A Complete Guide On Student Loan Repayment In 2024

Shatakshi Sinha

Federal student loan repayment plans can be intimidating, but with the right resources and knowledge, you can be confident in tackling your debt. The good news is that you can repay your federal student loan conveniently without being overburdened for the same.


The average federal student loan debt balance is $37,338, though your actual balance may differ significantly. However, depending on your financial situation, you have several options available to overcome your loan repayment hassles. 

You can make payments on your own or enroll in repayment programs with reduced or adjusted terms. With some research and planning, you can be on your way to paying off those student loan debts.

Student Loans Repayment Options

Comparing the various repayment plans available to those with federal student loans. Here is an overview of the different options one may be eligible for.

1. Standard Repayment Plan

This is the most basic federal student loan repayment plan, with fixed monthly payments over a 10-year term. This plan best suits borrowers who can afford the required monthly payments and want to pay off their loans quickly.

Everyone can use it.

Loans are repaid in installments over a 10-year time frame, with payments remaining constant throughout.

People who wish to pay back their loans as quickly as possible to reduce the interest they will have to pay.

People hoping to access Public Service Loan Forgiveness.

2. Graduated Repayment Plan

This plan also has a 10-year term, but the monthly payments start lower and gradually increase every two years. Therefore, this plan suits borrowers who expect their income to increase over time and want to start with lower payments.

Everyone can use it.

 The payments for loans that are completely paid off within ten years gradually increase, starting with a lower amount.


People who expect an increase in their income and want to pay off their loans as soon as possible.


People hoping to access Public Service Loan Forgiveness.

3. Extended Repayment Plan

This plan offers a longer repayment term of up to 25 years, with fixed or graduated monthly payments. This plan is best for borrowers who need a lower monthly payment and are willing to pay off their loans over a longer period.

Individuals who borrow through a Federal Family Education Loan and have an outstanding debt of more than $30,000.

Loans can have payments that are either the same amount each time at a fixed rate or gradually increasing, and they can be paid off in a maximum of 25 years.

 Those with higher loan amounts and require a smaller monthly installment.

People hoping to access Public Service Loan Forgiveness or not wanting to pay extra interest on their loans.

4. Pay as You Earn Repayment Plan (PAYE)

This plan is based on a borrower’s income and family size, with monthly payments capped at 10% of discretionary income. The repayment term is 20 years, and any remaining balance is forgiven at the end of the term. This plan is ideal for borrowers with high debt-to-income ratios.

 Under the Pay As You Earn (PAYE) repayment plan, you are expected to make monthly payments equal to 10% of your discretionary income, provided that the amount does not exceed what you would pay under the Standard Repayment Plan.

It is advisable for people interested in finding a way to lower their monthly payments or to consider the potential benefits of Public Service Loan Forgiveness to look into the available options.


People who have a significant change in their income yearly.

5. Revised Pay as You Earn Repayment Plan (REPAYE)

This plan is similar to PAYE but does not have income restrictions. Monthly payments are capped at 10% of discretionary income, and the repayment term is 20-25 years, depending on the type of loans.

Any loan recipient who has a loan that is eligible for direct loans. Parent PLUS loans, for instance, do not qualify.

The amount you must pay monthly is determined by taking 10% of your discretionary income.

Individuals looking for a repayment plan with lower monthly payments and are willing to pay more in interest throughout the loan’s lifespan than they would with a Standard Repayment Plan, as well as those interested in Public Service Loan Forgiveness.

Couples who are married and choose to file their taxes together and have a higher joint income.

6. Income-Based Repayment Plan (IBR)

This plan also caps monthly payments at 10-15% of discretionary income, depending on when the borrower took out their loans. The repayment term is 20-25 years, depending on the type of loan, and any remaining balance is forgiven at the end of the term.

Individuals taking out Direct Subsidized and Unsubsidized Loans, Consolidation Loans and Student Plus Loans, with a greater ratio of debt compared to income than average.

Loan payments can be determined by taking 10% or 15% of discretionary income based on the loan’s acquisition date but will not surpass the 10-year Standard Repayment Plan’s amount. 

 Those facing financial hardship must reduce their monthly loan payment.

