When you enter into repayment on your student loans you are automatically entered into the “Standard Repayment” plan. This plan is actually the best because, you pay the least amount on the loan overall with interest. However, many people cannot afford their loan payments under this plan. If that is the case, there are other student loan repayment plans that you should consider.
Income Based Repayment (or pay as you earn)
This option bases your Payment amount on how much you make annually. They cap your payment at 10% of your discretionary income. As a rule of thumb – if you make $30k a year and your student debt is $30K you would qualify. In this plan your payment could actually be $0 a month.
Link to calculator: www.finaid.org/calculators/Ibr10chart.phtml
Extended Repayment
Lowers your payment because it extends your repayment time frame to 20 years instead of the standard 10 years. Note: You end up paying more over the long term because of the accrued interest but your monthly payments is much lower.
Link to calculator: www.finaid.org/calculators/loanpayments.phtml
Graduated Repayment
Payments start out lower, then gradually increase. This is great for people in health, or law that start out making a lower salary the first few years then end up making much higher salaries as their career takes off.
Link to calculator: www.finaid.org/calculators/gradrepay.phtml
Radius Educational Services Blog 