Updated: Sep 7, 2019
Once the six-month post graduation grace period ends, the student loan repayment period begins. It is important for students to consider repayment options well before the grace period to accurately budget for the amount due and prevent falling into default.
Below is a list of repayment plans provided by the Federal Student Aid Office. I have categorized the various Federal Student Loan Repayment plans as Fixed, Pay-As-You-Earn, or Income-based. I have not assigned any categories to Private Student Loans as their repayment options are less flexible.
FEDERAL STUDENT LOANS
Fixed Repayment Plans
The federal government offers three "fixed" repayment plans. As you can see in the Monthly Payment and Time Frame column below, only the Standard Repayment Plan has fixed payments throughout the entire repayment period. None of these are qualifying plans for Public Student Loan Forgiveness. Borrowers will pay less over time with the Standard Repayment Plan. With the Extended Repayment Plan, Borrowers will pay a large amount of interest.
Pay-As-You-Earn plans are based on your discretionary income (gross income less poverty limits for your family size). Monthly payments will never be more than the 10-year Standard Plan listed above. These repayment options might qualify under the Public Student Loan Forgiveness (PSLF) program. Outside of the PSLF program, you might have to pay income tax on any amount that is forgiven.
Income-based plans are most often the option for borrowers who want lower payments and/or those who qualify for student loan forgiveness. All of the options below should be qualifying plans for PSLF.
PRIVATE STUDENT LOANS
Repayment options for private student loans vary by lender. With some private lenders, options for repayment are provided on a case-by-case basis. Others have options to refinance for a lower overall interest rate.