Can You Change Student Loan Repayment Plans?

Federal student loans offer various repayment plans designed to accommodate different financial situations. Borrowers are not permanently tied to their initial repayment plan and can change it at any time to better suit their current financial needs. This flexibility ensures payments remain manageable, even if income or family size changes.

Understanding Available Repayment Plans

Federal student loan repayment options fall into two categories: fixed payment plans and income-driven repayment (IDR) plans. Fixed payment plans, such as the Standard, Graduated, and Extended plans, determine monthly payments based on the loan balance, interest rate, and a set repayment period. In contrast, IDR plans adjust payments according to a borrower’s income and family size.

The Standard Repayment Plan involves fixed monthly payments over a 10-year term for most loans, or up to 30 years for consolidation loans. This plan results in the lowest total interest paid over the life of the loan, but it may have higher monthly payments. If a borrower does not select a plan, they are placed on the Standard Repayment Plan.

The Graduated Repayment Plan starts with lower monthly payments that gradually increase over a 10-year period, or up to 30 years for consolidation loans. This plan can be suitable for borrowers who anticipate their income will rise over time.

The Extended Repayment Plan allows for lower fixed or graduated payments over a period of up to 25 years. To qualify, a borrower must have more than $30,000 in outstanding Direct Loans or Federal Family Education Loan (FFEL) Program loans.

Income-Driven Repayment (IDR) plans offer payments based on a percentage of a borrower’s discretionary income. These plans can significantly reduce monthly payments depending on income and family size. Loan balances may be forgiven after 20 or 25 years of payments.

Specific IDR plans include Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Saving on a Valuable Education (SAVE) plans. Eligibility and payment calculations vary, with some plans capping payments at the Standard Repayment Plan amount. Borrowers pursuing Public Service Loan Forgiveness (PSLF) often enroll in an IDR plan, as qualifying payments count towards the 120 required payments for PSLF.

Preparing to Change Your Repayment Plan

Before changing a student loan repayment plan, borrowers should assess their financial situation and understand current loan details. This involves gathering information such as the loan servicer, loan types (e.g., Direct Loans, FFEL Program loans), outstanding balance, and interest rates for each loan.

Borrowers need to determine their current income and family size, as these are factors for eligibility and payment calculation under income-driven plans. For income verification, recent federal income tax returns or transcripts are typically used, or proof of income like pay stubs if tax information is not current or available. If married, spousal income may also be required, depending on the tax filing status and the specific IDR plan.

Utilizing tools like the Loan Simulator on StudentAid.gov can help compare different repayment plans and estimate potential monthly payments. This simulator allows borrowers to input their financial data and see how various plans would affect their payments and total interest paid over time. After reviewing the options, borrowers can identify the most suitable repayment plan for their circumstances.

Once a new plan is selected, borrowers need to access the appropriate forms, such as the Income-Driven Repayment Plan Request for IDR plans, available on StudentAid.gov or through the loan servicer. The forms require personal details, employment information, and financial data. For IDR plans, consent can be provided to retrieve federal tax information directly from the IRS, which expedites the application process.

Steps to Change Your Repayment Plan

The process for changing a federal student loan repayment plan involves submitting a formal request to your loan servicer. For income-driven repayment plans, borrowers can apply online through their StudentAid.gov account. Logging into this account with a Federal Student Aid (FSA) ID is the first step in accessing the online application.

Within the online portal, borrowers navigate to the section for changing repayment plans or applying for an IDR plan. The online application guides the user through confirming contact and personal information, reviewing federal loan details, and entering or transferring financial information. If income documentation is required and tax information cannot be linked, the system often allows for uploading relevant documents like pay stubs.

Once all required information is entered and reviewed, the borrower must agree to the terms and conditions before submitting the application. For paper submission, the Income-Driven Repayment Plan Request form can be downloaded from StudentAid.gov, completed, and then mailed or faxed to the loan servicer. If you have loans with multiple servicers, submit a separate request to each for the loans they manage.

What Happens After Changing Your Plan

After submitting a request to change a repayment plan, borrowers should anticipate a processing period. For online IDR applications, a confirmation email is sent shortly after submission. The processing time for repayment plan changes, particularly for IDR plans, takes about 30 days, though delays can occur due to high volume. Some servicers may place loans into a processing forbearance during this time, meaning no payments are due, but interest may continue to accrue.

The loan servicer will notify the borrower once the request has been processed and approved. This notification will include details of the new repayment plan, the updated monthly payment amount, and the effective date of the change. Borrowers should monitor their loan servicer account online for updates and to confirm the new plan is in effect.

It is also important to check the due date of the first payment under the new plan and adjust any automatic payment settings as needed. For IDR plans, borrowers will need to recertify their income and family size annually to maintain their eligibility and adjust their payment amount. The loan servicer will provide reminders when recertification is due, and providing consent to access federal tax information can automate this annual process.