Your four options for repaying student loans

It’s May and college campuses are filled with graduates walking down the aisle to claim their degrees. But for many, the pomp and circumstance means it’s also time to face student loan repayment. In fact, three out of four students leave school with some student loan debt.

 According to the Institute for College Access and Success, graduates face an average student debt of $28,400. The good news is that many loans come with a six-month grace period, so you can get on your feet before you need to start paying them back. But when it comes time to face the bill, it can be intimidating and confusing. Luckily, BetterMoneyHabits.com breaks down the options for student loan repayment.

Option 1: Pay ahead of schedule

Your student loan servicer will provide you with a repayment plan, which you will need to pay monthly. But if you have the money available, consider paying more than what is due each month. The advantage of paying more is that you spend less in interest over time. The sooner your loan is paid off, the less you owe.  

Option 2: Pay on schedule

Many students choose to pay back their loan over a 10-year standard or graduated plan. By default, you are placed into a 10-year plan where your monthly payment is the same each month.

You also have the option of selecting the graduated plan, where you payments start small and increase every two years. This may be a good option if you think you will earn more as you gain more experience in your career. Because you pay less per month initially, the downside is you pay more interest than with the fixed-price plan.

Learn more about repaying student loans on a 10-year plan.

Option 3: Pay based on income

If you are unable to afford the monthly payments of a standard 10-year schedule, you may be eligible for income-based repayment. If you are eligible, your affordable monthly payment is determined by how much you earn. But since you are paying less per month, it will take you longer to pay off your loan in full. You will accrue more interest in the process, which means your total paid will be higher.

Learn more about income-based student loan repayment.

Option 4: Delay payment

If you are unable to afford any payments at all, you can apply for deferment or forbearance. You may be eligible for forbearance and deferment, where you temporarily put off repayments, if you are facing economic hardship or continue your education. 

Learn more about student loan deferment or forbearance.


Your four options for repaying student loans: http://bit.ly/1WFYzUY v/ @AmericaSaves @BofA_Tips #studentloans #savings
Tweet: Your four options for repaying student loans: http://bit.ly/1WFYzUY v/ @AmericaSaves #studentloans #savings Tweet this now


Need motivation and support to pay back your student loans? Let America Saves help you reach your savings and debt reduction goals. It all starts when you make a commitment to yourself to save. Take the first step today and take the America Saves pledge to save money, reduce debt, and build wealth over time. And it doesn’t stop there. America Saves will keep you motivated with information, advice, tips, and reminders to help you reach your savings goal. Think of us as your own personal support system.

Take the pledge.

Take the Pledge

Savers who make a plan are twice as likely to save successfully. 

Take the America Saves Pledge

Tip of the Day

  • Written by Administrator2 | January 13, 2014

    Never purchase expensive items on impulse. Think over each expensive purchase for at least 24 hours. Acting on this principle will mean you have far fewer regrets about impulse purchases, and far more money for emergency savings. http://ow.ly/sj972

Saver Tips and Stories View all »

Inspired to Build Savings By Starting Small

Written by Great Lakes Michigan Saves | April 19, 2016

With little-to-no money in the bank and living on a limited income with her adult daughter, Sharon wasn’t sure if building up savings for her future was even possible. “At my age, to put debts behind me would be a relief,” she said, but she wasn’t quite sure how to even get started with a savings plan. That all changed when Sharon attended the Great Lakes Michigan Saves Pay Yourself First Saver’s Summit during America Saves Week.

Read more...

#ImSavingFor Winner Story

Written by Lindsay Ferguson | June 13, 2019

America Saves awarded one lucky saver, Pedram R. from California, $750 for sharing his #ImSavingFor story. Pedram said, “Saving is important to me because it proves I am not willing to buy unnecessary things to please others or to be perceived as successful.”

Read more...

Starting and Continuing a Personal Finance Journey

Written by Sara Cooper | December 23, 2013

When Kiara Hardin, now a junior at Western Illinois University, became an intern with the Chicago Summer Business Institute during her sophomore year of high school, she began her personal finance journey. The program required participants to open a savings account.

Read more...

Receive Updates

Take the Pledge

Written by Super User | September 16, 2013

Start Saving

Receive Texts

Written by Tammy G. Bruzon | July 15, 2014

Learn More

Partner News & Updates

Written by Katie Bryan | October 18, 2013

Sign Up