How to Apply for the Graduated Repayment Plan for Federal Loans

Quick Facts

• The Graduated Repayment PlanGraduated Repayment PlanA federal repayment plan where monthly payments start lower and increase roughly every two years, typically over a 10-year term. It is designed for borrowers who expect their income to rise over time. starts with smaller monthly payments and will rise every two years, making it easier for borrowers with limited current income.
• You need federal Direct or FFEL loans to qualify, so make sure your loan type is eligible before applying.
• The repayment term typically lasts 10 years but can extend up to 30 years if you consolidate your loans.

Overview

The Graduated Repayment Plan could offer immediate relief if you’re managing high student loan debt and need smaller payments right now. Your payments start low and increase every two years, making this a good option if you expect your income to grow.

But while this plan can give you breathing room in the short term, it’s important to know that you might pay more interest over time. If your financial situation stays the same, those higher payments could become challenging.

If you’re unsure whether this is the best plan for you, it’s okay to reassess. You have options, and you can switch plans or explore 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. later if your situation changes.

Related

• How Do I Change My Student Loan Repayment Plan?
• Parent PLUS Loan Repayment Options

How to Apply for the Graduated Repayment Plan

1. Confirm Eligibility

Before applying, let’s make sure you qualify. You’ll need to have federal Direct or FFEL loans, which are part of the federal student loan repayment program, to be eligible.

Related: How Do I Know if My Student Loans are Federal?

Head to studentaid.gov and log in to check your loan type, interest rate, and remaining balance. It’s important to confirm that your loans meet the eligibility criteria before moving forward so you don’t waste time applying for a loan program you don’t qualify for.

2. Contact 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.

Reach out to your lender or loan servicer—the company handling your student loan repayment. They’re there to help guide you through the process. You can usually apply online through their portal or give them a quick call to discuss your options.

If you’re still deciding between repayment plans like the Graduated Plan, 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. (IBR), or the Saving on a Valuable Education Plan, which replaced the Revised Pay As You EarnRevised 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. (REPAYE) Plan, your servicer can help you compare them 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 overall personal finance situation. It’s always good to explore what works best for you.

3. Fill Out the Repayment Plan Request Form

Be sure to select the Graduated Repayment Plan, but if you’re unsure about any part of the form, don’t hesitate to ask your servicer for guidance. They’re there to make sure everything’s correct.

4. Review the Terms

After applying, you’ll get confirmation from your servicer outlining your new payment terms. Take a moment to review how much your payments will increase over time and the total interest rate you’ll pay.

Understanding how your loan program works is essential to managing your payments, especially if you compare this to other plans like 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. options such as the SAVE planSAVE Plan (SAVE)The Saving on a Valuable Education Plan, a federal income-driven repayment plan introduced in 2023 to replace REPAYE. Its implementation has been subject to ongoing litigation, and enrolled borrowers have faced court-ordered forbearance periods. or the PSLFPublic 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. Program.

5. Begin Your New Payment Schedule

Once your application is approved, your loan servicer will send details about when your payments start under the Graduated Repayment Plan.

It’s helpful to track when your payment amounts will increase so you can stay ahead of your finances.

Keep in mind how this new plan fits into your overall personal finance strategy, from managing your credit score to balancing other commitments like private student loans or other financial goals.

How the Graduated Repayment Plan Works

The Graduated Repayment Plan is designed to give you lower initial monthly payments, which increase every two years.

If you’re just starting your career or going through a period of lower income, this plan offers you a chance to breathe while your payments remain manageable and grow alongside your expected income.

Here’s what you need to know:

Lower Initial Payments

Your monthly payments start smaller than those of other repayment options, like 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.. This can help if you’re just getting started in your career and managing multiple education loans or personal finance commitments.

Payment Increases Every Two Years

Every two years, your payments will increase, regardless of whether your income changes. This can be great if you anticipate income growth, but it’s important to be mindful of the risk if your financial situation stays the same.

