Understanding Federal Student Loan Repayment Plans: 8 Options Explained

Federal student loans come with multiple repayment plan options. Here is a comprehensive breakdown of the 8 major federal repayment plans: four with fixed monthly payments and four that adjust based on your income.

Fixed Payment Repayment Plans

Fixed payment plans base your monthly payment amount on how much you owe, your interest rate, and a set repayment period. Your payment stays the same each month until your loans are paid off.

Tiered Standard Repayment Plan

• How it works: When you leave school, you are automatically enrolled in the Tiered Standard plan unless you actively choose a different option. This plan applies to all Direct Loans. Your monthly payment is a fixed amount calculated to pay off your loans within 10 to 25 years, depending on the total amount you borrowed. The larger your loan balance, the longer your repayment window.
• Total cost: Larger loan balances receive longer repayment terms, resulting in more total interest paid compared to the Standard 10-year plan.
• Best for: Borrowers who want predictable payments and don't mind a longer repayment timeline. However, be aware that payments made under the Tiered Standard plan do not count as qualifying payments toward Public Service Loan Forgiveness (PSLF).

Standard 10-Year Repayment Plan

• How it works: Your monthly payment is a fixed amount designed to pay off your loans within 10 years (10 to 30 years if you have Consolidation Loans). This plan is no longer the automatic default when you graduate; you must actively choose it if you want it.
• Total cost: This plan typically results in the lowest total interest paid because of the shorter repayment period.
• Best for: Borrowers who can afford higher monthly payments and want to minimize interest. Payments on the Standard plan count toward PSLF if you work in public service.

Graduated Repayment Plan

• How it works: Your monthly payment starts lower and increases, typically every two years. Payments are designed to pay off your loans within 10 years (10 to 30 years for Consolidation Loans). Early payments cover mostly interest; later payments cover more principal.
• Total cost: You pay more total interest than the Standard plan, because principal is paid down more slowly in the early years.
• Best for: Borrowers whose income is expected to rise over time and who want lower initial payments. Note that Graduated payments do not earn PSLF credit.

Extended Repayment Plan

• How it works: To qualify, you must have more than $30,000 in outstanding Direct Loans (if you're a Direct Loan borrower) or more than $30,000 in outstanding FFEL Program loans (if you're an FFEL borrower). Your monthly payment can be fixed or graduated, and you have up to 25 years to repay.
• Total cost: Because you have a longer repayment period, you will pay significantly more interest than shorter-term plans.
• Best for: Borrowers with large loan balances who need the lowest possible monthly payment and can afford to pay interest over a longer period. Extended payments do not earn PSLF credit.

Income-Driven Repayment Plans

Income-driven repayment (IDR) plans base your monthly payment on how much money you make and your family size. Because your payment is tied to your income, you must provide your loan servicer with updated income and family size information each year so your payment can be recalculated. This annual process is called recertification. You must recertify even if nothing has changed. If you authorize the secure disclosure of your tax information to the Department of Education, your IDR plan can be automatically recertified once per year using your IRS tax data, and your payment will be adjusted without you having to submit documents.

Important eligibility rule: If you have eligible loans taken out before July 1, 2026, you can access Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE) on or after July 1, 2026. However, once you receive a first disbursement on a new loan on or after July 1, 2026, you lose eligibility for IBR, ICR, and PAYE, leaving Repayment Assistance Plan (RAP) as your only income-driven option. Borrowers still enrolled in ICR or PAYE when those plans sunset on July 1, 2028 will be automatically moved to RAP or IBR.

