Standard vs. Graduated Repayment Plan: Which one is right for you?


Are you looking for the right repayment plan? If so, here’s a guide that can help you decide between Standard and Graduated Repayment Plans.

Standard Repayment Plan

This plan features fixed payments made for no more than ten years, and it has the shortest repayment period. The Standard Repayment Plan is ideal for graduates who want to save money in the long run as it allows you to pay the least amount of interest over the life of your federal student loan. It’s also ideal if you:

• Want to pay off your loans as quickly as possible
• Have a high income

However, its monthly payments can be slightly higher than what you would pay on other repayment plans. While the Standard Repayment Plan has higher monthly payments, it allows you to pay less interest over time.

Additionally, it has fixed payments so that you know exactly what you owe each month. Unfortunately, this can stretch your finances if your income drops. It’s important to note that if you consolidate your student loans on the standard repayment plan, your repayment period will last more than ten years, depending on your debt.

Graduated Repayment Plan

This plan features lower initial payments, which increase after every two years for a span of ten years. The Graduated Repayment Plan is designed for individuals with lower starting salaries but expect higher wages in the future.

Since your loan will be paid off in ten years, this repayment plan isn’t ideal for those seeking Public Loan Forgiveness. Luckily, like the Standard Repayment Plan, the Graduated Repayment Plan ensures you can quickly free yourself of student debt.

Some of the cons associated with the Graduated Repayment Plan are:

• You’ll pay more over the life of your loan compared to the Standard Repayment Plan
• If your income doesn’t grow over the ten years, the higher payments can put a strain on your finances

Which one is right for you?

It all depends on your needs, starting salary, and financial goals. For instance, if you land a high paying job, it’s wise to choose the Standard Repayment Plan. If not, go for the latter.

Contact StudentLoanify today to learn more about student loan repayment plans.