Student loan borrowers have a number of options when the time comes to start repaying their loans. Federal student loans offer the most flexibility, while the choices for private student loans are limited.

The best way for you to repay will depend on the kind of loans you have, how much you owe, and where you stand financially after graduation.

Federal Student Loan Repayment Options

There are multiple repayment plans that you may be eligible for if you have federal student loans. Here’s how they compare.

One quick note: The Public Service Loan Forgiveness (PSLF) program forgives student loan balances for those who work for a government agency or a qualified 501(c)(3) nonprofit for at least 120 months while also making 120 months of direct student loan payments.

As of June 2023, just 3.3% of applicants qualified for forgiveness, while the remainder have yet to fulfill this criteria. So be forewarned: Receiving loan forgiveness under the PSLF program is not an easy task.

1. Standard Repayment Plan

• Who’s eligible: All borrowers
• How it works: Payments are fixed and loans are paid off over a 10-year period.
• Who it benefits: Borrowers who want to repay their loans over the shortest period of time to minimize interest charges
• Who it doesn’t benefit: Borrowers potentially eligible for Public Service Loan Forgiveness

2. Graduated Repayment Plan

• Who’s eligible: All borrowers
• How it works: Payments start off lower and increase gradually, with loans paid in full over a 10-year period.
• Who it benefits: Borrowers who expect their income to increase over time and want to pay off their loans as quickly as possible
• Who it doesn’t benefit: Borrowers potentially eligible for Public Service Loan Forgiveness

3. Extended Repayment Plan

• Who’s eligible: All borrowers, although federal direct loan and Federal Family Education Loan (FFEL) borrowers must owe more than $30,000
• How it works: Payments may be fixed or graduated, with loans paid in full over a period of up to 25 years.
• Who it benefits: Borrowers who have larger loan balances and need a smaller monthly loan payment
• Who it doesn’t benefit: Borrowers who are either eligible for Public Service Loan Forgiveness or unwilling to pay additional interest on their loans

4. Pay as You Earn (PAYE) Repayment Plan

• Who’s eligible: Borrowers who received a disbursement of a direct loan on or after Oct. 1, 2011
• How it works: PAYE sets monthly payments at a percentage of discretionary income but never exceeds what you would pay on a Standard Repayment Plan.
• Who it benefits: People who need a low monthly payment and/or are interested in Public Service Loan Forgiveness
• Who it doesn’t benefit: Borrowers whose income fluctuates significantly from one year to the next

5. Saving on a Valuable Education (SAVE) Plan (formerly the REPAYE Plan)

• Who’s eligible: Any direct loan borrower with an eligible federal loan. Parent Loan for Undergraduate Student (PLUS) loans, for example, are not eligible.
• How it works: Your monthly payments are usually set at 10% of your discretionary income.
• Who it benefits: Direct loan borrowers who need a low monthly payment and don’t mind potentially paying more in interest over the life of the loan compared with a Standard Repayment Plan. It also benefits those interested in Public Service Loan Forgiveness.
• Who it doesn’t benefit: Married couples who file a joint return and have a higher combined income

The White House announced the Saving on a Valuable Education (SAVE) plan in August 2023 and said up to 20 million borrowers could benefit. Under the plan, undergraduate and graduate borrowers pay just 5% to 10% of their discretionary income, and some borrowers who fall below income thresholds do not have to make any monthly payments at all.

6. Income-Based Repayment (IBR) Plan

• Who’s eligible: Borrowers with direct subsidized and unsubsidized loans, subsidized and unsubsidized federal Stafford loans, student PLUS loans, and consolidation loans—but not PLUS loans made to parents. Borrowers must also have high debt relative to their income.
• How it works: Monthly payments are either 10% or 15% of discretionary income, based on when you borrowed, but never more than you would pay on a 10-year Standard Repayment Plan. After the end of your 20 or 25 years of payments, you’ll be eligible for Public Service Loan Forgiveness.
• Who it benefits: People who have a high debt balance and need smaller monthly payments due to a lower income, in addition to anyone interested in Public Service Loan Forgiveness
• Who it doesn’t benefit: Borrowers who can afford to put more than 10% or 15% of their income toward repayment each month and would be better off with a plan that allows them to pay off their loan faster

7. Income-Contingent Repayment (ICR) Plan

• Who’s eligible: Any direct loan borrower with an eligible loan. Parent PLUS loans, for example, are not eligible.
• How it works: Monthly payments are 20% of discretionary income or the amount you would pay over 12 years with a fixed payment based on your income, whichever is less.
• Who it benefits: Borrowers who can afford to commit more of their monthly income to loan repayment, but not the amount required by a Standard Repayment Plan. It also benefits those interested in Public Service Loan Forgiveness.
• Who it doesn’t benefit: Borrowers who owe anything other than direct loans or married couples who file jointly and are in a higher tax bracket

8. Income-Sensitive Repayment (ISR) Plan

• Who’s eligible: Federal Family Education Loan (FFEL) borrowers
• How it works: Monthly payments are based on annual income, with loans paid in full over 15 years.
• Who it benefits: FFEL borrowers who want a lower monthly payment than they would get on a Standard or Graduated Repayment plan
• Who it doesn’t benefit: Borrowers who are interested in Public Service Loan Forgiveness

Which Federal Student Loan Repayment Option Is Best?

The answer to this question is different for every borrower. “Student loan repayment isn’t one size fits all, but the majority of people just try to pay back their debt normally,” says Shann Grewal, former vice president of IonTuition. “When borrowers don’t look for a repayment plan that best fits their situation, it has outsize impacts.”

Whether or not you should choose an income-driven repayment (IDR) plan hinges on several factors, including what you’re earning now and your future earning potential.

“Some students will enter the workforce immediately with a high-paying job, while others will work their way up,” says , general manager of student loan refinancing at Earnest. Other variables that come into play when making this decision include the amount of debt you owe and whether you plan to go back to school for a graduate degree at some point.

“You can always refinance your loan down the line if the situation changes, but it’s best to start off on the right note so you don’t get into financial trouble,” says Chukhno.

Private Student Loan Repayment Options

Private student loans typically offer fewer choices for borrowers. These include:

• Immediate repayment: Principal and interest payments begin as soon as your loan is disbursed.
• Interest-only payments: You make interest-only payments while in school, then begin principal and interest payments once you graduate or drop below half-time enrollment.
• Fixed payments: You pay a low fixed amount while in school, then begin making larger, regular payments once you leave school or drop below half-time enrollment status.
• Full deferment: You pay nothing while enrolled in school and begin making interest and principal payments within a set time frame after you leave school.

Depending on your lender, you may be eligible for a deferment or forbearance period if you aren’t able to keep up with your regular loan payments. But this typically requires a financial hardship, and it isn’t offered by every lender.

If you have private student loans, it’s important to do the math so you know what the various repayment options will cost you in interest over the life of the loan.

You might also consider refinancing your private loans if that would get you a lower interest rate. This can save you money on interest during the repayment term. Refinancing a student loan typically involves a credit check, so if you don’t yet have a solid credit history, you may need a co-signer to qualify.

Finally, if you’re struggling to manage your monthly payments, contact your lender as soon as you can and see what can be worked out.

The Bottom Line

If you owe education debt, take time to get to know your repayment options. Ideally, this is something you do before graduation so you have an idea of which repayment plan you want to start with. If you’re choosing an income-driven plan, reevaluate your finances each year to see if another repayment option might be better for saving money on interest charges.