How to Change Your Student Loan Repayment Plan

How to Change PlansPlan OptionsBottom Line

If you’re having trouble making payments on your federal student loans, you can change your repayment plan as many times as you need to get a payment you can afford. Plus, you can switch plans at any time. Some private student loanPrivate Student LoanA student loan issued by a bank, credit union, or other private lender rather than the federal government. Private loans generally lack federal protections like income-driven repayment and broad forgiveness programs. lenders offer similar payment flexibility — at least temporarily. Contact your servicer or check your promissory notePromissory NoteThe legal contract a borrower signs to receive a loan. It sets out the amount borrowed, the interest rate, repayment terms, and the borrower's obligations to the lender. to discover the options you have to lower your monthly payments.

It makes sense to change plans if you need a lower monthly payment or want to qualify for loan forgiveness after 20-25 years of payments. But if you want to get rid of the interest that’s accrued on your loans, switching plans won’t help. It could make things worse. Changing plans can capitalize unpaid interest, increasing the amount you owe.*

Related: What Happens to Student Loans After 25 Years?

Keep reading to learn how to change repayment plans, when switching plans is right for you, and other ways to lower your student loan bill.

\* The Education Department has proposed to end interest capitalization at the end of a deferment or forbearance or when you defaultDefaultThe status of a federal student loan after the borrower has failed to make required payments for 270 days. Default can trigger collection actions such as wage garnishment, tax refund offset, and damage to credit reports.. But the proposed rules changes won’t stop accrued interest from being added to your original loan balance when you move from one repayment plan to another. That type of change will require federal lawmakers to pass a new law.

How to change your student loan repayment plans

Switching your repayment plan is easy, and you can do it for free. Just follow these steps:

1. Find out what type of loans you have. Use the Federal Student AidFederal Student Aid (FSA)The office within the U.S. Department of Education that manages federal grants, work-study, and student loans. It runs the FAFSA, the StudentAid.gov website, and oversees the federal loan servicers. website, studentaid.gov, to see what kind of loans you have. If you have Parent PLUS Loans, Federal Perkins Loans, or loans made under the Federal Family Education Loan ProgramFederal Family Education Loan Program (FFELP)The federal program that guaranteed student loans made by private lenders through 2010. Loans issued under this program are commonly called FFELP loans and are still held by millions of borrowers., you’ll need to consolidate your loans into a Direct Consolidation to qualify for the best repayment options and the latest forgiveness programs. Read more about consolidation and student loan forgiveness.
2. Estimate your monthly payments. You can use the Education Department’s Loan Simulator to figure out how much your monthly payments would be under different repayment plans based on your adjusted gross incomeAdjusted Gross Income (AGI)A borrower's total taxable income minus specific deductions, as reported on a federal tax return. Federal income-driven repayment payments are generally calculated using AGI. and family size. You’ll also be able to see how your payments will change over time and the amount of interest that will be added to your balance during the loan term.
3. Complete the paperwork. You’ll need to complete a request form to switch to an income-driven repaymentIncome-Driven Repayment (IDR)A category of federal student loan repayment plans that calculate monthly payments based on income and family size rather than loan balance. Any remaining balance can be forgiven after 20–25 years of qualifying payments. plan like IBR or REPAYERevised Pay As You Earn (REPAYE)A former federal income-driven repayment plan that capped payments at 10% of discretionary income, with forgiveness after 20 or 25 years. REPAYE was replaced by the SAVE Plan in 2023.. You can apply online at studentaid.gov or submit a paper application to your servicer.
4. Follow-up with your servicer. Changing repayment plans can take a few weeks. Make sure you reach out to your student loan servicerLoan ServicerThe company that manages a borrower's federal student loan account, processes payments, and handles applications for repayment plans, deferment, forbearance, and forgiveness on behalf of the U.S. Department of Education. to determine your payment amount and due date. And if you signed up for an IDR Plan, ask the servicer for your IDR recertification date. That’s the deadline for submitting updated income and family size information to your servicer to remain in your chosen plan.

FYI. Paying your loans back under an income-based plan like the Pay As You Earn or Income-Contingent RepaymentIncome-Contingent Repayment (ICR)The oldest federal income-driven repayment plan, with payments generally set at 20% of discretionary income or a fixed 12-year amount, whichever is lower. It is the only IDR plan available to Parent PLUS borrowers after consolidation. Plan won’t lower your credit score. So long as you pay your bills on time, your score should increase throughout the repayment term.

