We know college seniors have a lot on their plates: career searches, internships, and preparing for graduation. But amid everything, it is worth your time to take a moment to consider the upcoming repayment of your federal student loans that have been in deferment throughout your time in college. Here are some things to understand about your federal student loans.
Learning About Student Loan Repayment
Prior to graduation, you will attend an exit interview (online or in person) where your total loan balance will be shared with you, along with your rights and responsibilities as a federal student loan borrower. You will also most likely hear from your student loan servicer, the company that manages your student loan repayment, via mail or email. Pay attention to these communications—there will be important information contained in them.
Options for Repaying Your Student Loans
Once you graduate, your loans will be automatically placed into the Tiered Standard Repayment Plan, which begins six months after graduation and lasts for 10-25 years, depending on your total debt amount. Your monthly payment will fit into your total years of repayment to allow you to pay off your loans (with interest) over that amount of time. See listing below to determine your repayment term.
For total debt:
- Up to $24,999, repay over a 10-year term
- From $25,000 to $49,999, repay over a 15-year term
- From $50,000 to $99,999, repay over a 20-year term
- Of $100,000 or more, repay over a 25-year term
Some graduates find that their monthly payment amount is too much, so the federal government offers an income-based plan called the Repayment Assistance Plan (RAP). With that plan:
- Payments are set at 1%–10% of Adjusted Gross Income (AGI)
- Remaining debt is forgiven after 30 years
- There’s a minimum payment of $10/month
- Monthly payments are reduced by $50 per dependent
- If your payment isn’t enough to cover the interest, the extra interest is canceled
- If your monthly payment doesn’t reduce the principal by at least $50, a subsidy is applied to make the monthly principal deduction a total of $50
Borrowers with Loans Disbursed Prior to July 1, 2026
If you’re a federal loan borrower who had all loans disbursed prior to July 1, 2026, you have additional repayment options. They include:
- 10-Year Standard Repayment Plan: Your fixed monthly payment will be based on your total loan amount and a 10-year repayment.
- Graduated Repayment Plan: Your monthly payment amount starts off low and as your earnings increase, the monthly payment amount increases.
- Extended Repayment Plan: Your monthly payments could extend for up to 25 years and be fixed or graduated.
- Income-Contingent Repayment Plan (ICR): Your monthly payment amount is based on the lesser of 20% of your monthly discretionary income or the amount for a fixed 12-year repayment plan.
- Income-Based Repayment Plan (IBR): Your monthly payment amount is based on 10 or 15% of your monthly discretionary income.
- Pay As You Earn Repayment Plan (PAYE): Your monthly payment amount is based on 10% of your monthly discretionary income.
- The Repayment Assistance Plan (RAP): Your monthly payment is set at 1%–10% of your AGI, with a minimum payment of $10/month.
Keep in mind that ICR and PAYE will no longer be available after 7/1/28, so borrowers in those plans will need to select another eligible repayment plan before that date.
Determining which repayment plan you are eligible for and which may be right for you can be confusing. For a full breakdown of all these options, please visit the Federal Student Aid site here.
Should you not be able to afford any loan payment, certain situations may qualify you for federal loan deferment or forbearance, and in some cases, loan forgiveness. Visit the Federal Student Aid site here to learn about deferment and forbearance, and click here to learn more about loan forgiveness.
Finally, these options only exist for federal loans. Any private loans that you may have borrowed to finance your education do not have these same options. If you would like to explore different repayment options for your private loans, contact your private loan servicer. And for a simple tutorial from MEFA on general loan repayment, visit our page here.
