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Best Student Loan Repayment Plans in 2023

By Will Geiger
Will Geiger is the co-founder of Scholarships360 and has a decade of experience in college admissions and financial aid. He is a former Senior Assistant Director of Admissions at Kenyon College where he personally reviewed 10,000 admissions applications and essays. Will also managed the Kenyon College merit scholarship program and served on the financial aid appeals committee. He has also worked as an Associate Director of College Counseling at a high school in New Haven, Connecticut. Will earned his master’s in education from the University of Pennsylvania and received his undergraduate degree in history from Wake Forest University. Full Bio
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Updated: July 18th, 2023

There are many student loan repayment plans for federal student loans and people sometimes don’t know where to start! The best plan for you will depend on your financial situation, career, and goals.

Here are some of our top picks for the best loan repayment plans according to a few different situations:

Below we’ll go into more depth about the different types of student loan repayment plans, the general terms, eligibility, and some more details about who each repayment plan is best for including private student loan repayment.

Types of student loan repayment plans

Standard repayment

  • Eligible loans: Direct Federal Stafford, Direct PLUS loans, all Consolidation loans
  • Terms: All borrowers are eligible for Standard Repayment and payments are fixed to be paid off in 10 years.
  • Who is standard repayment best for? Students who want to pay back their loans as quickly as possible (and may be willing to pay a higher monthly amount). 

Graduated repayment plan

  • Eligible loans: Direct Federal Stafford, Direct PLUS loans, all Consolidation loans
  • Terms: All borrowers are eligible for Graduated Repayment and payments are lower, but increase about every two years. Borrowers can pay these loans off in 10 years.
  • Who is graduated repayment best for? Students who want lower payments in the short-term, but are willing to pay more later on (which can be a good move assuming their earnings are higher) 

Extended repayment plan

  • Eligible loans: Direct Federal Stafford, Direct PLUS loans, all Consolidation loans
  • Terms: Borrowers must have a certain amount of loan debt to qualify and will pay off their loans over an extended period of time (between 25 to 30 years) 
  • Who is extended repayment best for? Extended Repayment makes the most sense if you owe a lot in student loans and want to lower your monthly payment. The downside is that you may wind up paying more interest as the loan is over a longer period of time.

Revised pay-as-you-earn repayment plan

  • Eligible loans: Direct Federal Stafford, Direct PLUS loans, all Consolidation loans
  • Terms: This plan is available to borrowers of any Direct loan and caps monthly payments at 10% of your income. If you haven’t paid your loan off in 20 years, the outstanding balance will be forgiven (this is upped to 25 years if the loans are for graduate school).
  • Who is Revised Pay As You Earn best for? This repayment plan is a good fit for people who want to peg their loan amount to their income (this can be helpful for budgeting). As with other extended repayment, the downside is that students may wind up paying more in interest.

Pay-as-you-earn repayment plan

  • Eligible loans: Direct Federal Stafford, Direct PLUS loans, and Direct Consolidation Loans
  • Terms: You must be a new borrower on or after Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011. If you are married, you can choose to file your taxes separately and your spouse’s earnings do not count (unlike Revised Pay as you earn). The other big difference between PAYE and REPAYE is that under PAYE outstanding balances will be forgiven after 20 years (including graduate loans).
  • Who is Pay As You Earn best for? This can be a good fit for people high debt who want to peg their student loans to income. Remember, some PAYE borrowers may wind up paying more back because of the loan extension.

Income-based repayment plan

  • Eligible loans: Direct Federal Stafford, Direct PLUS loans, all Consolidation loan
  • Terms: Monthly payments of  10 or 15 percent of your income and loan forgiveness after 20 or 25 years.
  • Who is an Income-based Repayment Plan best for? This can be a good fit for people with large amounts of debt who want to peg their student loans to income. Some IBR borrowers wind up paying more back because the loan is extended.

Income-contingent repayment plan

  • Eligible loans: Direct Federal Stafford, Direct PLUS loans made to students and Direct Consolidation Loans
  • Terms: Monthly payment of 20% of income or the amount you would pay if you were on a 12 year fixed payment plan. All loans will are forgiven after 25 years
  • Who is an Income-Contingent Repayment Plan best for? This is open to any Direct loan borrower (while some of the other income pegged plans have other requirements). You may wind up paying back more money than if you were on a fixed plan.

Income-sensitive repayment plan

  • Eligible loans: Direct Federal Stafford, Federal Family Education Loan (FFEL) Direct PLUS loans, FFEL Consolidation Loans
  • Terms: Monthly payments are based on income but the loan will be paid off in 15 years (in full)
  • Who is an Income-sensitive Repayment Plan best for? This plan is for students who have borrowed Federal Family Education Loans and will not be an option if you have Direct loans.

Private student loan repayment

Private student loans are managed by private lenders and will not qualify for any of the above repayment plans (which are only for federal student loans).

If you are having trouble making your private student loan payments, we recommend contacting the lender to discuss what your options might look like.

Additionally, you may be eligible to refinance your private student loans at a more favorable rate. You can see what types of private student loan refinancing rates you might qualify for through a loan refinancing marketplace.

Looking for more help about your repayment plan?

If you’re not sure where to even begin with this, we recommend that you also use the Loan Simulator tool from the Department of Education. This free tool allows you to compare your student loan repayment options using your personal financial data. This will give you the most accurate estimate of what your monthly payment and overall loan payments will look like.

Frequently asked questions about student loan repayment plans

Am I allowed to change repayment plans after I've already chosen one?

Changing repayment plans is possible for most people, but the specific rules for switching plans vary. Borrowers can generally change their repayment plans once a year if the reason to change is a qualifying one. Private student loans have different rules, so check with your loan servicer for details.

What happens if I miss a student loan payment?

Missing one or more student loan payments has negative consequences, including late fees. If you continue to miss payments, your loan will be considered “in default,” which will drastically lower your credit score. You may also  be subject to serious legal action and wage garnishment as well. Be proactive and reach out to your loan provider if you know that you can’t make a payment so you avoid all of that!

How do I choose the right student loan repayment plan for me?

Your personal financial situation, income level, and long-term goals all play a part when choosing a student loan repayment plan. Only you know what monthly payment you are comfortable making. Make sure to educate yourself about total interest you will pay over the loan and whether you qualify for any loan forgiveness options due to your career choice.