by David Carlson
A clear guide to repayment strategies, refinancing, and loan forgiveness programs.
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Compare federal Standard repayment, Income-Driven plans, and private refinance scenarios for your student loans.
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Standard, Income-Driven, and Refinance
Standard repayment splits your federal loan into equal monthly payments over 10 years. You pay the least total interest of any federal plan but have the highest monthly payment. Income-Driven plans cap payments at 10 percent of discretionary income (your AGI minus 225 percent of the federal poverty line for your family size and state) and forgive any remaining balance after 20 or 25 years. Borrowers working full-time for a government or 501(c)(3) employer may qualify for Public Service Loan Forgiveness after 120 qualifying payments. Private refinance is a separate option through banks and online lenders, available for both federal and private loans, and is driven by your credit profile rather than federal formulas.
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Federal vs Private Student Loans
Federal student loans offer fixed rates set annually by Congress, income-driven repayment options, deferment during hardship, and potential loan forgiveness programs including PSLF. Private loans may offer lower initial rates but are usually variable, offer no forgiveness programs, and have fewer protections. Always exhaust federal options first. Compare refinance options on NerdWallet.