Selecting Your Repayment Plan in Two Steps

December 26, 2023

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If you have federal student loan debt, the good news is you get to choose how to pay it back, and it takes only two simple steps to pick the best plan for you.

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Develop Your Own Strategy

There’s no single best way to repay your federal student loans. Your best plan will be what fits your life and your financial goals.

Step #1: Set a Student Loan Repayment Goal

Decide what is most important to you when repaying your student loan debt. Your options ultimately include:

  • Minimize total repayment cost. (You’re focused on reducing cost and time while saving money overall).
  • Minimize monthly payments. (You’re focused on immediate affordability, flexibility, and possibly loan forgiveness).
Step #2:  Select the Repayment Plan for You

Choose the federal student loan repayment plan that best supports your financial goals. You can do so by focusing on total cost and time or focusing on minimizing your monthly payment.

If you're focused on total cost or time: You may want to choose one of the Traditional Repayment plans. The Standard, Extended, and Graduated plans all fall within this category. These plans will likely have a higher monthly payment in comparison to the Income-Driven Repayment plans. The reason is because traditional repayment plans base the monthly payment on the term of the loan and amount of debt. The most aggressive plan within the traditional plans is likely the Standard plan. This plan requires the borrower to repay their entire loan balance in 10 years.

If you're focused on minimizing your monthly payment:
You may want to select one of the Income-Driven Repayment plans. These plans offer more affordable monthly payments because they limit your monthly payment to 10-20% of your discretionary income (depending on the plan). Keep in mind, the lower the monthly payment, the longer it may take to repay the debt. More time in repayment allows for more interest to accrue, which can result in a higher total cost; however, borrowers can always choose to make larger payments without a penalty, and borrowers can ultimately determine the length of time they take to pay off their loans.

If you don’t want to make payments on your loans during residency, you may choose to put your loans into a mandatory residency forbearance. During this time, no monthly payments are required; however, your subsidized and unsubsidized loans will accrue interest. Be sure to learn the facts about forbearance before making that decision.

Crunch Your Numbers With the MLOC Tool

To see monthly payments, interest costs, and potential forgiveness amounts based on your loan debt, use the MedLoans Organizer and CalculatorUltimately, you are in control of how to repay your student loans, so start now, set your goals, and then pick the best plan for you.

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