Repayment Assistance Plan (RAP)

• How it works: Your monthly payment is calculated as a percentage of your adjusted gross income, ranging from 1% to 10% depending on your income level, with a $10 monthly minimum. For each eligible dependent you claim, your payment is reduced by $50. For example, if your adjusted gross income is $65,000, you fall into the $60,001–$70,000 income band and pay 6% of your income. If your monthly payment doesn't cover the interest accruing on your loans, the unpaid interest is waived rather than added to your balance. If your payment reduces your principal by less than $50, the government contributes up to $50 toward your principal balance.
• Total cost: Forgiveness of any remaining balance occurs after 360 qualifying payments (30 years). Any forgiven balance is taxable income, except under the Public Service Loan Forgiveness program, where forgiveness is tax-free.
• Best for: Borrowers with lower or moderate incomes, those with large loan balances relative to income, and public service workers pursuing PSLF. RAP is the only income-driven option available to borrowers who take out new loans on or after July 1, 2026.
• Eligibility: RAP is available for Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans for graduate or professional students, and Direct Consolidation Loans that do not include a parent PLUS loan. Parent PLUS loans and consolidations containing them are not eligible for RAP.

Income-Based Repayment (IBR) Plan

• How it works: IBR has two versions depending on when you first borrowed. If your first federal student loan was taken out before July 1, 2014, you pay 15% of your discretionary income, with forgiveness after 25 years. If you first borrowed on or after July 1, 2014, you pay 10% of your discretionary income, with forgiveness after 20 years. In both cases, your payment is capped at what you would pay under the Standard 10-year plan. As of December 22, 2025, you no longer need to demonstrate partial financial hardship to enroll in IBR; any borrower with eligible loans can choose this plan regardless of income.
• Total cost: Forgiveness of any remaining balance is taxable income, except under PSLF, where it is tax-free.
• Best for: Borrowers with lower incomes relative to their loan balance, or those who want a payment capped at the Standard amount. Payments count toward PSLF.
• Eligibility restriction: If you received a new loan, including a new consolidation loan, on or after July 1, 2026, you are not eligible for IBR.

Income-Contingent Repayment (ICR) Plan

• How it works: Your monthly payment is the lesser of 20% of your discretionary income or the amount you would pay under a 12-year fixed repayment plan adjusted for your income. Forgiveness of any remaining balance occurs after 25 years and is taxable income (except under PSLF, where it is tax-free).
• Total cost: ICR typically results in higher payments than other income-driven plans.
• Best for: Borrowers with parent PLUS loans (consolidated into a Direct Consolidation Loan) who want an income-driven option, or those who prefer a shorter forgiveness timeline than RAP. If you have consolidated parent PLUS loans, note that you must enroll in ICR and make at least one payment before the plan is eliminated in order to retain access to IBR afterward — the Department of Education has not yet published the specific enrollment deadline, so check StudentAid.gov.
• Eligibility restriction: ICR is being eliminated on July 1, 2028. If you received a new loan on or after July 1, 2026, you are not eligible. Borrowers still on ICR at the July 1, 2028 sunset will be automatically moved to RAP or IBR.

Pay As You Earn (PAYE) Repayment Plan

• How it works: Your monthly payment is 10% of your discretionary income, but never more than what you would pay under the Standard 10-year plan. Forgiveness of any remaining balance occurs after 20 years and is taxable income (except under PSLF, where it is tax-free).
• Total cost: PAYE payments match new IBR at 10% of discretionary income, so the two are comparable for borrowers who first borrowed on or after July 1, 2014. PAYE is lower than old IBR, which charges 15% for borrowers who first borrowed before that date.
• Best for: New borrowers with high loan balances relative to income who want the lowest possible payment and a 20-year forgiveness timeline.
• Eligibility restriction: To qualify for PAYE, you must be a new borrower (first federal student loan on or after October 1, 2007) with a Direct Loan disbursement on or after October 1, 2011. PAYE is being eliminated on July 1, 2028. If you received a new loan on or after July 1, 2026, you are not eligible. Borrowers still on PAYE at the July 1, 2028 sunset will be automatically moved to RAP or IBR.

How to Switch Plans

You can change your repayment plan at any time by contacting your loan servicer or logging into your account on StudentAid.gov. Switching to a fixed payment plan (Standard, Graduated, or Extended) is straightforward. Switching to an income-driven plan requires you to submit an application with income and family size information.

Keep in mind that only certain plans count toward PSLF. Only payments on the Standard 10-year plan and the income-driven plans count. Payments on the Tiered Standard, Graduated, and Extended plans do not.

Written by Morgan Reed, Founder of MyStudentLoanPayoffCalculator · Last updated 8/2026