8 Student Loan Repayment Plans Explained

2. Graduated Repayment Plan

What it is: Graduated repayment starts with lower payments that increase every two years, typically over a 10-year term. It aims to match payments with expected income growth. Who it fits: Borrowers who expect steady salary increases and need lower payments early on. How payments work: Initial payments are smaller than the standard plan and step up in scheduled increases until the loan is paid. Pros: Lower early payments ease initial budgets; predictability of scheduled increases helps with planning. Cons: More interest accrues early, so total interest paid is higher than with the standard plan. How to decide: Run a simulation that compares your likely future income against the stepped payments. Action steps: If you choose this plan, set reminders for each increase and re-evaluate if income doesn’t grow as expected.