Banking and Finance

Repayment Options for Student Loans

Elizabeth
May 29, 2020

Even though there are tons of options when it comes to repaying your student loans, nearly 11 million borrowers (the vast majority) choose to follow a level repayment plan that will allow them to pay off their loans within ten years.


There are over a dozen different types of loan repayment opens for students who have taken about both private and federal loans, and that’s not even considering the option to refinance or consolidate loans


Which option is best for you? You’ll want to find a trusty loan repayment calculator that allows you to see which truly makes sense for your loan amount and ability to repay it. But, here are some of the most common and popular repayment options for student loans.

Loan Repayment Calculator: Which Repayment Option is Best? 

When your loans go into repayment, you might automatically be assigned to a specific repayment plan. Depending on the amount of money you own in student loans, you’ll receive notice that the monthly bill will be for X amount. However, you are able to contact Federal Student Aid or your loan provider to change your repayment plan and either reduce or increase your monthly payments.


Federal Student Aid has a Loan Simulator which acts similarly to a loan repayment calculator and will allow you to select from a few options that best fit your situation. Whether you’re looking to repay your loans as fast as possible or are having trouble keeping up with your payments, the tool is helpful in getting answers.


It’s important to note that, at the moment, the federal government has suspended all student loan payments through September 30th, 2020 and has set interest rates to 0%. This means that you will owe nothing until the end of September and your loans won’t be accruing interest either. While you’re able to enjoy this period of relief, take the time to really figure out what kind of student loan repayment plan you’ll want to follow once the freeze is over.

Student Loan Repayment Options

As mentioned, you’ve got options and lots of them. Here are the most popular ways in which borrowers pay off their student loans.

Standard Repayment Plan

This is the most commonly used as it’s the repayment plan that will allow you to pay off your student loans as fast as possible. With this loan repayment strategy, your payments are set to a fixed amount that allows you to pay off your loans in full within ten years. Because of this, you’ll end up paying less over time in accrued interest.

Graduated Repayment Plan

Similar to the Standard Repayment Plan, the Graduated Repayment Plan gives you the chance to still pay off your loans within ten years, but your payments start out lower at first and then are gradually increased over time. This is great for those who don’t immediately graduate into high-paying jobs and need time to get on their feet before making larger payments.

Extended Repayment Plan

This repayment plan works exactly the same as the Standard Repayment Plan and Graduated Repayment Plan in that your payments are set to a fixed amount or graduated over time. However, the period within which you’ll pay off the loans is extended to 25 years. It’s a good option for those with a higher total loan amount to pay off as it will ensure you’re not making outrageously high monthly payments in order to pay off, let’s say, $150,000 in student loans.

Pay as You Earn Repayment Plan

If you’re not too worried about the specific timeframe within which you are aiming to pay off your student loans but would instead rather focus on keeping your monthly payments manageable, the Pay as You Earn option might be best for you. Your monthly payments will be 10% of discretionary income, which means you have to submit your tax returns annually so that your loan provider can continually reassess what that value should be.

Income-Driven Repayment Plan

This is very similar to the Pay as You Earn Repayment Plan in that your payments are based fully on your income and ability to pay. Like the PAYE plan, income-driven repayment can make you eligible for loan forgiveness. If you make qualifying payments consistently, any outstanding balance on your loan will be forgiven after 20 years or 25 years.

Consolidate Your Student Loans

Along with other unique options for loan forgiveness, which includes Public Service Loan Forgiveness plans for teachers and public service workers, you can also refinance or consolidate your loans if you’re interested in attaining lower interest rates or wish to roll your payments into one larger loan with one interest rate and one monthly payment. At the moment, interest rates are low, making it a great time to refinance student loans. However, it’s worth speaking with a financial advisor who can walk you through the ins and outs of what the might involve.

How to Save for Student Loan Payments

With a nationwide freeze on all student loan payments, now is the time to focus on saving to ensure you’re able to pay off your loans on time and in full once they resume after September. Focus on bulking up your savings or even contribute a little of your extra cash to monthly payments while interest rates are at 0% to get ahead.


Need help saving a little extra each month to put towards the payments? The Cheese Debit Card provides saving bonuses and cashback. Without any fee charged, you can save more by doing, well, pretty much nothing. It’s an easy way to start saving for student loan payments now while things are in a bit of a lull.


Interested? Learn more and join our growing community of super savers using the Cheese Debit Card.

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