How to Select the BEST Repayment Plan in Two Steps

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

Develop Your Own “Best” Strategy*

There’s no single “best” way to repay.  Everyone’s life is different.  Your “best” plan will be what best fits your life and your financial goals.

Step #1: Set a Student Loan Repayment Goal

The first step is to decide what is most important to you in the repayment of your student loan debt. Your options ultimately include:

Minimize TOTAL repayment cost (You’re thinking long term - reducing cost, reducing time, and saving money overall.)


Minimize monthly payments (You’re focused on immediate affordability, flexibility and possibly loan forgiveness.)

Step #2:  Select the “Best” Repayment Plan for You

The next step is to choose the plan that best supports your goal.

If you’re focused on total cost, you may want to choose one of the Traditional Repayment Plans.  These include the Standard, Extended, and the Graduated Repayment plansThe higher the monthly payment, the lower the total repayment cost. For this reason, the most aggressive plan, the Standard Repayment plan, may lead to the lowest total cost.

If you want to minimize your monthly payment, you may select one of the Income-Driven Repayment Plans which include Income-Contingent Repayment (ICR), one of the two versions of Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE).  These plans are affordable because payments are limited 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 - sometimes significantly more.

Crunch Your Numbers:  To see payment, interest and potential forgiveness amounts, based on your loan debt, use the Medloans® Organizer and Calculator

Repayment Plans May Be Changed When Life Changes

Ultimately, you are in control of how to repay your student loans, and to a degree, how much it costs to repay your debt. So start now, set your goals, and then pick the “best” plan for you.

Related Resources


How Will You Manage Your Student Loans After Graduation?

How to Manage Your Student Loans During Residency

*The information included here pertains only to federal student loans.

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