Comparing Student Loan Repayment Plans And Consolidation Options

We will look at the three most common payment plans, the monthly payments associated with each plan, and the total accrued interest for each option. We will also use a student loan debt of $31,000 with a 5% interest rate.

Available Repayment Plans

Payment PlanTermsAdditional Information
Standard Repayment Plan10 years (120 Months)The Standard Repayment Plan is the most common repayment plan most students will use.
Graduated Repayment Plan10 years (120 Months)This option gives you lower monthly payments at the beginning and then increases every two years.
Extended Repayment Plan Fixed or Graduated25 years (300 Months)Must have more than $30,000 in debt to qualify.  Payments can be fixed or graduated.
  • The Standard Repayment Plan

The Standard Repayment Plan is a simple calculation using the amount you owe and your fixed interest rate over a term of 10 years or 120 months.

  • The Graduated Repayment Plan

This plan calculates your payment over a 10-year period as well.  However, your payment will be split into 2-year terms where your monthly payments will be lower until you reach years five and six.

  • The Extended Repayment Plan

The Extended Repayment Plan is a 25-year payment plan.  You can choose to have a fixed repayment over the 25-year term, or you can choose the graduated repayment schedule and lower your monthly payment in the beginning.

Your Repayment Options, Monthly Payments and Accrued Interest Explained

You may be asking yourself which payment plan works best for your situation.  Some people may wish to have low monthly payments, and others may want to pay as little interest as possible.  The table below lays out all repayment options, monthly payments and total accrued interest for a fictitious scenario where the total loan amount is $31,000 with a five percent interest rate.

Repayment Options Summary Table
Loan = $31,000
Interest = 5%

Standard Repayment
Amount BorrowedTerm (Years)Monthly PaymentTotal of All PaymentsTotal Accrued Interest
$31,00010 years$328$38,456$7,456
Graduated Repayment
Amount BorrowedTerm (Years)Monthly PaymentTotal of All PaymentsTotal Accrued Interest
1-2$219
3-4$268
5-6$329
7-8$403
9-10$493
$31,00010 years$41,074$10,074
Extended Repayment (Fixed
Amount BorrowedTerm (Years)Monthly PaymentTotal of All PaymentsTotal Accrued Interest
$31,00025 years$181$54,366$23,366
Extended Repayment (Graduated)
Amount BorrowedTerm (Years)Monthly PaymentTotal of All PaymentsTotal Accrued Interest
1-2$129
3-4$138
5-6$148
7-8$159
9-10$170
11-12$182
13-14$195
15-16$209
17-18$224
19-20$240
21-22$257
23-24$275
25$295
$31,00025 years$59,383$28,383

The table shows that the total accrued interest begins to increase with each payment option, and the monthly payments are significantly lower when choosing the Extended Repayment Plan.  You can compare this loan amount and interest rate to your own to get specific numbers.

To calculate your own student loan payment, visit the following government website:

https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

The Bottom Line – Every Situation Is Unique

Every student’s loan repayment plan will be different.  This article illustrates a hypothetical loan amount and interest rate, but it may not be far off from the real deal.  Students with higher interest rates on their consolidated loans will pay more in total accrued interest should the loan be extended over any length of time.  Many students will experience too much student loan debt, and they may not be able to immediately afford the higher monthly payments.  Therefore, the Extended Repayment Plan may best suit these types of situations.  Remember that you can also change your plan in the future if so desire.

Student Loan Consolidation Helps

The important thing to remember is that the Extended Repayment Plan is only available for students with a total debt burden of $30,000 or more.  Therefore, student loan consolidation can help bring these combined loan totals over the qualifying amount should students wish to use this repayment option.

Contact Your Lender

Your lender could have even more specific options available other than the three repayment plans outlined in this article.  Consult with them about your options, but start early to avoid missed payments, negative credit marks or loan default.