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KEY TAKEAWAYS
- Millions of borrowers on the Saving on a Valuable Education plan will need to find another repayment plan soon.
- Standard plans ensure borrowers finish payments after a set time frame, and some include fixed payments while others have payments that grow over time.
- Income-driven repayment plans lower payments according to the borrowers’ income level and will forgive the loan balance after a certain number of payments. These plans will see many changes over the next few years.
If you’re one of the millions of student loan borrowers currently enrolled in an embattled repayment plan, you will need to make changes to your accounts soon.
In December, the Department of Education announced it will eliminate the Saving on a Valuable Education repayment plan, also called SAVE. The official end date for this income-driven repayment plan, which impacts about 7.4 million borrowers, has not been announced. However, once SAVE is gone, its borrowers will need to find a new repayment plan.
Student loan borrowers can use the Federal Student Aid Loan Simulator to compare repayment plans. Borrowers can enter their income, family situation, and loan balance into the tool to see their monthly payments under each offered repayment plan, when they would finish payments, and how much interest they would accrue over their repayment term.
Here is an overview of the current and future repayment plan options.
Standard Plans
Standard Repayment Plan
How it works: Payments are fixed, splitting the total loan amount into 120 equal installments, made every month for up to 10 years. If the loan has been consolidated, the repayment period ranges from 10 to 30 years, depending on the debt amount.
Who is eligible: Borrowers who took out either Direct Subsidized or Direct Unsubsidized Loans, Subsidized and Unsubsidized Federal Stafford Loans, any PLUS loans (Direct or FFEL), or any Consolidation Loans (Direct or FFEL).
Graduated Repayment Plan
How it works: Payments are made for up to 10 years, with the amounts increasing typically every two years. If the loan has been consolidated, the repayment period ranges from 10 to 30 years, depending on the debt amount.
Who is eligible: Borrowers who took out either Direct Subsidized or Direct Unsubsidized Loans, Subsidized and Unsubsidized Federal Stafford Loans, any PLUS loans (Direct or FFEL), or any Consolidation Loans (Direct or FFEL).
Extended Repayment Plan
How it works: Payments are made for up to 25 years and can be fixed or start lower and increase over time.
Which loan types are eligible: Borrowers must have a balance of more than $30,000 in any of these loan types: Direct Subsidized and Direct Unsubsidized Loans, Subsidized and Unsubsidized Federal Stafford Loans, any PLUS loans (Direct or FFEL), or any Consolidation Loans (Direct or FFEL).
Income-Driven Repayment Plans
Generally, payments under income-driven repayment plans will depend on the borrowers’ annual income. Borrowers are required to recertify their income every year, and if their pay has gone up, so will their payments. However, if their income falls, the same will happen to their payments.
The existing income-driven repayment plans (IBR, ICR, and PAYE) are all based on “discretionary income,” which basically calculates the income a borrower has left over after essential payments have been made. Discretionary income finds the difference between the borrowers’ annual income and, for the IBR and PAYE plans, 150% of the poverty guideline for their family size and state of residence. The ICR plan uses 100% of the poverty guideline for their family size and state of residence.
After July 1, 2028, the ICR and PAYE plans will be eliminated, and borrowers on these income-driven plans will need to transition to another repayment plan.
One new option will be available starting July 1, 2026, when the Department of Education opens the Repayment Assistance Plan, an income-driven plan created last year under the “One Big Beautiful Bill.” Payments under this plan can be relatively similar and sometimes smaller than those from existing income-driven plans, but for some, especially lower-income borrowers, they will pay significantly more over time.
Income-Based Repayment (IBR) Plan
How it works: Monthly payments are 15% of the borrowers’ discretionary income divided by 12. If the borrower first took out a student loan on or after July 1, 2014, their payments are 10% of their discretionary income divided by 12. Payments under IBR will never be more than what the borrowers would pay under the 10-year standard repayment plan.
Those who borrowed before July 1, 2014, and who still have a loan balance after 25 years of payments, will have the remaining balance forgiven. Borrowers who first took out a loan after July 1, 2014, will have the remaining balance forgiven after 20 years.
Who is eligible: Borrowers who took out either Direct Subsidized or Direct Unsubsidized Loans, Subsidized and Unsubsidized Federal Stafford Loans, Grad PLUS Loans, or Consolidation Loans (Direct or FFEL) that were not used for Parent PLUS loans. Parent PLUS borrowers can only enroll in IBR if they consolidated their loans and at least one payment was made under the ICR plan between July 4, 2025, and July 1, 2028.
Income-Contingent Repayment (ICR) Plan
How it works: Payments under ICR are either 20% of the borrower’s income divided by 12, or the amount the borrower would pay under a fixed 12-year standard plan, adjusted to their income, whichever results in the lower monthly payments.
Borrowers who still have a loan balance after 25 years of payments will have the remaining balance forgiven.
Who is eligible: Borrowers who took out either Direct Subsidized or Direct Unsubsidized Loans, Direct Grad PLUS Loans, Direct Consolidation Loans, or consolidated Parent PLUS loans.
Pay As You Earn (PAYE) Repayment Plan
How it works: Monthly payments under PAYE are 10% of the borrowers’ discretionary income, divided by 12. Payments will never be more than what the borrowers would pay under the 10-year standard repayment plan.
Borrowers who still have a loan balance after 20 years of payments will have the remaining balance forgiven.
Who is eligible: Borrowers are not eligible if they took out student loans anytime before Oct. 1, 2007. They must also have received a direct loan sometime on or after Oct. 1, 2011. Eligible loans include: Direct Subsidized and Direct Unsubsidized Loans, Direct Grad PLUS, or a Direct Consolidation Loan that was not used for Parent PLUS loans.
Repayment Assistance Plan (RAP)
How it works: Monthly payments are determined as a percentage of the borrower’s adjusted gross income, divided by 12, with the percentage increasing as the borrower’s AGI rises. Borrowers with children can subtract $50 for each dependent from their monthly payment. In addition, for borrowers whose monthly payments are so low that they do not pay down the principal balance, the Department of Education will chip in up to $50 a month to lower the principal.
Borrowers who have a loan balance after 30 years of payments will have the remaining balance forgiven.
| Monthly Payments Under the RAP | |
|---|---|
| Borrowers’ Adjusted Gross Income | Monthly Payment Amount |
| Less Than $10,000 | $10 a month |
| $10,000 to $19,999 | 1% of AGI |
| $20,000 to $29,999 | 2% of AGI |
| $30,000 to $39,999 | 3% of AGI |
| $40,000 to $49,999 | 4% of AGI |
| $50,000 to $59,999 | 5% of AGI |
| $60,000 to $69,999 | 6% of AGI |
| $70,000 to $79,999 | 7% of AGI |
| $80,000 to $89,999 | 8% of AGI |
| $90,000 to $99,999 | 9% of AGI |
| More than $100,000 | 10% of AGI |
Who is eligible: Borrowers who took out either Direct Subsidized or Direct Unsubsidized Loans, Grad PLUS loans, or a Direct Consolidation Loan that was not used for Parent PLUS loans.
