The Standard Repayment plan is the basic repayment plan for student loan borrowers to repay loans made under the Federal Direct Loan Program and the Federal Family Education Loan Program.
A student loan borrower receives a 6-month grace period after they graduate or drop below part-time status as a student. After the grace period is over, the borrower is expected to start making payments on the loans they borrowed while they were in school.
Unless they choose a different repayment plan, all student loan borrowers are placed into a Standard Repayment Plan by default.
Student loan borrowers entering the Standard Repayment plan will have access to the following benefits:
- The fastest way to pay off their student loan debt
- Borrowers end up spending less money on interest than other repayment plans
What types of loans are eligible for the Standard Repayment Plan
Student loan borrowers that have loans made under the Direct Loan Program or the FFEL Program can pay their loans under a Standard Repayment Plan.
Here are the loans that are eligible for the Standard 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
Do you have Private Student Loans?
Private Student Loans are not eligible for the Standard Repayment Plan or any repayment plan offered through the Department of Education. Please contact your servicer to see what repayment options are available to you.
Who is the Standard Repayment Plan for?
A student loan borrower can benefit from the Standard Repayment Plan if they meet the criteria below:
- They have no issues making their full student loan payment each month
- Anyone with a high income compared to their student loan debt
- Anyone that wants the quickest way to get out of student loan debt
- Anyone that wants to avoid adding additional interest to their principal loan balance
Who is the Standard Repayment Plan not for?
The Standard Repayment Plan is not a one size fit all type of plan for student loan borrowers. This repayment plan is the fastest way for borrowers to pay their debt off. Borrowers that can’t get a higher income after college will most likely not be able to afford a Standard Repayment Plan.
The Standard Repayment Plan generally gives loans borrowers the highest monthly student loan payment. The payment amount is a fixed amount that ensures the borrower is debt free after 10 years of payments.
Some borrowers might find the Standard Repayment Plan the best method of paying their student loan debt. However, there are thousands of loan borrowers that find it difficult to pay on a Standard Repayment Plan because of their financial situation.
Here are some reasons why a student loan borrower might want to choose a different repayment plan:
- Student loan borrowers that struggle to make their full student loan payment each month after paying other bills
- Anyone with a low income compared to their student loan debt
- Borrowers that have multiple dependents who receive more than half of their support from the borrower
- Loan borrowers that are considered to have a partial financial hardship
Am I eligible for the Standard Repayment Plan?
Yes. Everyone is eligible for the Standard Repayment Plan. The real question is can you afford making the payments in a Standard Repayment Plan?
And can you still live comfortably after you make your monthly payment?
Everyone is automatically placed into the Standard Repayment Plan after their six month grace period expires.
The monthly payment is a fixed price based off your total loan amount and a monthly payment amount that will pay off your student loan debt after 120 payments.
Plan on making the full monthly payment if you do decide to stay in the Standard Repayment Program. If you only choose to make monthly payments on some loans and not on the others, you’re loan servicer will spread partial payments to all of your loans.
This means all of your loans will get hit with late fees!
Unless you can comfortably afford your monthly payment in the Standard Repayment Plan, you might want to consider an income-driven repayment plan.
Otherwise you might end up paying $1,000s in interest and never see a reduction in the principal loan balance.
How long will I be in the Standard Repayment Plan?
The repayment period for the Standard Repayment Plan is 10 years (10 – 30 years if you complete a Direct Loan Consolidation). Depending on your financial situation, making all 120 payments on time is the easiest and quickest way to repay your student loans.
If you start making payments in the Standard Repayment Plan and decide it’s not the right plan for you (or if you experience a financial crisis), you can choose to take yourself out of the plan.
It’s common for many student loan borrowers to enter an income-driven repayment plan after they realize a Standard Repayment Plan is not an affordable method to pay off their student loan debt.
Is the payment the same each month?
The monthly payment in a Standard Repayment Plan remains the same each month. The price is a fixed amount based off the amount of student loan debt and the payment amount needed to clear the debt in 120 payments.
Regardless of loan size, there is a minimum $50 monthly payment in the Standard Repayment Plan. There’s a definite possibility that the payment can be even higher.
Borrowers in a comfortable financial situation can always make extra payments through their servicer if they would like to expedite the process. However, if you do make extra payments, you’re still responsible to make your minimum monthly payment every month.
What is an income driven repayment plan?
An income-driven repayment plan is a repayment plan that can help student loan borrowers get a more affordable monthly loan payment based on income and the size of their family.
These repayment plans originated from the passing of the Health Care and Education Reconciliation Act of 2010.
While there are four income driven repayment plans, not all income driven plans are built for everyone. Depending on your unique financial situation, there might only be one repayment plan that makes sense for you.
Sometimes borrowers qualify for multiple income driven repayment plans and can’t decide which one makes the most sense.
Need help with that? Give us a call.
What factors come into play with the Standard Repayment Plan
Your monthly payment for the Standard Repayment Plan is calculated based on the following factors:
- Amount Of Student Loan Debt – your monthly payment is based off the amount of money you need to pay each month to pay off your debt in 10 years
- Type of loans – loans from the Federal Direct Loan Program and the Federal Family Education Loan Program (*Private Student Loans are not eligible)
What other options are there for me to repay my student loans?
The Department of Education offers a variety of student loan repayment programs to assist student loan borrowers with different financial situations.
There are four income driven repayment plans:
- Income Based Repayment Plan
- Income-Contingent Repayment Plan
- Pay As You Earn Repayment Plan
- Pay As Your Earn Revised Repayment Plan
There are four standard payment plans: