Student Loan Repayment Guide: 7 Plans Explained 2026

Federal vs Private Student Loans

The type of loan you have determines your repayment and forgiveness options:

Feature	Federal Loans	Private Loans
Interest Rate	Fixed: 5.5%-8.05% (2026)	Variable: 3.5%-13% based on credit
Repayment Plans	8 options (Standard, IDR, PSLF)	Usually Fixed 10-year only
Forgiveness	PSLF, IDR forgiveness available	Very limited or none
Forbearance	Up to 3 years available	Limited, usually 3-12 months
Total Borrowable	$31,000 undergrad, $138,000 grad	Depends on lender (often higher)

7 Federal Repayment Plans Explained

Choose based on your income and career path:

1. Standard Repayment Plan

Fixed $50-$300 monthly payment for 10 years. Total cost lowest if you can afford it.

Example: $40,000 at 5.5% → $755/month → 10 years → $10,680 interest

2. Income-Based Repayment (IBR)

Payment: 10% of discretionary income (under age 31 at disbursement) or 15% (over 31). Forgiveness after 20-25 years. Best for low-income borrowers.

Example: $40,000 debt, $30,000 salary → $100-150/month → potential forgiveness

3. Pay As You Earn (PAYE)

Payment: 10% of discretionary income. Forgiveness after 20 years. Available to borrowers who received loan after 2007.

Example: $50,000 debt, $40,000 salary → $200/month → forgiveness after 20 years

4. Revised Pay As You Earn (REPAYE)

Payment: 10% of discretionary income for all borrowers. Forgiveness after 20-25 years. Includes undergrad and grad loans.

Example: $100,000 debt, $60,000 salary → $400/month → balance forgiven if still owed

5. Income-Contingent Repayment (ICR)

Payment: 20% of discretionary income or fixed amount over 12 years (whichever is less). Forgiveness after 25 years. Available for Parent PLUS loans.

Example: $60,000 PLUS loan, $50,000 salary → $300-500/month

6. Graduated Repayment Plan

Payments start low and increase every 2 years over 10 years. No forgiveness. Good if you expect income to grow quickly.

Example: $40,000 debt → Years 1-2: $400/month → Years 9-10: $1,200/month

7. Public Service Loan Forgiveness (PSLF)

Forgiveness of remaining balance after 120 qualifying payments (~10 years) while working in public service. Must be on Income-Driven Repayment plan.

Example: $60,000 debt, government job, 10 years of payments → Remaining balance forgiven (often $20,000-$40,000)

Payoff Timelines: Real Examples

Compare total cost under different scenarios for $50,000 debt at 5.5% interest:

Scenario 1: High Income ($75,000+)

Best Plan: Standard 10-year
• Monthly Payment: $947
• Total Interest: $13,660
• Years to Payoff: 10
✓ Lowest total cost

Scenario 2: Medium Income ($45,000)

Best Plan: Income-Based (IBR)
• Monthly Payment: $250-350
• Total Interest: $18,000-25,000
• Years to Payoff: 20
✓ Affordable monthly payment

Scenario 3: Low Income ($30,000)

Best Plan: REPAYE + Forgiveness
• Monthly Payment: $150-200
• After 20 years: Balance forgiven
• Potential forgiveness: $15,000-$25,000
✓ Manageable + tax-free forgiveness

Scenario 4: Public Service ($50,000)

Best Plan: PSLF + IDR
• Monthly Payment: $300-400
• After 10 years: All forgiven
• Amount forgiven: $50,000+
✓ Massive savings with forgiveness

Understanding PSLF: 10 Years to Forgiveness

Public Service Loan Forgiveness is one of the most generous programs if you work in public service:

Who Qualifies?

Work full-time (30+ hours/week) for a government agency or non-profit (501(c)(3)). Includes teachers, social workers, nurses, government employees, military. Over 500,000 borrowers received forgiveness as of 2026.

10-Year Timeline

Make 120 on-time monthly payments while working in qualifying employment on an income-driven repayment plan. Then remaining balance is forgiven tax-free.