Those who can devote more than 10% or 15% of their income to their monthly repayments may favor a repayment plan that permits them to pay off the debt more quickly.

7. Income-Contingent Repayment Plan (ICR)

This plan calculates monthly payments based on the borrower’s income, family size, and loan balance. The maximum payments allowed are either 20% of the borrower’s discretionary income or the standard 12-year repayment plan amount, whichever is lower. The repayment term is 25 years, and any remaining balance is forgiven at the end of the term.

A loan applicant who has borrowed directly from a lender is eligible, not including Parent PLUS loans.

Your monthly payments will be based on the lower amount of two options – either 20% of your discretionary income or the amount you would pay with a fixed payment plan over 12 years, based on your income.

Individuals who can make larger monthly loan payments but cannot meet the minimum requirement of a Standard Repayment Plan.

People with non-loan debt and married couples who file taxes together and have a larger tax rate.

8. Income-Sensitive Repayment Plan

This plan is only available for Federal Family Education Loan (FFEL) Program loans. Payments are based on the borrower’s income, with the repayment term ranging from 10-15 years. Monthly payments are adjusted annually based on income changes. This plan is ideal for borrowers who want to repay their loans quickly.

Those who took out a Federal Family Education Loan.

Payments are calculated yearly and must be fully paid off after 15 years.

Individuals with a Federal Family Education Loan (FFEL) and are seeking to pay a lesser amount each month than required under a Standard or Graduated Repayment plan may consider other options.

People hoping to access Public Service Loan Forgiveness.

Which student loan repayment Option is best?

When choosing the right way to pay off your student loans, the best option is one tailored to suit your needs. Unfortunately, there is no one-size-fits-all repayment plan, so it’s important to consider factors such as the amount of debt, current and future earning potential, if a graduate degree is planned, and more.

The most popular repayment plan is the standard model, but some may have better choices. By considering all the options upfront, you can start with the best plan for you and make regular payments, which is the best way to keep debt levels under control and avoid financial issues. 

To get a better idea of your best option, take stock of how much debt you owe. Additionally, consider the future and the salary you may be able to acquire. Also, think about whether or not you’ll be seeking higher education shortly.

Regular payments should be made to avoid getting into debt problems. If circumstances change over time, you can consider refinancing the loan, but beginning with the correct plan is critical.

Private Student Loan Repayment Options

When it comes to private student loan options, there is a wide variety of possibilities from which to choose. All private lenders offer different options based on the needs of the student and the lender, so it is important to research the choices thoroughly before making a decision.

Once you get the money from the loan, your payments will begin right away.

Borrowers who choose this option pay only the interest on their loan while still in school. Then begin paying total interest and principal payments after graduating or dropping out.

While attending school, you will make a small, set amount. After you have completed your program or reduced the time you spend studying, you will begin making larger payments regularly.

Once you have completed your studies, you will begin to pay both the interest and the original amount loaned after a certain period.

How is Student Loan Interest Calculated?

Student loan interest is calculated based on the size of your loan, your interest rate, and the length of your loan repayment period. Your borrower will give you an announced interest rate, a percentage of the loan amount you must pay the lender. The interest rate can be fixed, meaning it won’t change over the life of the loan, or it can be variable. 

The amount of interest you owe is based on the size of your loan, your interest rate, and the length of your loan repayment period. Your interest rate will be assessed over the length of the loan, and the total interest on the loan will be applied to the total amount borrowed. For example, if you have a student loan of $10,000 with an interest rate of 5% and a five-year repayment period, you would pay $500 of interest each year until the loan is paid off. 

When paying down the interest on your student loan, it’s important to understand that any extra payments you make are first applied to the interest and then to the principal balance. This is called prepayment, and it can help you save money on your student loan over time. 

Lastly, there are some student loan interest deductions that you may qualify for. Depending on your loan type, you can deduct a portion of the interest you paid on those loans from your federal income taxes. This will help you save money on your taxes, so check with an accountant to see if you qualify for these deductions.

5 Things to Do BEFORE Student Loan Repayment

Paying off your student loan is an important milestone in your financial life and can be quite daunting. Aside from having the funds available, a few important steps should be taken before you begin the repayment process. 

