Student Loan Repayment Plans Explained

Federal student loan repayment plan changes in 2026

The federal student loan repayment landscape changed on July 1, 2026, due to the One Big Beautiful Bill Act (OBBBA). If you take out a new federal student loan or consolidate on or after that date, you have two repayment options: the Tiered Standard Plan and the Repayment Assistance Plan (RAP). Borrowers with loans taken out before July 1, 2026, retain access to the previous plans, including Standard, Graduated, Extended, Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR). The SAVE plan, which was an income-driven plan, has ended, and the new RAP plan replaces it for new borrowers.

Understanding which plans are available to you is the first step in choosing the right approach to repaying your loans.

Sources: NerdWallet

Standard Repayment Plan

The Standard Repayment Plan is a common option for many federal borrowers. It features fixed monthly payments, which means your payment amount stays the same throughout the repayment term.

For most federal loans, the repayment term is 10 years. If you have a Direct Consolidation Loan, the term can be longer, up to 30 years. This plan is generally available to all borrowers with federal student loans taken out before July 1, 2026.

Because fixed payments are spread over a shorter term, monthly payments are typically higher than under income-driven plans. However, you'll pay less interest over the life of the loan because the repayment period is shorter.

Sources: Student Loan Borrower Assistance

Graduated Repayment Plan

The Graduated Repayment Plan begins with lower monthly payments that gradually increase, typically every two years. This can be a good fit if you expect your income to rise steadily over your career.

Like the Standard Plan, the Graduated Plan generally has a 10-year repayment term, but can extend up to 30 years for Consolidation Loans. Payments start out lower and then increase, but the total interest paid may be higher than under the Standard Plan.

This plan is available to borrowers with federal loans taken out before July 1, 2026. You must request this plan from your loan servicer; it is not automatic.

Sources: Student Loan Borrower Assistance

Extended Repayment Plan

The Extended Repayment Plan stretches repayment over a longer period, which can lower your monthly payment. However, you'll pay more in interest over time because the loan is outstanding for a longer period.

To be eligible, you generally must owe more than $30,000 in eligible federal Direct or FFEL loans. The repayment term can be up to 25 years. You may choose either fixed or graduated payments, giving you flexibility in how your payments change.

This plan is available only to borrowers with loans taken out before July 1, 2026. If you have a smaller loan balance, you may not qualify.

Sources: Student Loan Borrower Assistance

Income-Driven Repayment Plans (IBR, PAYE, and ICR)

Income-driven repayment (IDR) plans tailor your monthly payment to your income and family size, making payments more affordable. Under these plans, any remaining balance is forgiven after a certain number of years of qualifying payments.

For borrowers with loans taken out before July 1, 2026, the available IDR plans include Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR). SAVE is no longer available.

A key feature of IDR plans is the annual recertification requirement: you must submit updated income and family size information each year to remain on the plan. Your payment amount is based on that information. If you fail to recertify, your payment may revert to a standard payment amount.

• Each plan has its own eligibility rules and loan forgiveness time frames (typically 20 or 25 years for undergraduate loans).

Sources: Aidvantage / Federal Student Aid, Student Loan Borrower Assistance

Tiered Standard Plan for new borrowers

If you take out a new federal student loan or consolidate a loan on or after July 1, 2026, you have two repayment plan options. One is the Tiered Standard Plan, which offers fixed monthly payments over a term that ranges from 10 to 25 years, depending on the amount you borrow.

The Tiered Standard Plan is a simplified alternative to the previous Standard and Extended plans. It provides predictable monthly payments, but it may not be the best fit if you need lower, income-based payments.

It is important to note that the Tiered Standard Plan does not count toward Public Service Loan Forgiveness (PSLF). If you are pursuing PSLF, you need to consider the Repayment Assistance Plan instead.

Sources: Student Loan Borrower Assistance, U.S. Department of Education

Repayment Assistance Plan (RAP) for new borrowers

The Repayment Assistance Plan (RAP) is the income-driven option for borrowers with loans taken out on or after July 1, 2026. Under this plan, your monthly payment is based on your income and family size.

Any remaining balance is forgiven after 30 years of qualifying payments. Additionally, unpaid monthly interest is waived when you make your monthly payments on time, preventing your loan balance from growing due to interest.

RAP is the only income-driven repayment plan available to new borrowers starting in July 2026.

Sources: Student Loan Borrower Assistance, U.S. Department of Education

Comparing repayment plans

The table below compares the key features of the major federal repayment plans. Note that eligibility depends on when you took out your first federal student loan—before or on/after July 1, 2026.

Sources: Student Loan Borrower Assistance, U.S. Department of Education

How to choose a repayment plan

Choosing the right repayment plan depends on your financial situation and your goals. Here are key factors to consider:

Your monthly budget: If you need lower monthly payments, an income-driven or extended plan might be more suitable, but you may pay more interest over time.

Your long-term goals: If you are aiming for Public Service Loan Forgiveness (PSLF), you need to choose a plan that qualifies. The Tiered Standard Plan does not count toward PSLF, while income-driven plans generally do.

Your income trajectory: If you expect your income to rise, a Graduated Payment Plan or an IDR plan might work well. If your income is uncertain, an IDR plan offers annual adjustments.

When you borrowed: If you took out loans before July 1, 2026, you have more plan options. If you are a new borrower, your options are limited to the Tiered Standard and RAP plans.

• Use the federal Student Loan Simulator on the Department of Education's website to estimate payments under different plans.
• Consider the total interest you'll pay over the life of the loan.
• Review eligibility requirements, such as minimum loan balances for the Extended Plan.

Sources: NerdWallet

How to switch repayment plans

If you have federal loans taken out before July 1, 2026, you can switch between repayment plans at any time by contacting your loan servicer. There is no fee to switch, and you can usually make the change online or over the phone.

When you switch to an income-driven plan, your monthly payment will be based on your income and family size, and you will need to complete annual recertification.

Borrowers with loans taken out on or after July 1, 2026, have only two options: the Tiered Standard Plan and RAP. You can switch between these two by contacting your servicer, but you cannot enroll in the legacy plans (Standard, Graduated, Extended, IBR, PAYE, or ICR).

Sources: Aidvantage / Federal Student Aid, Student Loan Borrower Assistance, NerdWallet