Federal Student Loan Repayment Plans Explained

Standard Repayment Plan

The Standard Repayment Plan sets a fixed monthly payment amount that ensures your loans are paid off within 10 years (or up to 30 years for consolidated loans). This plan typically results in the lowest total interest paid because you repay your loans quickly.

Sources: MOHELA

Graduated Repayment Plan

With the Graduated Repayment Plan, your monthly payments start lower and increase every two years, with the expectation that your income will grow over time. This plan also has a 10-year repayment term (or up to 30 years for consolidated loans). While the lower initial payments can be helpful, you'll pay more total interest compared to the Standard Plan.

Sources: MOHELA

Extended Repayment Plan

The Extended Repayment Plan allows you to stretch your payments over a 25-year period, which lowers your monthly payment compared to the Standard or Graduated Plans. However, you'll pay significantly more in interest over the life of the loan.

Sources: MOHELA

Income-Driven Repayment Plans: PAYE, IBR, ICR, and the New RAP

Income-driven repayment (IDR) plans cap your monthly payment at a percentage of your discretionary income, making payments more affordable when your income is low. The major IDR plans include Income-Based Repayment (IBR), Pay As You Earn (PAYE), Income-Contingent Repayment (ICR), and the new Repayment Assistance Plan (RAP). The Saving on a Valuable Education (SAVE) Plan ended in March 2026 and is no longer available.

• SAVE Plan: A court order ended this plan in March 2026. It is no longer available for new or existing borrowers.
• PAYE and ICR: These plans are being phased out; by July 1, 2028, they will no longer be available for new enrollments.
• Repayment Assistance Plan (RAP): New for loans disbursed on or after July 1, 2026, this is the new income-driven repayment option.
• IBR: Remains available for eligible borrowers, including those with older FFEL loans.

Sources: MOHELA, The Score Guide, WealthSpott

What Is Income-Driven Repayment?

Income-driven repayment plans tie your monthly student loan payment to your income and family size, often leading to lower payments than standard plans. After making payments for a certain number of years (typically 20 or 25), any remaining balance is forgiven.

Sources: The Score Guide, WealthSpott

Comparing the Available IDR Plans: RAP, IBR, PAYE, and ICR

For borrowers with older loans, PAYE, IBR, and ICR may still be options. However, RAP is the new income-driven plan for loans disbursed on or after July 1, 2026. The table below compares key features of the IDR plans that are or will soon be available.

Sources: MOHELA, The Score Guide, WealthSpott

How Payments Are Calculated Under IDR

Under Income-Based Repayment (IBR), payments are 10% to 15% of your discretionary income, which is defined as the amount above 150% of the federal poverty line for your family size.

Sources: The Score Guide, WealthSpott

How to Choose the Right Plan

Choosing a repayment plan depends on your current income, career trajectory, and long-term financial goals. The Standard and Graduated Plans generally result in faster payoff and lower total interest, while income-driven plans like RAP and IBR can free up cash flow now but may result in higher overall costs due to interest accrual.

• If you can afford payments under the Standard Plan, it often costs the least in the long run.
• If your income is low relative to your debt, an income-driven plan like RAP or IBR may be necessary to keep payments manageable.
• If you're pursuing Public Service Loan Forgiveness (PSLF), an income-driven plan qualifies, and you may pay less over 10 years before forgiveness.

Sources: MOHELA, The Score Guide

How to Apply for an IDR Plan

To apply for an income-driven repayment plan, you need to submit an application through the U.S. Department of Education or contact your loan servicer. The process typically involves providing income documentation, such as tax returns or pay stubs, and you may need to recertify your income annually.

• Visit studentaid.gov and complete the Income-Driven Repayment Plan Request form.
• Alternatively, contact your loan servicer directly for assistance with your application.

Sources: MOHELA, The Score Guide

How to Switch Repayment Plans

You can change your federal student loan repayment plan at any time, free of charge. Simply contact your loan servicer to discuss your options and request a switch. For income-driven plans, you'll need to apply and provide income documentation. Keep in mind that if you switch, your monthly payment may change, and interest may continue to accrue.

Sources: MOHELA, The Score Guide

What Happens If You Don't Recertify Income

For income-driven repayment plans, you must recertify your income and family size each year. If you don't, your monthly payment may increase to the amount you would pay under the Standard Plan, and any unpaid interest may be capitalized (added to your principal balance). To avoid this, be sure to submit your recertification by the deadline your servicer provides.

Sources: MOHELA, The Score Guide

Repayment Assistance Plan (RAP): The Newest Option

Starting July 1, 2026, the Repayment Assistance Plan (RAP) becomes available for Direct Loans disbursed on or after that date. This plan sets monthly payments between 1% and 10% of your adjusted gross income, with a $50 reduction per dependent, and a minimum monthly payment of $10. RAP provides forgiveness after 30 years of qualifying payments and qualifies for Public Service Loan Forgiveness (PSLF). For new loans, RAP will be the only income-driven repayment option.

Sources: MOHELA, The Score Guide