We recommend tracking your discretionary income to stay ahead of the increases.

Repayment Term

The loan term usually lasts 10 years, much like the Standard Repayment Plan. But if you choose to consolidate your loans into a Direct Consolidation Loan, the term could extend up to 30 years.

This means lower monthly payments in the short term but higher interest rate costs in the long run.

Consolidation Impact

If you consolidate your federal loans—including FFELPFederal 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. loans—you can still choose the Graduated Plan.

Just keep in mind that consolidation could lengthen your repayment period, which may lower your payments but increase the total interest you’ll pay.

Weigh the long-term financial impact and compare this to options like student loan refinancing or other loan programs.

Higher Interest Costs

If you’re thinking long-term, consider options like deferment, refinancing, or even switching to a plan that better fits your evolving financial situation. Related: How to Refinance Student Loans

Graduated Repayment Plan vs. Other Repayment Plans

Choosing the right repayment plan depends on your financial situation and what you expect in the future. Here’s a comparison of the Graduated Repayment Plan with other options, each suited to different borrower needs:

• Graduated Repayment Plan: This plan works well if you expect your income to grow over time. It starts with lower payments, giving you breathing room early on. But keep in mind that payments will rise every two years, regardless of income.It’s a good choice if you’re confident your financial situation will improve, but you’ll pay more interest over time.
• 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.: If you have more than $30,000 in federal loans and need to keep monthly payments low, the Extended Repayment Plan might work for you. Payments are spread over 25 years, making it easier to manage your budget now.
• Income-Driven Repayment Plans: These plans base your payments on your discretionary income and family size, which makes them ideal if your earnings are lower or unpredictable. You could even qualify for loan forgiveness after 20-25 years.But if you don’t reach forgiveness, you could end up paying more over the life of the loan. It’s a flexible option if you need payments that match your current income.
• Standard Repayment Plan: If you’re looking to pay off your loans as quickly as possible and can afford higher monthly payments, the Standard Repayment Plan might be the best option.You’ll pay off your loans in 10 years with fixed payments, minimizing the total interest paid. This is a good fit for borrowers who want to minimize long-term costs and can now handle higher payments.

Pros and Cons of the Graduated Repayment Plan

Here’s a breakdown of the key benefits and drawbacks of the Graduated Repayment Plan:

Pros:

• Lower Initial Payments: A great option if you’re just starting your career or experiencing a period of lower income.
• Predictable Payment Increases: Payments rise at fixed intervals, so you’ll always know when they’re going up.
• Good for Short-Term Relief: Perfect if you’re expecting your income to grow in the near future.

Cons:

• Higher Interest Costs: Over time, you’ll pay more in interest than with other plans, such as the Standard Plan or IDR plans.
• Payment Increases Regardless of Income: Your payments will increase every two years, even if your income stays the same.
• Not Eligible for Loan Forgiveness: You won’t qualify for Public Service Loan Forgiveness or IDR forgivenessIDR ForgivenessThe forgiveness of any remaining federal student loan balance after a borrower has completed 20 or 25 years of qualifying payments under an income-driven repayment plan, depending on the specific plan. unless you switch to an IDR plan.

Example Payment Comparison Table

Here’s how the Graduated Repayment Plan stacks up against other repayment options based on different loan amounts. You’ll notice that while the initial payments are lower, the total interest costs can add up over time compared to other plans.

Loan Balance

Graduated Plan Initial

Graduated Plan Final

Extended Plan

Income-Driven Plan

Standard Plan

Total Interest (Graduated)

Total Interest (Extended)

Total Interest (Standard)

1. $30,000

$145

$265

$178

$100

$322

$27,800

$23,400

$8,600

2. $50,000

$242

$445

$297

$150

$537

$46,400

$39,000

$14,300

3. $100,000

$485

$890

$595

$300

$1,072

$92,800

$78,000

$28,600

Who Qualifies for the Graduated Repayment Plan?