Real Example

$80,000 debt | Teacher earning $40,000 | 10 years PSLF

• Monthly payment (PAYE): $250-300
• Total paid over 10 years: $30,000-$36,000
• Amount forgiven: $44,000-$50,000 (tax-free!)
• Total savings: $44,000+

Refinancing vs Repayment Plans

Should you refinance your federal loans?

✓ Refinance If:

• Credit score 750+
• Stable income $60,000+
• Interest rate 6%+ on current loans
• Don’t need federal benefits
• Short payoff timeline

✗ Don’t Refinance If:

• Working toward PSLF
• Income unstable/could drop
• Need forbearance flexibility
• Want IDR forgiveness option
• Interest rate already 5% or less

💡 Refinancing Rate: Current rates for refinanced student loans: 3.5%-8.5% depending on credit. Average savings: $200-$400/month for high earners.

Strategies to Lower Your Payment

💰

Pay During Grad School

Interest still accrues during school. Paying $100-200/month while in school saves $5,000-$20,000 in total interest.

📊

Choose Income-Driven Repayment

Monthly payment drops from $755 to $250-300 on income-driven plans for $40,000 debt at $30,000 income.

💼

Get Employer Forgiveness

Some employers (medical, legal, military) offer loan forgiveness programs up to $10,000. Check your employer benefits.

🎓

Consolidate Multiple Loans

Consolidate federal loans to extend repayment from 10 to 25 years, lowering monthly payment but increasing total interest.

Frequently Asked Questions

Federal loans are issued by the U.S. Department of Education, have fixed interest rates, and offer income-driven repayment options. Private loans are from banks/credit unions, have variable rates, and limited repayment flexibility. Federal loans also qualify for forgiveness programs like PSLF.

It depends on your income, loan balance, and career path. Standard 10-year plan works well for high earners. Income-Driven Repayment (IDR) is better if you have high debt-to-income ratio. PSLF is best if you work in public service and plan to stay there 10 years.

Public Service Loan Forgiveness (PSLF) forgives remaining federal loan balance after 120 qualifying payments (~10 years) while working for a government or non-profit employer. Must be on an income-driven repayment plan. As of 2026, over 500,000 borrowers have received forgiveness.

Yes, but refinancing federal loans means losing federal protections (income-driven repayment, forbearance, forgiveness programs). Refinancing makes sense only if you have excellent credit (740+), stable income, and don't need federal benefits. Interest rates

Yes, but refinancing federal loans means losing federal protections (income-driven repayment, forbearance, forgiveness programs). Refinancing makes sense only if you have excellent credit (740+), stable income, and don't need federal benefits. Interest rates: 3.5%-8.5% for refinanced loans.

Average federal student loan debt for 2024 graduates

Average federal student loan debt for 2024 graduates: $28,400 total. However, advanced degree holders average $60,000-$150,000+. Total U.S. student debt exceeds $1.7 trillion across 43 million borrowers.

On Standard 10-year plan at 5.5% interest

On Standard 10-year plan at 5.5% interest: 10 years, $491 monthly, $8,940 total interest. On Income-Based Repayment (IBR) with $40,000 salary: 20 years, $200-300 monthly, potential forgiveness of remaining balance. On PSLF: 10 years, forgiveness after 120 payments.

Yes. Lenders calculate your debt-to-income ratio (DTI). Student loans increase DTI, potentially reducing your approved mortgage amount by $50,000-$100,000+. Some lenders overlook student loans if you're on PSLF track and have good payment history.

As of 2026, federal student loan forgiveness programs include PSLF (120 payments for public service, $650+ per month forgiven), Perkins Loan forgiveness (teachers, nurses, military), and Temporary Expanded PSLF (limited). Mass forgiveness plans have been challenged in court.

If your loan interest rate is 4-5%, investing likely returns more (market average 7-10%). However, psychological benefits of debt payoff matter. Many people do both

If your loan interest rate is 4-5%, investing likely returns more (market average 7-10%). However, psychological benefits of debt payoff matter. Many people do both: minimum payments on low-interest loans (under 4%) and invest extra funds.