The standard repayment plan is the basic plan for paying off student loans. You are automatically placed in this plan when you start the repayment, unless you select another option. Here are the main details about the standard student loan repayment plan:
Repayment period : 10 years.
Payment amounts: The same amount every month.
Other qualifications: Must have federal student loans.
Is Standard Refund Right for You?
The standard student loan repayment plan may be right for you if you want to limit the amount you pay overall. Payments under the standard repayment are larger than under other plans that extend your repayment term. But you will pay the least interest and complete the repayment the fastest using standard repayment.
If standard payments are too expensive, you may be able to reduce your monthly bills with income-based reimbursement, extended refund or progressive repayment. Keep in mind that any plan that lowers your payments will likely increase the amount of interest you pay. As a general rule, stick to the standard refund if you can afford it.
Payments under the standard repayment plan
Standard repayment divides the amount you owe into 120 installment payments so that you pay the same amount every month for 10 years. Under this plan, payments cannot be less than $ 50.
For example, let’s say you have a student loan of $ 35,000 with an interest rate of 4%. With the standard repayment plan, you would pay $ 354 per month and $ 42,523 in total.
Plug in your own loan information into the education department Loan simulator to get an idea of how much you would pay under the standard student loan repayment plan, as well as other repayment plans.
Pay off loans faster
If you are comfortable making standard payments, consider ways to pay off your student loans even faster. For example, there is no penalty for prepaying loans under a federal student loan repayment plan. Just make sure your manager is applying the extra money to your main balance, not your next payment.
You may also be able to refinance federal student loans in a new private loan. It will cost you access to income-based repayment and other benefits associated with federal loans. But if you think you don’t need these options – and plan to stick with the standard repayment anyway – refinancing could save you money if you qualify for a lower interest rate.