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Guide to Federal Student Loan Repayment Programs

Federal student loan borrowers have a number of repayment options to choose from. This guide will walk you through the different options for standard repayment, refinancing, and federal student loan forgiveness programs.

Published February 16, 2023

The office of Federal Student Aid, a division of the U.S. Department of Education, provides more than $112 billion in financial aid (the large majority of student loans) each year. They are likely your first stop in funding your education, and in many cases offer the best options (if you qualify) to take out and repay loans for a wide variety of life, financial, and educational backgrounds. If you’re wondering where federal loans come from, check out this overview from U.S. News & World Report.

As a critical budgetary concern within the Department of Education, the Office of Federal Student Aid’s operations are highly regulated and swayed by the economic climate and other factors. Nevertheless, it is a major pathway for millions of students to achieve their higher educational goals.

If you’re one of the 43.5 million borrowers with federal student loans, you have a number of repayment options at your disposal.

Federal Student Loans Repayment Programs

Standard and Extended Repayment

Upon graduation, federal student loan borrowers are granted a six-month grace period before their first loan payment comes due. If no action is taken, they’ll default into the ten-year standard repayment plan. This means they’ll make the same payment every month for ten years, resulting in the loan being completely paid off. Ten years is the shortest standard repayment term offered by the federal government. If borrowers want a longer term, they must meet balance thresholds for their requisite loans, qualifying them for longer term, extended repayment loans. For more information on standard repayment plans, visit studentaid.gov.

Loan Consolidation

If you have multiple federal student loans, you can combine them into a single Direct Consolidation Loan to help simplify repayment or to reach the balance thresholds needed to qualify for extended loan terms. Consolidation involves merging your direct loans into a single payment with one servicer, rather than paying several loan servicers. Consolidated student loans often have new terms, such as a lower monthly payment, but can also have a longer repayment period—which could lead to paying more over the life of the loan.

Repayment Periods for Consolidation Loans

For Direct Consolidation Loans, the length of your repayment period will vary depending on your total student loan debt. Select your student loan balance below to see the repayment period for a Direct Consolidation Loan under the Standard Repayment Plan.

Total Student Loan Balance

Repayment Period

10 years


Consolidating loans other than Direct Loans—such as FFEL Program loans or Federal Perkins loans—may give you access to additional income-driven repayment plans or forgiveness options.

Interest Rate Impacts
Targeted Repayment

Interest Rate Impacts

Direct Consolidation Loans take the weighted average interest rate of all loans included in the consolidation and round that up to the nearest 1/8th percent, which can result in a higher weighted average interest rate.

Targeted Repayment

Once all loans are consolidated, borrowers can no longer implement a targeted repayment approach, paying down their highest rate loans more aggressively, since they now have one loan.

Depending on your circumstances, there may be advantages or disadvantages to loan consolidation. For more information on Direct Consolidation Loans, visit studentaid.gov/consolidation.

Income-Driven Repayment (IDR)

Income-driven repayment was introduced to provide borrowers with options other than forbearance when they have trouble making monthly payments. There are several income-driven repayment options, including Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE), as well as Income-Contingent Repayment (ICR) all of which adjust the borrower’s payments based on their adjusted gross income and family size—not how much they owe.

How Monthly Payments are Calculated

For income-driven repayment, your monthly payments will be calculated based on your adjusted gross income and family size and will be a percentage of your discretionary income. While that percentage will vary depending on the plan, note that some IDR plans may factor in your spouse’s income to your discretionary income.

For more information, go to the Federal Student Aid website at studentaid.gov/ and compare the different IDR plans in the table below.

  • Plan
  • Monthly Payments
  • Repayment Period
Income-Based Repayment (IBR)
Monthly Payments:
  • 10-15% of your discretionary income (and your spouse’s if filing jointly)
  • Never more than federal 10-year Standard Repayment Plan amount
Repayment Period:
20-25 years depending on when you become a new borrower
Pay As You Earn (PAYE)
Monthly Payments:
  • 10% of your discretionary income (and your spouse’s if filing jointly)
  • Never more than federal 10-year Standard Repayment Plan amount
Repayment Period:
20 years
Revised Pay As You Earn (REPAYE)
Monthly Payments:
  • 10% of you and your spouse’s discretionary income even if you are filing separately
  • Can be more than federal 10-year Standard Repayment Plan amount
Repayment Period:
Undergrad: 20 years Graduate: 25 years
Income-Contingent Repayment (ICR)
Monthly Payments:
The lesser of the following:
  • 20% of your discretionary income or
  • What you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income
Repayment Period:
25 years

Public Service Loan Forgiveness

Public Service Loan Forgiveness allows borrowers employed at qualifying non-profit 501(c)(3) organizations and government entities to have their Federal Direct Loans forgiven after ten years of qualifying income-driven payments, entirely tax-free. To pursue and qualify for PSLF, you must provide paperwork, including an Employment Certification Form (ECF) filled out by each eligible employer in your work history. You will need to complete an ECF at least annually or whenever you change employers while you’re enrolled in the program. If you have questions about how to qualify for either PSLF or IDR student loan forgiveness, a student loan consultant at GradFin can help you understand all your options, learn more here. For the most up-to-date information regarding PSLF, go to studentaid.gov/pslf.

