Overview of Federal Repayment Plans
Federal student loans come with several repayment plans. The plan you choose determines your monthly payment amount, the length of time you'll be in repayment, and the total interest you pay over the life of the loan. Repayment plans generally fall into two categories: traditional (or fixed) plans and income-driven repayment (IDR) plans.
Traditional plans base your monthly payment on the amount you borrowed and the plan's repayment term. Income-driven plans base your payment on your adjusted gross income and family size, and any remaining balance is forgiven after a set number of years.
Keep in mind that the federal repayment landscape is changing. For new loans first disbursed on or after July 1, 2026, only two repayment plans will be available: a restructured Standard plan with a repayment period ranging from 10 to 25 years, and a new income-driven Repayment Assistance Plan (RAP) with a 30-year repayment period. Borrowers with older loans may continue to use existing plans or opt into the new RAP. If you are currently in an income-driven plan like ICR, PAYE, or SAVE, you will need to transition to a new plan by July 1, 2028.
Sources: Stanford University, Mohela / Federal Student Aid, Edfinancial Services / Federal Student Aid
Standard and Graduated Repayment Plans
The Standard Repayment Plan is the default plan for federal student loans. Payments are fixed over a 10-year term, which typically means higher monthly payments than other plans but the lowest total interest cost. If you do not choose a plan, you'll be placed on the Standard plan.
The Graduated Repayment Plan is designed for borrowers who expect their income to increase over time. Payments start lower and increase every two years, typically over a 10-year term. While the early payments are more manageable, the total interest cost is higher than the Standard plan because you pay less principal in the early years.
Sources: Mohela / Federal Student Aid
Extended Repayment Plan
The Extended Repayment Plan stretches your repayment term up to 25 years, which lowers your monthly payment compared to the Standard plan. You can choose fixed or graduated payments. However, eligibility is limited to borrowers with more than $30,000 in outstanding federal student loans. Because the repayment term is longer, you will pay more interest over time compared to the Standard plan.
Sources: Mohela / Federal Student Aid
Income-Driven Repayment Plans: What You Need to Know
Income-driven repayment (IDR) plans calculate your monthly payment based on your adjusted gross income and family size, rather than the amount you owe. These plans require you to recertify your income and family size each year.
There are several IDR plans, including Income-Based Repayment (IBR), Pay As You Earn (PAYE), Income-Contingent Repayment (ICR), and the Saving on a Valuable Education (SAVE) plan. Each has different payment formulas and forgiveness timeframes. Some plans are being phased out: PAYE and ICR will no longer be available after July 1, 2028. Borrowers currently enrolled in ICR, PAYE, or SAVE must transition to a new plan by that date; if no selection is made, they will be moved into the new RAP.
PAYE payments are typically 10% of discretionary income, with forgiveness after 20 years.
All IDR plans are eligible for Public Service Loan Forgiveness (PSLF), and forgiveness under PSLF is currently non-taxable. At the end of an IDR repayment term, any remaining balance is forgiven, but the forgiven amount is generally considered taxable income. IDR plans can lower your monthly payment, but they may also increase the total amount you pay over time because you are in repayment longer.
Sources: Mohela / Federal Student Aid, Edfinancial Services / Federal Student Aid, NerdWallet
The Repayment Assistance Plan (RAP)
The Repayment Assistance Plan (RAP) is a new income-driven repayment plan that will be available for loans first disbursed on or after July 1, 2026. It will also be the default plan for borrowers who do not select a plan after their existing plan ends.
RAP bases monthly payments on adjusted gross income and family size, with payments ranging from 1% to 10% of your AGI. For those earning $10,000 or less, the minimum payment is $10. The repayment term is 30 years, and any remaining balance is forgiven after that period.
RAP includes an interest subsidy: if your monthly payment is less than the interest that accrues, the unpaid interest is waived. It also includes a matching principal payment, which reduces your principal balance by at least $50 per month for qualifying full and on-time payments.
RAP is not available for parent PLUS loans, even if they are consolidated. If you have existing loans, you may be able to switch to RAP, but you should consider the implications for your loan term and total interest.
Sources: Edfinancial Services / Federal Student Aid, NerdWallet, Saving for College
How to Choose a Repayment Plan
To choose a repayment plan, start by considering your current income, expected income growth, and financial goals. If you can afford higher monthly payments, the Standard plan will save you the most money over time. If your income is low or variable, an income-driven plan may offer more affordable payments, even if it means paying more in the long run.
Use the official Loan Simulator at StudentAid.gov to compare plans side by side. The simulator shows estimated monthly payments, total interest, total paid over time, payoff date, and any forgiveness amount. It can help you see how different plans affect your finances.
Remember that you are not locked into a plan forever. You can switch repayment plans after you start making payments, but you should consider the implications, such as extending your repayment term or changing your monthly payment amount. If you are pursuing PSLF, you must be on an income-driven plan to qualify.
