Which Repayment Plan Will You Be Placed On Automatically Unless You Change It By Contacting Your Servicer?

Which Repayment Plan Will You Be Placed On Automatically Unless You Change It By Contacting Your Servicer? When it comes to repaying student loans, the standard repayment plan serves as the fundamental option for borrowers. Automatically assigned to borrowers at the onset of repayment, this plan offers a structured and straightforward approach to clearing educational debt. This article aims to delve into the details of the standard repayment plan, including its benefits, eligibility criteria, and how it compares to other available options.

Which Repayment Plan Will You Be Placed On Automatically Unless You Change It By Contacting Your Servicer?
Which Repayment Plan Will You Be Placed On Automatically Unless You Change It By Contacting Your Servicer? (Image By bankrate.com)

The Standard Repayment Plan Explained

The standard repayment plan is the default option for borrowers commencing their journey towards clearing student loans. Under this plan, borrowers are required to make 120 fixed monthly payments over a period of 10 years. The key highlight of this plan is that the monthly payments remain the same throughout the entire repayment term. To be eligible for the standard repayment plan, borrowers must possess federal student loans.

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Benefits of the Standard Repayment Plan

  • Repayment Length: With a duration of 10 years, the standard repayment plan allows borrowers to clear their debt relatively quickly. This ensures that borrowers can become debt-free at a relatively early stage in their careers.
  • Limited Interest: By opting for standard repayment, borrowers pay the least amount of interest compared to other plans with extended repayment terms. This translates to lower overall borrowing costs.
  • Faster Repayment: As borrowers make fixed monthly payments, they can anticipate the end of their repayment journey within a set timeframe. This offers a sense of accomplishment and financial security.

Standard Repayment vs. Other Repayment Plans

While the standard repayment plan offers several advantages, it may not be suitable for every borrower’s financial situation. Those who find the standard payments too expensive may consider alternative options such as income-driven repayment, extended repayment, or graduated repayment.

Income-Driven Repayment Plans: These plans base monthly payments on the borrower’s income and family size. Payments typically range from 10% to 20% of discretionary income. While these plans provide more manageable monthly payments, they may extend the repayment term, leading to higher overall interest costs.

Extended Repayment Plan: This plan allows borrowers with over $30,000 in federal student loans to stretch their repayment period up to 25 years. While monthly payments may be lower, borrowers should be aware of potential higher interest costs over the extended term.

Graduated Repayment Plan: With this plan, borrowers start with lower payments that increase every two years. It suits those expecting their income to grow over time but may not be ideal for those seeking loan forgiveness.

Selecting the Right Repayment Plan

Choosing the most suitable repayment plan depends on a variety of factors. Borrowers must assess their income, family size, personal circumstances, and long-term financial goals. By comparing various plans, borrowers can make informed decisions to align their repayment strategy with their individual needs.

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Accelerating Loan Repayment

For those who can comfortably manage standard payments, there are additional ways to expedite the loan repayment process. Borrowers can explore the option of prepaying loans, enabling them to make extra payments towards their principal balance without incurring penalties. By doing so, borrowers can reduce their overall interest costs and clear their debts sooner.

Additionally, some borrowers may consider refinancing their federal student loans into private loans. While this option may offer lower interest rates, borrowers should be aware of potential trade-offs, such as the loss of income-driven repayment options and federal loan benefits.


The standard repayment plan presents a solid foundation for repaying student loans, offering borrowers a structured path towards becoming debt-free. However, each borrower’s financial circumstances are unique, and choosing the right repayment plan requires careful consideration of various factors. By understanding the options available and their respective advantages, borrowers can embark on a well-informed journey towards financial freedom.

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