What Is The Graduated Repayment Plan?

Federal student loan holders can choose from several repayment options, including standard and graduated repayment plans. Unlike the standard repayment plan, which has fixed payments, the graduated repayment plan begins with low monthly payments that increase every two years.

The graduated repayment plan could be beneficial if you’re a recent graduate with a lower starting salary who prefers lower initial monthly payments. Before you decide to use this plan to repay your student loans, weigh the pros against the cons to see if it’s right for you.

How the graduated repayment plan works

Under the graduated repayment plan, your monthly payment starts low and gradually rises every two years. The repayment term is usually 10 years, but up to 30 years for consolidated loans. Your payments during the plan will never be less than the interest that grows between payments.

Nonconsolidated loans

If you choose the graduated repayment plan and you have a nonconsolidated loan, the U.S. Department of Education will determine your payments. In general, your payments will start at around 50 percent of what you’d pay on the standard repayment plan and will finish at around 150 percent of what you’d pay on the standard repayment plan.

• Repay loan in 10 years
• Monthly payment increases every two years
• Never pay less than interest that accrues between payments
• Monthly payments won’t be three times greater than other plans

Consolidated loans

If you have a consolidated loan, your payment timeline will look slightly different. If you have less than $7,500 in consolidated loans, your repayment period will still be 10 years. If you owe between $7,500 and $10,000, you’ll repay over 12 years. That repayment period increases the larger your total loan balance.

The Department of Education’s Loan Simulator can help you determine if the graduated repayment plan is a good option for your student loans. Consider your career and long-term income trajectory before enrolling to ensure the monthly payments will be manageable.

• Repay loan in 10 to 30 years
• Monthly payments increase every two years
• Never pay less than interest that accrues between payments
• Monthly payments won’t be three times greater than other plans

Graduated repayment plan: Pros and cons

The graduated repayment plan doesn’t operate like an income-driven repayment (IDR) plan. If your income doesn’t increase over time, you’ll still be on the hook for the increased payments near the end of your plan.

Pros

• Low monthly payments to start
• Pay off debt in as little as 10 years

Cons

• Higher interest payments than the standard repayment plan
• Payments increase over time
• Payments under this plan don’t count toward Public Service Loan Forgiveness

Bottom line

Enrolling in a graduated repayment plan could make sense if you want to take advantage of the lower payments for the first few years. But consider the major drawbacks of this plan first, like higher total borrowing costs than the standard repayment plan, before using it to pay back your federal student loans.

If you need help deciding which repayment plan is best for you, use the Federal Student Aid Loan Estimator, or use the student loan calculator to help you with your repayment strategy.

Frequently asked questions

• Will graduated payment student loans be forgiven?
  

  Unlike income-contingent and income-based plans, graduated payment plans are not automatically forgiven after 25 years of repayment. Graduated repayment plans are not eligible for Public Service Loan Forgiveness (PSLF).

• What is the difference between a fixed and graduated repayment plan?
  

  Under a fixed repayment plan or standard repayment plan, your payments are the same for 10 years (up to 30 years for consolidated loans). This is the most aggressive payment plan, which allows you to pay off your loans completely in a decade.

• How do you switch to the graduated repayment plan?
  

  To change your existing payment plan, contact your loan servicer or fill out and submit the repayment plan request form, which expires on April 30, 2026.