Federal Student Loan Repayment Plans Compared
Federal borrowers can choose from several plans. The right one depends on your balance, income, and goals.
| Plan | Term | Payment Basis |
|---|---|---|
| Standard | 10 yrs | Fixed, full amortization |
| Graduated | 10 yrs | Low, rises every 2 yrs |
| Extended | 25 yrs | Fixed or graduated |
| IBR / PAYE / REPAYE | 20–25 yrs | % of discretionary income |
| ICR | Up to 25 yrs | % of income or 12-yr fixed |
Income-Driven Repayment: Is It Right for You?
IDR plans cap payments at 10–20% of discretionary income and forgive the remaining balance after 20–25 years. They're ideal if your income is low relative to your debt, but you'll typically pay more total interest than the Standard plan. Any forgiven balance may be taxable under current law (though PSLF forgiveness is tax-free).
Student Loan Forgiveness Programs
- Public Service Loan Forgiveness (PSLF) — 120 qualifying payments while working full-time for a qualifying employer.
- Teacher Loan Forgiveness — up to $17,500 for highly qualified teachers in low-income schools.
- Total and Permanent Disability Discharge — full discharge for qualifying borrowers.
- IDR forgiveness — remaining balance forgiven after 20–25 years on an income-driven plan.
Should You Refinance or Stay Federal?
Refinancing with a private lender can lower your rate if you have strong credit and steady income. The trade-off: you permanently lose federal benefits — IDR plans, forgiveness, deferment, and forbearance. Keep your loans federal if you might need those safety nets; refinance only if you're confident you won't.
What to Do If You Can't Make Payments
Default begins after 270 days of missed payments and triggers wage garnishment (up to 15%), tax-refund seizure, and credit damage. Before that point, contact your servicer about deferment, forbearance, or switching to an income-driven plan. Acting early protects your credit and your options.