1. Federal Loan Types

The Graduated Repayment Plan is available for most federal student loans, including:

• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS Loans (for graduate or professional students)
• FFEL Loans (both Subsidized and Unsubsidized)

If you have Parent PLUS Loans, don’t worry—you’re not out of options. You’ll need to consolidate them into a Direct Consolidation Loan to become eligible for the Graduated Repayment Plan.

2. Not Income-Based

This means your payments will increase every two years, no matter how much you earn. It’s a great option if you expect your income to grow, but it may not be the best fit if your financial situation is likely to remain steady or change unpredictably.

The good news?

You can always reassess and switch to another plan later if this one doesn’t feel right down the line.

3. Loan Balance

There’s no minimum loan balance requirement for the standard Graduated Repayment Plan.

But if you decide to consolidate your loans, the length of your repayment period may extend based on your total loan balance, which could stretch beyond the standard 10-year term.

While this can lower your monthly payments, it’s important to keep in mind that you’ll likely pay more in interest over time.

When to Consider the Graduated Repayment Plan

The Graduated Repayment Plan offers some breathing room with lower payments at the start, but it’s important to know when it’s the right choice for your situation. Here are a few scenarios where the plan might make sense for you:

You’re Early in Your Career

If you’re just starting out and expect your income to grow in the next few years, the Graduated Repayment Plan could be a smart way to ease into managing your loans.

Lower payments now allow you to focus on building financial stability while you get your career off the ground.

As your income rises, you’ll be better equipped to handle the higher payments, but remember that interest will add up over time, so it’s worth keeping an eye on that as you plan for the future.

You Anticipate Financial Growth but Need Flexibility Now

If you’re in a field like business, tech, or medicine, where your income is likely to grow, the Graduated Plan can give you the flexibility you need right now while waiting for your income to catch up.

Once your income increases, you can reassess and either stick with the plan or switch to something that aligns better with your long-term goals—like refinancing or paying off your loans more aggressively. This flexibility helps you adapt as your financial situation evolves.

You’ve Exhausted Forbearance Options

If you’ve run out of forbearance time but still need lower payments to get by, the Graduated Plan could offer the relief you’re looking for. This is particularly helpful during financial transitions, like changing careers or moving to a new city.

When your finances improve, you’ll have the option to switch to a repayment plan that’s more in tune with your goals, like an income-driven plan or something with more forgiveness options.

You Want a Predictable Payment Schedule

For borrowers who prefer a steady, predictable payment structure but need lower payments now, the Graduated Plan can be a good middle-ground.

Unlike income-driven repayment plans, your payments won’t fluctuate with your income, which gives you a better sense of what to expect month-to-month.

Just keep in mind that payments will go up every two years, regardless of your income. If you’re confident that your financial situation will improve, this predictability could be a real asset to your planning.

Other Repayment Options

• Standard Repayment Plan: Fixed monthly payments over 10 years. Learn more about the Standard Repayment Plan.
• Extended Repayment Plan: Spread payments over 25 years, lower monthly payments, and offer quick relief. Learn more about the Extended Repayment Plan.
• Income-Driven Repayment Plans: Payments are based on your income and family size, with potential loan forgiveness after 20-25 years. Learn more about Income-Driven Repayment Plans.
• Income-Sensitive Repayment Plan: Available for FFEL borrowers, this plan adjusts your monthly payments based on your income. Learn more about Income-Sensitive Repayment Plan.

Bottom Line

The Graduated Repayment Plan can provide short-term relief if you want lower payments. To apply, check your loan eligibility on studentaid.gov, then contact your loan servicer to discuss your options.

Fill out the Repayment Plan Request Form online, selecting the Graduated Plan. Review the terms, and you’re all set to begin your new payment schedule. If your situation changes, you can switch plans or refinance.

If you’re unsure which repayment plan is best for you, our team is here to help. Book a consultation with one of our student loan experts or sign up for our newsletter to stay informed on the latest changes and opportunities.