Federal Student Loan Repayment Plans Compared in One Place
Federal repayment was rebuilt in 2026, and the right plan depends on income, balance and whether forgiveness is realistic. Every option on one page.
A public school teacher, an engineer and a borrower with $112,000 of debt on a modest salary should not be on the same repayment plan. Under the federal rules in force since July 1, 2026, the teacher's best payment is about $175 a month, the engineer's is the plain 10-year standard payment, and the third borrower pays $60 a month while the government covers the interest. Choosing the wrong plan can cost each of them tens of thousands of dollars.
Federal student loan repayment was rebuilt by the July 2025 tax law, with most changes taking effect on July 1, 2026. This guide sets out every plan now available, who can use which, and how to choose. If your question is whether to pay loans off faster than required, that is in paying off student loans early.
What changed for federal borrowers
The Federal Student Aid page on the One Big Beautiful Bill Act changes sets out the new rules. The ones that matter most for repayment:
- Two plans for new loans. Any Direct Loan first disbursed on or after July 1, 2026 must be repaid under the Repayment Assistance Plan (RAP) or the Tiered Standard Plan.
- One new loan moves everything. If you take any new Direct Loan on or after that date, including a Direct Consolidation Loan, all your Direct Loans move to those two plans when the new loan enters repayment.
- Older plans for older loans. Borrowers whose loans were all disbursed before July 1, 2026 keep access to the Standard, Graduated and Extended plans, Income-Based Repayment (IBR), and the Income-Contingent (ICR) and Pay As You Earn (PAYE) plans until those two close, no later than July 1, 2028.
- SAVE is gone. Its borrowers have moved to other plans.
- Borrowing limits. Grad PLUS loans ended for new borrowers, and Parent PLUS loans are capped at $20,000 a year and $65,000 per student.
Interest rates on new Direct Loans for 2026 to 2027 are 6.52% for undergraduates, 8.07% for graduate students and 9.07% for PLUS loans, fixed for the life of each loan.
The standard and tiered options
The fixed-payment plans set a payment that repays the loan, with interest, over a set period.
| Plan | Who can use it | Term | Counts for PSLF? |
|---|---|---|---|
| Standard (10-year) | Loans all from before July 2026 | Up to 10 years, or longer for consolidation loans | The 10-year version does |
| Graduated | Loans all from before July 2026 | Up to 10 years, rising payments | No |
| Extended | Loans all from before July 2026, over $30,000 | Up to 25 years | No |
| Tiered Standard | Anyone with Direct Loans; required for new loans unless RAP is chosen | 10 to 25 years, by balance | No |
The Tiered Standard Plan sets the term by the total Direct Loan principal you owe when you enter it: under $25,000, 10 years; $25,000 to under $50,000, 15 years; $50,000 to under $100,000, 20 years; $100,000 or more, 25 years. Payments are at least $50 a month.
Income based options and the new plan
The Repayment Assistance Plan
RAP sets your payment from your adjusted gross income, not your balance:
| Adjusted gross income | Yearly payment before dependents |
|---|---|
| $10,000 or less | $120 ($10 a month) |
| $10,001–$20,000 | 1% of AGI |
| $20,001–$30,000 | 2% of AGI |
| Each further $10,000 band | One more percentage point |
| Over $100,000 | 10% of AGI |
Divide by 12, then subtract $50 a month for each dependent you claim; the payment is never less than $10. Married borrowers filing jointly are assessed on joint income, reduced if the spouse also has federal loans. The full mechanics are in the studentaid.gov definitions of RAP and the Tiered Standard Plan, and worked for several incomes in the Repayment Assistance Plan guide in this cluster.
Two features set RAP apart. If your on-time payment is less than the month's interest, the unpaid interest is waived, so your balance does not grow. And if your payment reduces principal by less than $50, the government makes a matching payment so principal falls by at least $50, or by the amount you paid if your payment is under $50. Any remaining balance is forgiven after 360 qualifying payments, 30 years.
Income-Based Repayment and the older plans
IBR remains open to borrowers with older loans, and the law removed the old requirement to show a partial financial hardship to enter it. Payments are 10% of discretionary income, meaning income above 150% of the poverty guideline for your family size, for borrowers who first borrowed on or after July 1, 2014, with forgiveness after 20 years; earlier borrowers pay 15% with forgiveness after 25 years. IBR payments never exceed the 10-year standard payment.
