What is a Standard Student Loan Repayment Plan?

A standard repayment plan is a fixed amortization schedule where you pay the same amount each month for a set term (typically 10 years for federal loans). Each payment covers both interest and principal, with more going to interest early on and more to principal as the loan matures. This plan usually results in the lowest total interest paid, but requires higher monthly payments than income-based options.

What is an Income-Based Plan (in General)?

Income-based repayment plans tie your monthly payment to your income and family size. Payments are typically a percentage of your discretionary income (income minus a poverty guideline amount). These plans can lower your monthly payment, especially early in your career, but may extend your payoff time and increase total interest paid. Some plans offer forgiveness after 20-25 years if the balance isn't fully paid.

Important: This calculator uses a simplified model, not an exact federal program. Actual income-driven repayment plans (IBR, PAYE, REPAYE, ICR) have specific eligibility requirements and calculation methods that differ from this model.

How Do Extra Payments Change Your Payoff?

Making extra payments beyond the required minimum can significantly reduce your payoff time and total interest. Extra payments go directly toward principal, reducing the balance faster and preventing interest from accumulating on that portion. Even small extra payments (e.g., $25-50/month) can save thousands in interest and shorten payoff by years. The earlier you start making extra payments, the more you save.

Why Interest Can Grow Quickly If Payments Are Too Low

If your monthly payment is less than the interest that accrues each month, your balance will grow (negative amortization) or barely decrease. This is especially risky with income-based plans if your income is very low. Over time, unpaid interest can capitalize (be added to principal), making the problem worse. Always ensure your payments at least cover the interest to prevent balance growth.

Trade-offs Between Plans

Standard Plan: Higher monthly payments but lowest total interest and fastest payoff. Best if you can afford the payments and want to minimize total cost.

Income-Based Plan: Lower monthly payments (especially early on) but potentially more total interest and longer payoff. May be necessary if standard payments are unaffordable, but can cost more over time.

Standard + Extra Payments: Higher monthly payments than standard, but fastest payoff and lowest total interest. Best if you can afford extra payments and want to be debt-free quickly.