education loan indebtedness includes the amount of your consolidation loan and your other student loan debt. Other student loan debt includes any federal student loans that are not included in the consolidation loan, as well as private education loans that are not eligible for consolidation. The maximum amount of other student loan debt that may be considered in determining your repayment period may not exceed the loan amount you are consolidating.
To include other student loan debt in the determination of the repayment period for your Direct Consolidation Loan, be sure to list those loans on your consolidation application in the section for listing loans that you do not want to consolidate, but want considered in the determination of your repayment period.
The chart below shows the maximum repayment period for a Direct Consolidation Loan or FFEL Consolidation Loan under the Graduated Repayment Plan depending on total education loan indebtedness.
| If your Total Education Loan Indebtedness is… | …your Repayment Period will be… | |
|---|---|---|
| At Least | Less Than | |
| $7,500 | 10 years | |
| $ 7,500 | $10,000 | 12 years |
| $10,000 | $20,000 | 15 years |
| $20,000 | $40,000 | 20 years |
| $40,000 | $60,000 | 25 years |
| $60,000 | 30 years |
Using Loan Simulator to Estimate Your Eligibility and Payment Amount Under the Graduated Repayment Plan
Your loan servicer, the company that handles the billing and other services on your federal student loan, can help you choose a loan repayment plan that’s best for you. Before you contact your loan servicer to discuss repayment plans, use our Loan Simulator to get an early look at what repayment plans you may be eligible for and to receive a comparison of estimated monthly payment amounts for all federal student loan repayment plans. This comparison is important because the Graduated Plan may not provide you with the lowest payment amount based on your individual circumstances. You may find that your payment will be lower under another repayment plan.
extended repayment plan
The Extended Repayment Plan allows you to repay your loans over an extended period of time.
Payments are made for up to 25 years.
If you need to make lower monthly payments over a longer period of time than under plans such as the Standard Repayment Plan, then the Extended Repayment Plan may be right for you.
Eligible Federal Loans
The following loans from the William D. Ford Federal Direct Loan (Direct Loan) Program and the Federal Family Education Loan (FFEL) Program are eligible for the Extended Repayment Plan:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
- Direct Consolidation Loans
- Subsidized Federal Stafford Loans
- Unsubsidized Federal Stafford Loans
- FFEL PLUS Loans
- FFEL Consolidation Loans
Eligibility for the Extended Repayment Plan
If you’re a Direct Loan borrower, you must have had no outstanding balance on a Direct Loan as of October 7, 1998, or on the date you obtained a Direct Loan after October 7, 1998, and you must have more than $30,000 in outstanding Direct Loans.
If you’re a FFEL borrower, to qualify for this plan you must have had no outstanding balance on a FFEL Program loan as of October 7, 1998, or on the date you obtained a FFEL Program loan after October 7, 1998, and you must have more than $30,000 in outstanding FFEL Program loans.
For example, if you have $35,000 in outstanding FFEL Program loans and $10,000 in outstanding Direct Loans, you can choose the Extended Repayment Plan for your FFEL Program loans, but not for your Direct Loans.
Monthly Payments
Under this plan, your monthly payments are
- a fixed or graduated amount,
- made for up to 25 years, and
- generally lower than payments made under the Standard and Graduated Repayment Plans.
Using Loan Simulator to Estimate Your Eligibility and Payment Amount Under the Extended Repayment Plan
Your loan servicer, the company that handles the billing and other services on your federal student loan, can help you choose a loan repayment plan that’s best for you. Before you contact your loan servicer to discuss repayment plans, you can use Loan Simulator to get an early look at what plans you may be eligible for and to receive a comparison of estimated monthly payment amounts for all federal student loan repayment plans. This comparison is important because the Extended Plan may not provide you with the lowest payment amount based on your individual circumstances. You may find that your payment will be lower under another.
standard repayment plan
Standard Repayment Plan: Is There A Cheaper Way To Pay Off Student Loans?
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Compare Personalized Student Loan Refinance Rates
After you graduate from college and enjoy your six-month grace period, it’s time to start repaying your student loans.
The standard repayment plan is the default repayment plan that every federal student loan borrower starts off with after leaving school. While it’s the default option, it’s not the only student loan repayment option. Some other plans potentially will allow you to make lower monthly payments, extend the repayment period or both.
What Is the Standard Repayment Plan?
The standard repayment plan has fixed monthly payments that you pay for 10 years (or up to 30 years if you have a direct consolidation loan). You’ll make the same monthly payment throughout the repayment period, fixed to ensure you’ll pay off your loan in a decade, with interest.
When you start making payments on your federal loans, you’ll automatically be enrolled in the standard repayment plan unless you otherwise decide to switch to another plan, like income-driven repayment plans. You’ll make 120 payments—or monthly payments for 10 years.