ICR and PAYE close by July 1, 2028. Consolidated Parent PLUS borrowers who want to reach IBR must make at least one payment under ICR before it closes.
Forgiveness paths and who can realistically reach one
- Public Service Loan Forgiveness: tax-free forgiveness after 120 qualifying payments while working full-time for government or a qualifying nonprofit. RAP payments count; Tiered Standard payments do not. The procedure is in the PSLF guide in this cluster.
- Income-driven forgiveness: after 20 or 25 years on IBR, or 30 years on RAP. The forgiven amount may be taxable federally from 2026, and in some states.
- Discharges for total and permanent disability, death and some school closures.
Be honest about whether you will reach one. A borrower who plans on PSLF and leaves public service in year six has paid the low income-driven payment while interest accrued, and may have been better off paying more.
Choosing by income and balance, worked
Three borrowers. All payments are monthly, at today's incomes, before raises.
A teacher on the public service track
$48,000 of loans at 6.5%, adjusted gross income $54,000, one dependent, working at a public school.
- 10-year standard: $545.03 a month, $65,404 in total.
- RAP: $54,000 falls in the 5% band, so $2,700 a year, $225 a month, minus $50 for one dependent: $175 a month.
On RAP, 120 qualifying payments at about $175, rising with raises, total roughly $21,000 to $25,000. The rest is forgiven tax free under PSLF. RAP, or IBR if it is lower, is the clear choice, as long as the teacher stays in public service.
An engineer with a high income
$62,000 at 6.8%, adjusted gross income $140,000, single, private sector.
- 10-year standard: $713.50 a month, $85,620 in total.
- RAP: 10% of $140,000 is $14,000 a year, $1,166.67 a month. Higher than the standard payment.
- Tiered Standard, if the engineer takes a new loan: 20 years at $473.27, but $113,585 in total.
The standard 10-year plan costs least in total. There is no realistic forgiveness at this income, so the cheapest path is to pay it off, and faster if the rate is high relative to other uses of the money.
A large balance on a modest income
$112,000 at 7%, adjusted gross income $48,000, two dependents.
- 10-year standard: $1,300.41 a month. Not affordable.
- Tiered Standard: 25 years at $791.59, $237,478 in total.
- RAP: $48,000 is in the 4% band, $1,920 a year, $160 a month, minus $100 for two dependents: $60 a month.
On RAP, monthly interest is about $653. The $60 payment goes to interest, the rest of the month's interest is waived, and the government adds a principal payment so the balance falls by $50 a month. At this income the balance falls by about $600 a year and the remainder is forgiven after 30 years, possibly with tax due on the forgiven amount. RAP keeps this borrower solvent; the Tiered Standard payment would take a sixth of gross pay.
The decision in one table
| Your situation | Plan to look at first |
|---|---|
| Public service job, intend to stay ten years | RAP or IBR, whichever is lower; certify employment yearly |
| Income high relative to the balance | 10-year Standard, or Tiered Standard if you have new loans; consider paying extra |
| Balance large relative to income, no public service | RAP for low payments and no balance growth, or IBR if older loans and forgiveness sooner matters |
| Income temporarily low, expected to rise fast | RAP or IBR now; switch to a standard payment or prepay when income rises |
| Parent PLUS borrower | The fixed plans; consider the ICR to IBR path before 2028 if income is low |
Should you pay more than the plan requires?
The plan sets the minimum, not the right amount. For borrowers with no realistic forgiveness, paying extra saves interest at the loan's rate, which for 2026 to 2027 loans runs from 6.52% to 9.07%. That is a guaranteed return comparable to long-run stock returns, which makes extra payments on newer, higher-rate loans attractive once an emergency fund and any employer match are in place. The general comparison is in invest or pay off debt first, and if you hold several loans, paying the highest rate first is the avalanche approach in avalanche vs snowball.
For borrowers headed for PSLF, paying extra is usually a mistake: every extra dollar reduces a balance that would have been forgiven tax free. For borrowers on RAP with large balances and modest incomes, extra payments can also reduce the interest subsidy and principal match, so check the effect before paying more.
