Standard Plan

The standard plan is what your federal student loans default to upon graduation. This plan is for all federal loans besides consolidation loans. The terms are simple, you have 10 year terms for all of your loans at the specified interest rates. The drawback is that the standard plan often has higher monthly payments than the regular plans. However, you often end up paying off the loans much quicker.

Another benefit of the standard plan is that you can tackle the federal and/or private loans with the higher interest rates individually, while continuing to make the payments on the lower interest rate loans. Interest rates on Stafford loans change annually, so you may end up with federal loans with different rates. If you can afford extra payments above the minimum, try to pay off the higher interest rate loans first because it will save money in the long run.

There are options if you have trouble paying your federal loans under the Standard Plan. These include consolidation loans, income-driven repayment plans, extended plans, graduated plans, and student loan refinancing. Each has their pros and cons, but generally you will end up paying for a longer period of time or more interest under these other options. If you can afford the standard plan in your monthly budget, it should be your first choice because many of these other options can be utilized later on.