Part 6—Understanding the New Standard Repayment Plan

Recent federal legislation has changed how student loan borrowers repay their debt. The biggest update? The standard repayment plan now offers different payment terms based on how much you owe. Here's what you need to know.

The New Repayment Terms at a Glance

Total Debt Amount	Repayment Period
Under $25,000	10 years
$25,000 - $ 49,999	15 years
$50,000 - $99,999	20 years
Over $100,000	25 years

How It Works

Fixed Monthly Payments: Your payment stays the same every month throughout your repayment period. No surprises, no fluctuations.

Example: If you owe $60,000, you get 20 years (240 months) to pay it back.

Who Should Consider This Plan?

This new standard plan works well if you:

• Want predictable payments—Same amount every month makes budgeting easier

• Have stable income—You can handle consistent payments without income fluctuations

• Want to minimize total interest—Generally pays less interest than income-driven plans

• Have higher debt amounts—Longer terms mean lower monthly payments for big balances

Pros and Cons

Advantages:

• Repayment time matches your debt level

• Lower monthly payments for higher debt amounts

• Predictable, fixed payments

• Simpler than juggling multiple repayment options

• Clear end date for your loans

Considerations:

• Longer repayment = more total interest paid

• Less flexibility than income-driven plans

• May not be best for variable income situations

Should You Choose This Plan?

Good fit if you:

• Want payment certainty

• Have a steady income

• Prefer simplicity over complexity

• Have debt amounts that benefit from longer terms

Consider other options if you:

• Have irregular income

• Qualify for loan forgiveness programs

• Want payments tied to your earnings

Important Rules for Parent PLUS Loans

Key Limitation: Parent PLUS loans can ONLY use the standard repayment plan, no income-driven options.

Bottom Line

The new tiered standard repayment plan offers a more realistic approach to student loan repayment. Instead of forcing everyone into a 10-year timeline, it recognizes that different debt levels need different strategies.

Before making your choice, calculate what you will pay under different plans and consider your long-term financial goals. While longer repayment terms mean lower monthly payments, they also mean paying more interest over time.

Next Steps:

• Calculate your total federal student loan debt

• Identify which tier you will fall into

• Compare monthly payments across different plan options

• Consider your income stability and career plans

• Make an informed decision based on your specific situation

Understanding these changes now will help you choose the best repayment strategy for your financial future.

Ready to explore your student loan repayment options? Contact us today to review your specific situation and determine which plan will save you the most money over time.

Coming Up Next: We will explore the new rules for deferment, forbearance, and loan rehabilitation.