Eligibility requirements for PSLF include:

Federal Direct Loans
Full-time employment at a 501(c)(3) or government entity
Enrollment in an IDR plan
120 qualifying payments

Federal Direct Loans

Federal loans which are not Direct Loans (made directly by the U.S. Department of Education) may be consolidated into Direct Loans. This is often the first step for borrowers who have a wide array of loans which may include Perkins Loans, FFELP loans, and others. Learn more at studentaid.gov/consolidation.

Full-time employment at a 501(c)(3) or government entity

Full-time employment is defined as a minimum of 30 hours per week. It is not uncommon for borrowers to fulfill the 30 hour per week requirement at a non-profit and then work another 20 hours a week at a for-profit. This would still meet the program requirement.

Enrollment in an IDR plan

Borrowers must enroll in an income-driven repayment program to pursue PSLF. The 10-year standard plan is a qualifying repayment program in the pursuit of PSLF, but it would result in the borrower having the loan entirely paid off at the time of forgiveness.

120 qualifying payments

Participants will need to make 120 on-time qualifying payments over ten years to qualify for tax-free PSLF forgiveness of any remaining balance. These payments do not need to be consecutive, so if a borrower worked in the private sector for a period of time and came back, they’d pick up where they left off progress-wise. Unfortunately, borrowers can’t accelerate the payments by paying extra to get to the forgiveness point early.

Deferment or Forbearance

Deferment is a temporary period when the repayment of principal and interest is delayed, and forbearance is a deferment granted at the lender’s discretion in the event of economic hardship. During forbearance, the interest on both subsidized and unsubsidized loans is accruing and capitalizes every 12 months. As a result, borrowers accrue more interest in each subsequent year that they utilize forbearance. However, forbearance has no impact on a borrower’s credit. Because of the impact on interest and potential loan forgiveness, it might be worth exploring another repayment plan before you consider deferment or forbearance. For more information, go to the Federal Student Aid website at studentaid.gov.

Student Loan Refinancing

Private student loan refinancing may allow you to take advantage of lower interest rates, or a shorter loan term to potentially reduce the total amount you owe over the life of the loan. The process is simple; borrowers pay off their original student loans—both federal and private—and obtain, if eligible, a new, lower-rate loan with different repayment terms. The refinancing of federal student loans can only be done by moving to a private lender. Note that if you refinance federal student loans with a private lender, you will lose access to federal programs, such as federal forbearance, IDR, PSLF, and any other benefits offered to federal borrowers. Learn more at studentaid.gov.

Each lender has its own criteria for determining eligibility and rates, such as credit history, total monthly debt payments, and income. Read more on the differences between refinancing and consolidation and learn more about Laurel Road’s private student loan refinancing options here.


How much do you know about your federal loan repayment options?

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IMPORTANT INFORMATION: The U.S. Department of Education recently announced a student loan debt relief plan which includes forgiveness of up to $10,000 for qualifying federal student loans and up to $20,000 for qualifying Pell Grant recipients. For more information, please read the announcement. Please note that if you refinance qualifying federal student loans with Laurel Road, you may no longer be eligible for certain benefits or programs and waive your right to future benefits or programs offered on those loans. Examples of benefits or programs you may not receive include, but are not limited to, student loan debt relief or public service loan forgiveness, repayment options such as Income Based Repayment or Pay As You Earn, or COVID-19 relief benefits such as a 0% interest rate, suspension of payments or loan forgiveness. Please carefully consider your options when refinancing federal student loans and consult www.studentaid.gov for the most current information.

  1. GradFin and Laurel Road are brands of KeyBank N.A.

  2. To qualify for PSLF, you must be employed by a U.S. federal, state, local, or tribal government or not-for-profit organization (federal service includes U.S. military service); work full-time for that agency or organization; have Direct Loans (or consolidate other federal student loans into a Direct Loan); repay your loans under an income-driven repayment plan; and make 120 qualifying payments. For full program requirements, visit: Federal Student Aid.

Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice, legal, financial, or tax advice. We cannot and do not guarantee their applicability or accuracy in regard to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues. Calculators do not include the fees and restrictions that certain products may have. This calculator does not indicate whether you would qualify for a Laurel Road loan. Please visit the applicable banking product pages on laurelroad.com for specific terms and conditions.

This information provided is for informational purposes only and does not substitute consultation with a legal, tax or investment professional for important financial decisions. Laurel Road assumes no liability for loss or damage incurred by use of the information provided. Please visit laurelroad.com for full product details, terms and conditions.