Managing student loan debt is a critical concern for the vast majority of Americans. As there have been recent policy shifts at the federal level, it has become more important than ever to understand how monthly payments can be reduced.
Income-Driven Repayment Plans
Income-Driven Repayment (IDR) plans are based on family size and income, and can reduce your burden. These options have recently undergone revisions.
In February 2025, the 8th Circuit Court of Appeals issued an injunction impacting the Biden Administration’s Saving on a Valuable Education (SAVE) plan and other IDR plans. This caused online applications for the repayment plans to be temporarily halted.
The US Department of Education reopened IDR plans and loan consolidation applications on March 26, 2025, as per the court order. Borrowers can now submit applications for plans like Income-Based Repayment, Pay As You Earn, and Income-Contingent Repayment with new applications on StudentAid.gov.
Consolidation loans
Consolidating multiple federal student loans into a Direct Consolidation Loan may simplify repayment and might lower monthly payments by extending the repayment period. Remember, however, that the extended repayment period will also increase the total amount of interest you’ll pay during the loan’s lifetime.
Extended and graduated repayment plans
- Extended repayment plan: This plan can be used by borrowers with over $30,000 in Direct Loans to repay the loan within a period not exceeding 25 years, with reduced monthly payments. While it lowers the monthly payment, it can result in more interest over the long term.
- Graduated repayment plan: Payments are low initially and increase every two years, with a 10-year (or 30-year for consolidation loans) repayment term. It is best for borrowers who expect their income to grow regularly over the years.
- Deferment and forbearance: If you’re having a difficult time making ends meet, you may qualify for deferment or forbearance, which allows you to temporarily postpone or reduce your loan payments. Remember that interest may continue to accumulate during these periods, based on the loan type.
Recent policy changes influencing repayment
Recent Trump administration developments have caused Student Loan Repayment Programs to take dramatic twists. As of March 20, 2025, an executive order began making plans to eliminate the US Education Department, putting four popular federal student loan repayment programs in limbo. This has doubled the monthly payment for some borrowers from $500 to $5,000.
Steps to take now
As the landscape of student loan repayment continues to change, borrowers can remain:
- Informed: Check government websites like StudentAid.gov regularly to search for repayment options and policy changes.
- Call your loan servicer: Contact your loan servicer to ask about repayment plans and decide on the best course of action.
- Analyze financial implications: Utilize tools such as the Loan Simulator at StudentAid.gov to estimate how various repayment options would impact your monthly payment and overall cost of the loan.
- Obtain professional guidance: Consult with a financial advisor regarding the long-term implications of various repayment options.