While your payments may be as low as $50 a month, they’re not guaranteed to be that low; your monthly cost will be determined by the size of your loan. That means your monthly payments might be higher compared to other repayment plans.
Which Loans Are Eligible for the Standard Repayment Plan?
Direct loans and Federal Family Education Loans are eligible, including:
- Direct subsidized loans
- Direct unsubsidized loans
- Direct PLUS Loans
- Direct consolidation loans
- Subsidized Federal Stafford Loans
- Unsubsidized Federal Stafford Loans
- FFEL PLUS Loans
- FFEL Consolidation Loans
Only federal student loans are eligible for the standard repayment plan. Private student loans from banks and other lenders don’t qualify.
How the Standard Repayment Plan Works
Let’s walk through an example to show how the standard repayment plan works: Say you have $26,946 in student loan debt. When you graduate, your 3.9% interest rate kicks in. For the standard repayment plan, your monthly payments will be around $272 and will be paid off in 10 years. The total amount you’ll pay is $32,585, including $5,639 in interest.
While other plans might have lower monthly payments, the standard repayment plan lets you pay off your loans as soon as you can. If you’re unsure which plan is best for you, you can use the federal government’s Loan Simulator to get an idea of how much you’ll pay.
Standard Repayment Plan Benefits
Pros of the standard repayment plan include:
- Faster repayment. You’re paying off your loan in 10 years, giving you the chance to devote your money to other endeavors sooner, like buying a home, saving for retirement or expanding your family.
- Lower overall interest payments. Since you’re paying off your loan in 10 years, you’ll pay less interest overall on your loans compared to other repayment plans. The alternative options spread out your loan repayment over a longer period of time, which means you’ll pay more in interest over the life of your loan.
Standard Repayment Plan Drawbacks
Cons of the standard repayment plan include:
- Larger monthly payments. Since you’re on track to pay off your loans sooner, you’ll have higher monthly payments. This might seem daunting at first, especially early on in your career when you aren’t earning as much as someone who is further along or earning more money. If you can’t afford the monthly payments, you may want to look into other repayment plans.
Standard Repayment Plan Alternatives
Even though the standard repayment plan is one option, it’s not your only repayment choice. You might qualify for other loan repayment plans, including:
- Graduated repayment. Payments start out low and then increase over time—about every two years. This strategy assumes you’ll earn more income over time, and can afford higher payments, but also ensures you’ll pay off your loan within 10 years (or between 10 and 30 years for consolidated loans).
- Extended repayment. This is available to borrowers with $30,000 or more in direct loans. You can have fixed or graduated payments, and your loans will be paid off within 25 years.
- Income-based repayment (IBR). You’ll make payments that are 10% or 15% of your discretionary income—based on when you first received your loans—but you’ll never pay more than what you’d pay under the standard repayment plan. Your payments are updated every year based on your income and family size, even if they haven’t changed. After 20 or 25 years, the remaining balance on your student loans is forgiven.
- Income-contingent repayment (ICR). Your payments will be the lesser of: 20% of your discretionary income or the amount you’d pay with a repayment plan with a fixed payment over 12 years. Your payments are adjusted annually to account for your family and income changes, and you’re required to update your information even if there haven’t been any changes. After 25 years, your remaining balance is forgiven.
- Income-sensitive repayment (ISR). This is only available to FFEL Program Loan borrowers. Your payments are based on your annual income, but you’re guaranteed to pay off your loan within 15 years.
- Pay As You Earn (PAYE). Your monthly payments will be 10% of your discretionary income and you won’t pay more than you would on the standard repayment plan. Your remaining loan balance is forgiven after 20 years of repayments.
- Revised Pay As You Earn (REPAYE). Direct loan borrowers will pay up to 10% of discretionary income with payments recalculated annually based on your income and family size. After 20 or 25 years, the remaining balance on your loans will be forgiven.
Many repayment plans require annual updates to your information to adjust for any changes. If you got a raise this year or have a side hustle that’s bringing in more money, your payments could increase. If you recently lost your job and aren’t earning any money, your payments could decrease to as low as $0.
Refinancing Your Federal Student Loans
If you have a mix of federal and private student loans or you don’t like your federal payment plan choices, you can refinance your student loans.
Refinancing is when you combine all your student loans into one loan, replacing all your payments with one streamlined monthly payment. But refinancing is only done through private student loan lenders; the federal government doesn’t have refinancing options (only consolidation). You’ll lose your ability to pause payments through deferment or forbearance, change your repayment plan to one that’s friendly to your income or qualify for Public Service Loan Forgiveness (PSLF).
While you might lose your federal protections, refinancing might be a good idea. For instance, if you have stellar credit and a solid income to pay off your student loans sooner than you would through federal repayment options, refinancing may work for you. But if you don’t have great credit or a solid income, you may want to explore other options.
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