Welcome to the Make Lemonade Student Loan Repayment Guide
There are many options for student loan repayment, ranging from student loan refinancing to income-driven repayment plans. In this student loan repayment guide, we will cover everything you need to know about the best ways to pay off student loans.
You may have done your homework, explored your student loan refinancing options, understand which student loans you have and how much you are paying currently, but you still aren’t sure if you are on the best student loan repayment plan for your budget. You dive into all of the options for student loan repayment, but now you find yourself feeling like you’ve got more choices than a buffet.
Don’t stress — we’ll make it easy for you.
Explore our easy to follow Make Lemonade Student Loan Repayment Guide below and we will help you figure out which options can meet your student loan repayment needs. Make Lemonade has a helpful Student Loan Forgiveness Guide as well, but this student loan repayment guide is for those borrowers looking at the student loan repayment options, when student loan forgiveness is not an option for you.
The first group contains the traditional student loan repayment plans. These plans are what you will originally be offered when your student loan repayment period starts. They have nothing to do with how much you earn or how much you borrowed and can be used to repay just about any kind of student loan.
The second group of student loan repayment plans are options for borrowers to structure their student loan repayment based on their income. These plans each have specific benefits and limitations. In most cases, these student loan repayment plans reduce your monthly payments, but may extend the life of your student loan. These plans are only available to certain federal student loans. While the highlights of the student loan repayment plans are below to help you compare – as with any dotted line you planning on signing your name to – we encourage you to read the fine print before making it final!
Compare rates and pay off student loans faster
With student loan refinancing, you can combine existing federal and private student loans into a single student loan with a personalized lower interest rate and lower monthly payment.
Compare The Best Student Loan Refinance Rates For 2021
Overview
| Key | Value |
|---|---|
| Variable Rates: | 2.25% – 6.43% |
| Fixed Rates: | 2.99% – 6.88% |
| Minimum Credit Score: | 650 |
| Minimum Income: | None |
| Fees: | None |
| Minimum Loan Amount: | $5,000 ($10,000 in CA) |
Details
| Key | Value |
|---|---|
| Eligible Loans: | Private & Federal |
| Eligible Degrees: | Undergraduate & Graduate |
| Loan Terms: | 5, 7, 10, 15, 20 years |
| Borrower Residency: | All states |
| Hardship Deferment: | Yes |
| Co-signer Option: | Yes |
Overview
| Key | Value |
|---|---|
| Variable Rates: | 1.99% – 5.74% |
| Fixed Rates: | 2.98% – 5.89% |
| Minimum Credit Score: | 650 |
| Minimum Income: | None |
| Fees: | None |
| Minimum Loan Amount: | $5,000 |
Details
| Key | Value |
|---|---|
| Eligible Loans: | Private & Federal |
| Eligible Degrees: | Undergraduate & Graduate |
| Loan Terms: | 5-20 years |
| Borrower Residency: | All States except KY or NV |
| Hardship Deferment: | Yes |
| Co-signer Option: | No |
Overview
| Key | Value |
|---|---|
| Variable Rates: | 2.39% – 6.01% |
| Fixed Rates: | 2.79% – 5.99% |
| Minimum Credit Score: | 680 |
| Minimum Income: | $35,000 |
| Fees: | None |
| Minimum Loan Amount: | $15,000 |
Details
| Key | Value |
|---|---|
| Eligible Loans: | Private & Federal |
| Eligible Degrees: | Undergraduate & Graduate |
| Loan Terms: | 5, 7, 10, 15, 20 years |
| Borrower Residency: | All States |
| Hardship Deferment: | Yes |
| Co-signer Option: | Yes |
Overview
| Key | Value |
|---|---|
| Variable Rates: | 1.89% – 6.66% |
| Fixed Rates: | 2.63% – 6.63% |
| Minimum Credit Score: | 660 |
| Minimum Income: | None |
| Fees: | None |
| Minimum Loan Amount: | $5,000 |
Details
| Key | Value |
|---|---|
| Eligible Loans: | Private & Federal |
| Eligible Degrees: | Undergraduate & Graduate |
| Loan Terms: | 5 – 20 years |
| Borrower Residency: | All states |
| Hardship Deferment: | Varies |
| Co-signer Option: | Yes |
Overview
| Key | Value |
|---|---|
| Variable Rates: | 1.89% – 5.90% |
| Fixed Rates: | 2.80% – 6.00% |
| Minimum Credit Score: | 700 |
| Minimum Income: | None |
| Fees: | None |
| Minimum Loan Amount: | $5,000 |
Details
| Key | Value |
|---|---|
| Eligible Loans: | Private & Federal |
| Eligible Degrees: | Undergraduate & Graduate |
| Loan Terms: | 5, 7, 10, 15, 20 years |
| Borrower Residency: | All States |
| Hardship Deferment: | Yes |
| Co-signer Option: | Yes |
Overview
| Key | Value |
|---|---|
| Overall Rate: | 1.95% – 3.85% |
| Variable Rates: | – |
| Fixed Rates: | 1.95% – 3.85% |
| Minimum Credit Score: | None |
| Minimum Income: | None |
| Fees: | None |
| Minimum Loan Amount: | $25,000 |
Details
| Key | Value |
|---|---|
| Eligible Loans: | Private & Federal |
| Eligible Degrees: | Undergraduate & Graduate |
| Loan Terms: | 5, 7, 10, 15 years |
| Borrower Residency: | Must live near a branch in California; New York City; Boston; Greenwich, Connecticut; Palm Beach, Florida; Portland, Oregon; or Jackson, Wyoming |
| Hardship Deferment: | No |
| Co-signer Option: | Yes |
Overview
| Key | Value |
|---|---|
| Variable Rates: | 1.99% – 5.25% |
| Fixed Rates: | 2.95% – 8.28% |
| Minimum Credit Score: | 680 |
| Minimum Income: | $24,000 |
| Fees: | None |
| Minimum Loan Amount: | $5,000 |
Details
| Key | Value |
|---|---|
| Eligible Loans: | Private & Federal |
| Eligible Degrees: | Undergraduate & Graduate |
| Loan Terms: | 5, 7, 10, 15, 20 years |
| Borrower Residency: | All states, except ME, ND, NV, RI, WV |
| Hardship Deferment: | Yes |
| Co-signer Option: | Yes |
Traditional Student Loan Repayment Plans
Standard Student Loan Repayment
Standard Student Loan Repayment is just what is sounds like. Take no action and this is likely where you will land. All student loans are eligible for this type of student loan repayment and the maximum term is 10 years. Payments are fixed and because you make a higher monthly student loan payment compared to other student loan repayment plans, not only do you pay your student loans quickly, but also you pay less over the long term. Take that, interest and compound interest!