Given the upcoming changes to federal repayment plans, it is especially important to verify current plan availability and eligibility directly with the U.S. Department of Education or your loan servicer. The terms for new loans disbursed after July 1, 2026, are different, and existing IDR plans are being phased out for many borrowers.
- Compare plans using the official Loan Simulator, which shows estimated monthly payment, total interest, payoff date, and forgiveness if applicable.
- If you qualify for PSLF and plan to work in public service, choose an income-driven plan—all IDR plans are eligible.
- Be aware that repaying over a longer term often means paying more total interest.
- After July 1, 2026, new federal loans will have fewer repayment options, so check current rules before consolidating or borrowing.
Sources: Federal Student Aid (U.S. Department of Education), Edfinancial Services / Federal Student Aid, NerdWallet
Comparing Federal Repayment Plans
The table below summarizes key features of the main federal repayment plans as of the research date. Note that eligibility and availability are changing for loans disbursed on or after July 1, 2026, and for many existing IDR plans after July 1, 2028.
| Plan | Monthly Payment | Repayment Term | Availability After July 1, 2028 |
|---|---|---|---|
| Standard | Fixed | 10 years | Remains available for existing loans; new loans may have a 10-25 year term |
| Graduated | Starts lower, increases every 2 years | 10 years | Remains available for existing loans |
| Extended | Fixed or graduated, reduced amount | Up to 25 years | Remains available for existing loans if eligible |
| IBR | 10% or 15% of discretionary income | 20 or 25 years | Remains available, but terms may change |
| PAYE | 10% of discretionary income | 20 years | No longer available after July 1, 2028 |
| ICR | Lesser of 20% of discretionary income or 12-year fixed payment | 25 years | No longer available after July 1, 2028 |
| SAVE | Based on discretionary income above 225% of the poverty level | 20 or 25 years | Must transition to new plan by July 1, 2028 |
| RAP | 1% to 10% of AGI; minimum $10 | 30 years | Available for new loans and as transition option |
Sources: Mohela / Federal Student Aid, Edfinancial Services / Federal Student Aid, NerdWallet, Saving for College
Frequently asked questions
Can I switch repayment plans after I start making payments?
Yes. You can switch repayment plans at any time. However, switching may affect your monthly payment amount, the total interest you pay, and your eligibility for forgiveness. For example, moving from a standard plan to an income-driven plan can lower your payments but extend your repayment term. To switch, contact your loan servicer or use the federal Loan Simulator to compare plans before making a change.
Sources: Federal Student Aid (U.S. Department of Education)Which repayment plan will result in the lowest monthly payment?
Income-driven repayment plans generally produce the lowest monthly payments because they are based on a percentage of your discretionary income, not the amount you owe. Among the federal plans, the new RAP plan may offer especially low payments for lower-income borrowers, but the exact amount depends on your income and family size. Use the Loan Simulator to see estimated payments for each plan.
Sources: Federal Student Aid (U.S. Department of Education), NerdWalletDo income-driven plans extend the life of my loan?
Yes. Income-driven repayment plans typically have longer repayment terms than the standard 10-year plan. For example, IBR offers forgiveness after 20 or 25 years, PAYE after 20 years, and ICR after 25 years. The SAVE plan forgives after 20 or 25 years depending on loan type. The new RAP plan has a 30-year term. Because you are paying over a longer period, you will likely pay more total interest, but your monthly payments are based on income and can be more affordable.
Sources: Mohela / Federal Student Aid, Edfinancial Services / Federal Student Aid, NerdWalletAre there penalties for paying off my loans early?
No. There are no prepayment penalties on federal student loans. You can pay more than the required amount at any time without incurring fees. Making extra payments can help you pay off your loans faster and reduce the total interest you pay.
Sources: NerdWalletHow do I apply for an income-driven repayment plan?
To apply for an income-driven repayment plan, you can use the federal Loan Simulator at StudentAid.gov to compare plans and submit an application. You'll need to provide income and family size information, and you may need to recertify annually. Alternatively, you can contact your loan servicer directly to request a switch to an income-driven plan. After you apply, your servicer will determine your eligibility and set your monthly payment amount.
Sources: Federal Student Aid (U.S. Department of Education)Sources
- Repayment Plans : Stanford University — Stanford University
- Top FAQs About Income-Driven Repayment Plans – Federal Student Aid — Federal Student Aid (U.S. Department of Education)
- Repayment Options - Mohela - Federal Student Aid — Mohela / Federal Student Aid
- Repayment Assistance Plan (RAP) – Edfinancial Services — Edfinancial Services / Federal Student Aid
- Repayment Assistance Plan for Student Loans: Should You Switch? - NerdWallet — NerdWallet
- What Is the Repayment Assistance Plan (RAP)? How It Will Change Student Loan Payments — Saving for College