How the plan choice affects borrowing and taxes
Mortgages and other loans. Lenders count your student loan payment in your debt to income ratio. A low income-driven payment helps you qualify, though some loan programs count a percentage of the balance instead of a payment near zero. How the ratio is built is in debt to income ratio explained.
Married borrowers. On RAP and IBR, filing jointly generally means joint income sets the payment. Filing separately can lower the payment when one spouse has the loans and the other a high income, but it costs other tax benefits, and the couple should compare the two before choosing. Recheck the comparison each year, because incomes and plans change.
Interest deduction. Up to $2,500 of student loan interest a year can be deducted without itemizing, subject to income limits. On an income-driven plan with low payments, the interest you actually pay, and so the deduction, may be small.
When income changes during repayment
Income-driven payments follow income, which is their point and their catch. A borrower whose income doubles over a decade will see a RAP payment climb from a low band toward 10% of a much larger income, and may end up paying more in total than on a standard plan. A borrower whose income falls, through a layoff or reduced hours, can ask the servicer to recalculate the payment immediately rather than waiting for the annual recertification.
That makes the choice of plan something to revisit, not a decision made once. A reasonable habit is to compare the income-driven payment with the standard payment each year at recertification. If the income-driven payment has risen to near the standard one and forgiveness is not realistic, moving to a fixed plan and paying the loan off is often cheaper.
Switching plans without losing progress
- Before taking any new federal loan, including consolidation, check what it does to your plan options. A consolidation loan made on or after July 1, 2026 removes access to IBR, ICR and PAYE.
- Moving from IBR, ICR or PAYE to RAP: earlier qualifying payments count toward RAP's 30-year forgiveness. But if you later return to IBR, ICR or PAYE, the RAP payments do not count toward those plans' forgiveness. They do count for PSLF.
- Recertify income every year on any income-driven plan. Missing recertification can raise your payment to the standard amount.
- Pay on time and in full on RAP; the interest waiver and principal match only apply to on-time, full payments.
Mistakes that cost borrowers the most
- Staying on whatever plan the servicer assigned. If you do not choose, a borrower entering repayment on new loans is placed on the Tiered Standard Plan, which may not be the cheapest and does not count for PSLF.
- Consolidating without checking the date rule. A consolidation loan made on or after July 1, 2026 is a new loan, and it moves every Direct Loan you have onto the two new plans.
- Missing the yearly income recertification. On an income-driven plan this can raise the payment sharply, and on RAP late or partial payments lose the interest waiver and principal match for that month.
- Using forbearance to bridge a short gap. A month of forbearance usually costs more than a month on a $10 RAP payment, and does not count toward forgiveness.
- Assuming PSLF without checking the employer. Certify employment early and every year; the PSLF Help Tool confirms whether an employer qualifies.
Working with your servicer
Your loan servicer processes payments, plan changes and recertifications, but it is not your adviser, and servicers have made errors at scale in the past. Make every plan request through studentaid.gov where possible, keep confirmations, and check each statement against what you chose. If the servicer gets something wrong and will not fix it, the Federal Student Aid ombudsman group handles escalated disputes.
Save every letter about your plan, your payment count and your income certification. If you are pursuing forgiveness, those records are what proves your qualifying payments, years later.
When this does not apply
If you have private student loans. None of these plans apply. Private lenders set their own terms, and refinancing federal loans into private ones gives up every protection on this page.
If you have Parent PLUS loans. They cannot use RAP. Loans from before July 2026 can use the older fixed plans, and consolidated Parent PLUS loans can reach IBR only by first making a payment under ICR before it closes in 2028. New Parent PLUS loans are limited to the Tiered Standard Plan.
If you have older FFEL or Perkins loans. They are not eligible for RAP or the Tiered Standard Plan directly. Consolidating them changes your options, sometimes for the worse after July 2026; check before consolidating.
If you are in default. None of these plans are available until the loan is out of default, through rehabilitation or consolidation.
Next steps
- Log in to studentaid.gov and list each loan, its type, its balance and the date it was first disbursed.
- Note whether any loan was disbursed on or after July 1, 2026, which decides which plans you can use.
- Calculate your RAP payment from last year's adjusted gross income and dependents, and compare it with the standard payment.
- If you work in public service, choose an income-driven plan and certify your employment.
- Do not consolidate or take a new federal loan until you have checked what it does to your options.