Related: IDR Waiver Student Loans

Options to switch repayment plans

Most federal student loan borrowers have five repayment options to choose from. Some base your monthly payment on your income and family size, while others have a fixed monthly payment. The best plan for you depends on your budget, how much you owe, and whether you want to qualify for loan forgiveness.

• You need a lower monthly payment. Choose one of the income-driven repayment plans — IBR, ICR, PAYEPay As You Earn (PAYE)A federal income-driven repayment plan that caps monthly payments at 10% of discretionary income and forgives remaining debt after 20 years. It is only available to borrowers who took out their first federal loans on or after October 1, 2007., and REPAYE.
• You’re retiring. Moving to a payment plan based on your discretionary incomeDiscretionary IncomeFor federal income-driven repayment plans, a borrower's adjusted gross income minus a set percentage of the federal poverty guideline for their family size. Monthly IDR payments are calculated as a percentage of this amount. and family size can drop your bill to zero each month if your only source of money comes from Social Security benefits. Read more about student loan forgiveness for seniors.
• You have Parent PLUS Loans. See if consolidating your loans and enrolling in the ICR plan will give you an affordable payment. Read more about Parent PLUS Loan forgiveness & retirement.
• You’re working on Public Service Loan ForgivenessPublic Service Loan Forgiveness (PSLF)A federal program that forgives the remaining balance on Direct Loans after 120 qualifying monthly payments made while working full-time for a government or qualifying nonprofit employer.. Sign up for an IDR Plan like income-based repaymentIncome-Based Repayment (IBR)A federal income-driven repayment plan that caps monthly payments at 10% or 15% of discretionary income, depending on when the loans were taken out. Remaining debt is forgiven after 20 or 25 years of qualifying payments. and consolidate any loans made under the Perkins or FFEL Program into a Direct LoanDirect LoanA federal student loan made directly by the U.S. Department of Education under the William D. Ford Federal Direct Loan Program. Most federal student loans issued since 2010 are Direct Loans.. Related: Should I consolidate my student loans for PSLF?
• You’re waiting for loan forgiveness after 20 years. Enroll in the best IDR Plan for your situation. Read more about student loan forgiveness after 20 years.
• You have a high income. Compare your payments under the Graduated or Extended Repayment PlanExtended Repayment PlanA federal repayment plan that stretches payments out up to 25 years for borrowers with more than $30,000 in Direct or FFELP loans. Monthly payments are lower than the Standard Plan, but total interest paid is higher. to what your bill would be under one of the IDR plans. Read more about IDR income limits.
• You’re worried about interest. Switch to the Standard Repayment PlanStandard Repayment PlanThe default federal repayment plan, which spreads loan payments evenly over 10 years — or up to 30 years for consolidation loans. It usually results in the lowest total interest paid among federal plans. and pay your student loan debt as quickly as possible. RefinancingRefinancingTaking out a new private loan to pay off one or more existing student loans, usually to lower the interest rate or change the repayment term. Refinancing federal loans into a private loan eliminates federal benefits like IDR and PSLF. is another option — especially if you can score a lower interest rate. But if you refinance, you’ll lose federal benefits like debt cancellation, deferment, forbearance, and so on. Read more about how to refinance federal student loans.

Learn More: How to Reduce Student Loan Payments

Bottom Line

You can switch plans at any time throughout your repayment period if you have a student loan from the U.S. Department of EducationU.S. Department of Education (ED)The federal agency that oversees federal student aid programs, issues regulations for federal student loans, and is the ultimate lender on Direct Loans.. But there’s a cost to this freedom: the total amount you owe may increase rapidly due to interest capitalizationInterest CapitalizationThe addition of unpaid interest to the principal balance of a loan. After capitalization, interest begins accruing on the new, larger principal, which increases the total cost of repayment..

If you work in public service or plan to have your remaining balance forgiven after 20 years of payments, that’s not a problem. The government will write off the debt no matter how much interest is added to your balance.

Switching to the Standard Plan is better if your goal is to pay off your loans quickly. The move won’t change your interest rate or lower your bill. But it will reduce the amount of interest that accumulates on your loans, lowering the total loan amount you’ll pay back.

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