Student Loan Repayment for Dummies

Two students in face masks study with Victor E Viking.

Approximately 46 million Americans have student debt.

Before the election of 2020, one of the promises President Joe Biden made was to cancel student loan debt. His first action was pausing student-loan payments, that was supposed to end in May 2022 but has been extended until this  August. Democrats are pressuring Biden to cancel $50,000 per person.

For many college students (including myself) the relief of paused payments is short lived, and the cancellation of student debt entirely is wanted. The future of student loans and cancellation is unsure and leaders appear to be indecisive. Will we have to go back to paying our debt eventually, will at least $50,000 of our debt be canceled, or will it be canceled altogether … who knows?

I barely had any knowledge of what a student loan was when I took on two loans at the beginning of the year. Being skeptical of the future of my student debt, I went to a financial coach for more detailed information on student loans and was given a basic rundown on loan repayment. So, for all the new college kids who also have no clue what they’re getting themselves into when accepting a loan, here is a basic rundown version of federal loans (private student loans are an entirely different beast) and common repayment plans.

Disclaimer: This a basic version to help simplify information. If you want more details, such as more repayment plans, and info on PLUS and consolidation loans, you can find more information on the FSA website.

A Small Guide to Student Loans

If you accepted student loans in your FAFSA form you probably had the option of accepting either a subsidized loan, or an unsubsidized loan, or both. The difference between the two is that the U.S Department of Education will pay the interest of a subsidized loan while you’re in school half-time OR for the first six months after you leave school. You are required to pay the interest of an unsubsidized loan

Once your financial aid has disbursed, that is when the interest on your loan will start. Even when you leave or drop out of school you still have to pay the loan back. If you are having trouble making a loan payment, contact your loan servicer as soon as possible to possibly lower your monthly payments

Once you graduate or leave university you have a six-month grace period before you are required to start making regular payments. The grace period allows you to select a repayment plan and prepare yourself financially. When you enter the repayment period your servicer will automatically place you on the standard repayment plan if you didn’t choose a different plan.

Note: you can make prepayments on your loan while you are in school or during your grace period. If you want to pay less interest or reduce the total cost of loan over time you can pay extra every month.

Top Three Repayment Plans

Payment plans below do not include information about PLUS or consolidated loans.

Standard Repayment Plan


  • Ensures your loans are paid off within 10 years
  • You’ll pay less over time than other plans
  • All borrowers are eligible


  • Not a good option for those seeking public loan forgiveness

Extended Repayment Plan


  • Must have more than $30,000 in outstanding Direct Loans.
  • Will ensure loans are paid off within 25 years
  • Monthly payments are less than the standard or graduated repayment plan.


  • Will pay more over time than the standard plan
  • Not a qualifying repayment plan for public loan forgiveness

Income-Based Repayment Plan


  • Must have a high debt relative to your income.
  • Monthly payments will be either 10 or 15 percent of discretionary income but never more than what you would have paid under the standard plan.
  • Payments are calculated based on family and income size
  • Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20-25 years.


  • Will pay more over time than the standard plan.
  • If you’re married your spouse’s income or loan debt will only be considered if you filed a joint tax return
  • You may have to pay income tax on any amount that is forgiven.

What If I Don’t Want to Take Out a Loan?

No worries, there are other options to help pay for school if you’d rather not take out a loan!

  • Scholarships: PSU has a Scholarship Universe Portal. Submit an application by the deadline and win thousands of dollars for school. Tip: Local scholarships are easier to win than national ones.
  • Find Part-Time Work: of course, this is a harder option since it’s difficult to work while attending classes and completing schoolwork. Plus, it’s not easy to gain a job in the competitive marketplace. However, if your financial aid deems you eligible for federal work study you can find a not-so-stressful job on campus that you only have to work 8-10 hours per week for!
  • Request a Revaluation of Circumstances: If you had a special circumstance that isn’t properly reflected on your FAFSA form such as a loss, divorce, etc., you can petition to your university for a reevaluation on your FAFSA form.
  • Emergency Aid: If you have difficulty completing the semester or faced unexpected expenses, PSU offers an Emergency Hardship Fund through the Dean of Student Life office.




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