Extended Student Loan Repayment
The Extended Student Loan Repayment gives you a little breathing room and does exactly what it suggests – extends the length of your student loan repayment.
Payments Based On What You Earn
Payments Based On What You Earn, otherwise known as Income Driven Plans, are only available for certain federal student loans (not private student loans), and they use different formulas to calibrate your student loan payments based on your income. The federal student loans generally must be consolidated under the Federal Direct Loan Program (FDLP) or must be paid through the Federal Family Education Loan Program (FFEL). You have to apply for these programs through the U.S. Department of Education.
If you qualify, these student loan repayment plans almost always result in lower monthly student loan payments and student loan forgiveness as to any remaining balance at the end of the student loan repayment tern. You will pay income tax on the remaining amount to be forgiven (only in the year it is forgiven).
Income Contingent Repayment
Income Contingent repayment, or ICR is, like all of IDR plans, directed at reducing the burden of repaying high student loan debt on borrowers with lower income. It specifically considers those borrowers working in public service. In order to qualify for ICR, you must have consolidated your student loans through the FDLP student loan consolidation. Parent PLUS Loans are not eligible for the ICR program, but Direct Parent PLUS Loans, which are part of a student loan consolidation, are eligible.
The maximum student loan repayment period under this plan is 25 years. Like all IDR plans, at the end of the student loan repayment period, any remaining debt is forgiven. The student loan interest rate is fixed, but you are not locked into ICR for life and you may switch plans if you choose. Unpaid student loan interest can only be capitalized at 10 percent of the original loan amount. Your student loan payment will change every year depending on your income and family size. Depending on those numbers, if your salary increases, you could be repaying your student loan at a rate even higher than the 10-year standard student loan repayment plan.
You can calculate your monthly student loan payments and student loan forgiveness with the Make Lemonade Student Loan Income-Contingent Repayment (ICR) Calculator.
Income Based Repayment
Income Based Repayment, or IBR, requires you to have a partial financial hardship to qualify. IBR generally has a broader reach than ICR and is available under both FFEL and FDLP. Neither Parent PLUS loans nor Direct Parent PLUS loans are eligible.
That said, your student loan payment will never be set at a rate higher than the 10-year standard repayment plan. Depending on when you borrowed, your student loan repayment plan will either be 20 or 25 years. As with all of the IDR plans – at the end of the student loan repayment period, the remaining balance is forgiven.
Pay As You Earn (PAYE)
Pay As You Earn, or the PAYE plan, is an income-driven repayment plan that was created in 2012 in order to relieve student loan debt and was specifically directed at students graduating that year. As a result, PAYE has very specific requirements and is only available to a narrow group of borrowers. However, if you graduated in 2012 (or if you took out loans after Oct 1, 2007 and received a disbursement after October 1, 2011), this student loan repayment plan could be for you. Like IBR, you must prove that a 10-year standard repayment plan will not be affordable for you. Generally, payments are capped at 10 percent of your discretionary income, but like IBR, even if your income goes up, payments will never be higher than the 10-year Standard Repayment Plan amount.
You can calculate your monthly student loan payments and student loan forgiveness with the Make Lemonade Pay As You Earn (PAYE) Calculator.
One More Thing…
Revised Pay As You Earn (REPAYE)
Revised Pay As You Earn, or the REPAYE plan, is an income-driven repayment plan that was announced as a revision to the PAYE program. Unlike PAYE, which is targeted at 2012 grads, REPAY is available to anyone with federal direct loans. Also unlike PAYE, you do not have to prove that the 10-year standard repayment program is unaffordable for you, so borrowers at any income level can apply.
If you have undergraduate student loans, your student loan payments will end after 20 years, and if you have graduate student loans, your student loan payments will end after 25 years. Generally, student loan payments will be capped at 10 percent of your discretionary income. REPAYE also provides an interest subsidy payment to borrowers in cases where payments under the REPAYE plan cannot keep up with accrued interest on the student loans.
One word of caution – like the ICR plan – if your income ever spikes, you could find yourself making very high payments. You must recertify every year and student loan payments will always be based on income (and will never be capped, even at the 10-year standard rate).