Here are five things to do before repaying your student loan:

Developing a repayment strategy is crucial for paying off student loans. 

It involves estimating your income, expenses, and debt, setting a timeline for paying off the loan and calculating the repayment options that are best for you based on your loan term length and interest rate.

 It’s also essential to research available repayment plans, including extended, graduated, and income-based options. 

Additionally, consider paying more than the minimum amount each month to reduce the interest you pay overall and help pay off your loan faster.

Consider student loan refinancing to save money on your loans. Before refinancing, gather all the necessary loan information, including interest rates and repayment plan terms. Then, evaluate your finances to understand the potential impact on your financial goals. 

Contact multiple lenders to compare interest rates, fees, and repayment plans. Understand the legal implications of refinancing, including the risks involved and any impacts on your loan. By adequately preparing for the refinancing process, you can ensure positive results and avoid confusion or frustration.

Repaying your student loan is an important decision that requires careful consideration of your repayment plan. It’s essential to find the best payment plan to fit your budget and make it more manageable. 

Your repayment plan will greatly depend on your current financial situation. You can choose from several options, such as extended, graduated, or income-based repayments. Each has different qualifications and financial criteria that can provide more lenient terms, making them a great choice for managing your student loan debt.

You may also be eligible for the Public Service Loan Forgiveness program. It can be an excellent option as it will forgive any remaining student debt balance after 10 years of repayment, making it a great choice if you have a public service job.

Additionally, there are student loan assistance programs such as Perkins Loan Cancellation or Economic Hardship Deferment. These programs provide flexibility while tackling your student loan payments.

Before repaying your student loan, you should know the available tax benefits. For example, the Student Loan Interest Deduction allows you to deduct up to $2,500 of the interest you paid on your student loan each tax year. It helps reduce the overall cost of your loan and the amount you have to pay back.

You should also look into the American Opportunity Tax Credit which can give up to $2,500 per taxpayer for tuition and related expenses. It is provided for up to four years of post-secondary education and may help remove some financial burdens.

Both of these tax benefits can save you money, so it is important to look into them and ensure you are taking advantage of them. Doing so can result in a more manageable loan repayment amount, allowing you more room to make extra payments or pay off your loan faster.

Making repayment of your student loan automatic is an easy way to take care of your monthly loan payments. In addition, it can ease stress, help you avoid late fees, and build your credit score in the process. 

Make sure that you have enough funds regularly in your account. You should have enough money in your bank account each month to cover your monthly payments and other expenses. If your account balance is running low, add to your balance either by getting a part-time job or setting up a budget to manage your spending.

Double-check your payment amount before you set up automatic payments. If you have had loan deferment or granted forbearance, the amount you owe can change. This can lead to overdrawing money from your account.

Check to ensure that your payments are always being processed on time. Ensuring your payment will arrive on time is essential for keeping your credit score in good standing. This can easily be done by setting up email or text alerts when the payment is due.

FAQs Regarding Student Loan Repayment

The best way to quickly determine your options is to contact your loan servicer and have them walk you through the loan options. You can also look online for federal student loan repayment plans and go through the eligibility requirements. 

The FAFSA website has a loan simulator that can help you figure out the payment plan that suits you best. It can also calculate your potential loan payment.

No, the answer is different for everyone. Having your student loans written off is very complicated and depends on various factors, like the type of loans you have, the amount you owe, and your current financial situation.

Yes, A student loan is an installment loan, so even if you pay it back on time, it can still harm your credit score. In addition, depending on the loan size, it could significantly lower your score.

Student loans can be managed by creating a budget and staying organized. It’s also important to always make payments on time, even if they are the minimum amount because this helps keep loan costs down and preserve your credit score.

Concluding On Student Loan Repayment Options In 2023

Having student loan debt can be overwhelming. Take the time to get to know the different repayment options available. 

Before you graduate, you should research this for yourself to get an idea of which repayment plan is best for you. 

If an income-driven repayment plan is the right choice for you, it’s also important to check in every year to see if switching up your repayment options would be more beneficial. 

Investing in getting to know your choices doesn’t take much time, but it could make a massive difference in the long run.

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