Your finances can change significantly over the course of a career, often making your initial student loan repayment plan feel outdated. Fortunately, whether you want a lower monthly payment or a faster timeline, you aren’t necessarily locked into your original terms.
This guide explores the various federal repayment plans, the rules for switching from one to another, and how things differ with private student loans.
What Are the Different Student Loan Repayment Plans?
If you have federal student loans, you may be eligible for more than one repayment plan. Here’s a brief overview of the loan repayment plans available for federal student borrowers.
Fixed Payment Plans
Fixed payment plans have a set loan term (usually 10 years, although the term may be longer for more substantial loans). There are a few different types of fixed payment plans, including the following:
- Standard Repayment Plan: Your payments are set at a fixed amount, so the loan will be repaid in 10 years
- Graduated Repayment Plan: Payments start lower and increase every two years, but the loan will still be repaid in 10 years
- Extended Repayment Plan: Payments are set so your loan will be repaid in 25 years (only available for larger loans)
If you don’t choose a repayment plan when you graduate, your loan servicer will probably automatically enroll you in the Standard Repayment Plan. You may contact them to change it at any point.
Income-Driven Repayment (IDR) Plans
Income-driven repayment plans set your monthly payment based on your income and family size. Typically, your loan can be forgiven after you make a certain number of payments on time and in full.
Can You Adjust Student Loan Repayments?
If your current federal student loan repayment plan isn’t working for you anymore, you can usually adjust your schedule to one of the other alternatives.
Before you do, it’s a good idea to estimate how this will change things with Federal Student Aid’s Loan Simulator. The tool lets you forecast how different repayment plans would impact your loan and finances.
If you’re unsure how to change student loan repayment plans, contact your loan servicer for assistance. Once you’ve made the change, make a note of your new monthly payment and consider putting it on autopay.
Is There a Limit to How Many Times You Can Change Student Loan Repayment Plans?
Generally, there’s no limit to the number of times you can change your federal student loan repayment plan. However, switching back and forth repeatedly can make it harder to organize your finances and stick to a consistent plan.
Are There Repayment Plans for Private Student Loans?
Private student loans don’t provide the same standardized repayment plans as federal loans. However, some lenders may allow you to choose from repayment schedules like the following upfront:
- Interest-Only: You pay only interest while in school and interest plus principal after graduation
- Standard Repayment: You repay the loan in fixed installments
- Graduated Repayment: Payments increase over time, along with your income
Once you’ve committed to one of these options, you typically don’t have the option to change later with the same lender.
Can You Change Your Student Loan Repayment Plan for Private Loans?
Generally, the only way to change your private student loan repayment plan is to refinance the account. This pays off the original debt with a new one, giving you another opportunity to choose your repayment plan.
However, this isn’t as straightforward as switching a federal student loan repayment plan. Not only are there refinancing costs involved, but you could also end up increasing your interest rate or monthly payment. You’ll also need to undergo a credit check.
The Bottom Line
Federal student loans offer significant flexibility, allowing you to switch between standard and income-driven plans as your financial situation changes. Using tools like the Loan Simulator can help you find a monthly payment that fits your current budget and goals.
Private loans are less flexible and usually require refinancing to change your repayment terms. This process involves a credit check and may impact your interest rate, so it’s important to weigh the costs before committing to a new loan structure.
