Non Income-Driven Repayment Plans

By Daniel SachsUpdated September 14, 2017


In this article we take a look at non income-driven repayment plans for federal loans.

There are four non income-driven plans available for federal loans:

  • Standard Repayment Plan
  • Graduated Repayment Plan
  • Extended standard Repayment Plan
  • Extended graduated Repayment Plan

Overview of plans

Standard Repayment Plan

The Standard Repayment Plan is the default repayment plan for student loans for the Federal Direct Loan (Direct Loan) Program and Federal Family Education Loan (FFEL) Program. Under the plan, payments are fixed and made for up to 10 years.

Eligible loans

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • All PLUS loans
  • All Consolidation Loans (Direct or FFEL)

Monthly payments

Fixed amount.

Repayment period

Up to 10 years (up to 30 years for Consolidation Loans).

Eligibility

All borrowers are eligible.

Pros

The Standard Plan minimizes total interest charges so you save money over the life of your loans. Under the plan, you make a single fixed monthly payment, so it is generally easier to manage your debt.

Cons

The principle disadvantage with this plan is that your monthly payment amount may be high relative to your income as a result of the relatively short repayment period. As a result, it can be challenging to meet the payment schedule, particularly if you are on a tight budget. This plan is generally not good for graduates earning low incomes.

Graduated

Under the Graduated Repayment Plan you pay your loan back on the same 10-year term as you would under the Standard Repayment Plan, but your payments initially start out lower, and then increase every two years.

Eligible loans

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • All PLUS loans
  • All Consolidation Loans (Direct or FFEL)

Monthly payments

Payments are lower at first and then increase, usually every 24 months.

Repayment period

Up to 10 years (up to 30 years for Consolidation Loans).

Eligibility

All borrowers are eligible.

Pros

This is generally a good option if you are a recent graduate with an entry-level salary and if you expect to earn more money over time as you advance in your career.

Cons

You will pay more interest on this plan than on the Standard Repayment Plan. In fact, the first few years of the plan you are likely to be paying interest only and not the balance of the debt.

Extended (standard/graduated)

Borrowers with more than $30,000 in debt can extend their repayment up to 25 years. The payments under this plan can either be Standard (equal monthly payments) or Graduated (increasing over time).

Eligible loans

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • All PLUS loans
  • All Consolidation Loans (Direct or FFEL)

Monthly payments

Payments may be fixed or graduated.

Repayment period

Up to 25 years.

Eligibility

If you’re a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans.

If you’re a FFEL borrower, you must have more than $30,000 in outstanding FFEL Program loans.

Pros

Your monthly payments will be lower than under the 10-year Standard Plan or the Graduated Repayment Plan due to the 25 year repayment timeline.

The Extended Repayment Plan only requires you to have $30,000 in eligible student loans, making it easier to qualify for.

This plan is good for borrowers who have lots of debt and cannot financially manage the Standard Repayment Plan.

Cons

The extended repayment timeline means that you’ll pay more over time than under the 10-year Standard Plan because interest has a longer time to accrue.

  • Benjamin Franklin

    An investment in knowledge pays the best interest.

    Benjamin Franklin
  • Pablo Picasso

    Action is the foundational key to all success.

    Pablo Picasso
  • Abraham Lincoln

    Let no feeling of discouragement prey upon you, and in the end you are sure to succeed.

    Abraham Lincoln