Overview

Graduate fellowships often cover tuition or provide a living stipend, but many students still carry federal or private education debt. Your repayment choices depend on the type of loan (Direct, FFEL, Grad PLUS, or private), whether your fellowship is taxable (affects your adjusted gross income), and your career plans. Use the steps below to pick the best path for your situation.

Key repayment options (what they are and when they help)

  • Income‑Driven Repayment (IDR) plans — including the current SAVE plan: IDR ties monthly payments to your income and family size, which can make early payments affordable for new grads with modest salaries. IDR can also lead to forgiveness after 20–25 years of qualifying payments. For details and plan comparisons, see our guide on choosing the right income‑driven repayment plan.

  • Internal link: choosing the right income‑driven repayment plan — https://finhelp.io/glossary/income-driven-repayment-plans-choosing-the-right-one-after-graduation/

  • Deferment and Forbearance: Short‑term postponement (deferment) or temporary payment reduction (forbearance) can help during unpaid fellowship work or a gap between degrees. Deferment may apply if you’re enrolled at least half‑time; check with your servicer because some fellowships do not qualify as enrollment for federal deferment.

  • Public Service Loan Forgiveness (PSLF) and other forgiveness programs: If you plan a career in qualifying public service, PSLF can cancel remaining Direct Loan balances after 120 qualifying payments while on qualifying repayment plans. Confirm eligibility and certify employment regularly.

  • Internal link: PSLF eligibility checklist — https://finhelp.io/glossary/pslf-public-service-loan-forgiveness-eligibility-checklist/

  • Consolidation and Eligibility Steps: Consolidating non‑Direct federal loans into a Direct Consolidation Loan can make them eligible for federal IDR plans and PSLF — but consolidation creates a new loan and can affect your qualifying‑payments count. Discuss timing with your servicer.

  • Refinancing (private lenders): Refinancing to a private lender can lower interest rates if you have strong income/credit, but doing so removes federal protections (IDR, PSLF, deferment). If you might pursue forgiveness or need flexible relief, be cautious.

  • Internal link: refinancing timing and eligibility — https://finhelp.io/glossary/refinancing-student-loans-for-changing-career-and-earnings-paths/

Practical steps to choose and set up a plan

  1. Inventory your loans: Log in at your loan servicer(s) and the federal loan dashboard to confirm loan types and balances (Direct vs FFEL vs private). U.S. Dept. of Education’s Repayment Plans page is the authoritative reference for federal options (studentaid.gov).
  2. Estimate payments under SAVE/other IDR: Use your recent tax return or pay stubs. Remember fellowship stipends that are taxable increase AGI and can raise IDR payments. When in doubt, ask your servicer how they treat stipend income for payment calculation.
  3. Certify work for PSLF if eligible: Submit the PSLF Employment Certification Form annually or when you change jobs, and track qualifying payments.
  4. Consider consolidation only when it improves eligibility: Consolidation can help make loans PSLF‑eligible, but it also creates a new loan—verify how many qualifying payments will carry forward.
  5. Avoid refinancing federal loans if you need federal benefits: Private refinancing eliminates IDR eligibility and PSLF. Use refinancing only when you have stable income and no need for federal protections (see CFPB guidance on private refinancing risks).

Real‑world example

In my practice I worked with Sarah, a grad student who received a tuition fellowship plus a taxable stipend and had federal Grad PLUS loans from a prior year. We confirmed her loans were Direct eligible after consolidation and enrolled her in SAVE. Her initial monthly payment fell to a manageable level tied to her low entry salary, and she certified public‑service work to preserve PSLF eligibility.

Common mistakes to avoid

  • Assuming all fellowships qualify you for in‑school deferment—some stipend‑only fellowships don’t meet servicer criteria.
  • Refinancing federal loans before confirming you won’t need IDR or PSLF protections.
  • Failing to recertify income on IDR plans each year; late recertification can cause retroactive interest capitalization.
  • Not certifying PSLF employment annually; that undermines proof of qualifying service.

Quick checklist (next actions)

  • Confirm each loan’s type and servicer.
  • Decide whether federal benefits (IDR, PSLF) matter for your career path.
  • If you plan public service, submit PSLF employment certification yearly.
  • If considering refinancing, compare private offers and weigh loss of federal protections (see CFPB resources).
  • Contact a certified financial planner or your loan servicer for personalized advice.

Authoritative sources

Professional disclaimer

This article is educational and not individualized financial advice. For help tailored to your loans and tax situation, consult your loan servicer or a certified financial planner.

If you want, I can draft a one‑page checklist tailored to your loan types and expected salary to help pick the best option.