Federal Repayment Plans: What’s Available Now and What’s Coming July 1st?

Changes are coming to the federal student loan program this summer.

What repayment plans are available now?

If you already have loans and don’t plan to borrow any more federal student loans after July 1, 2026, you can choose from multiple repayment plans listed below.

Standard Repayment Plan: 10 year term*

• Payments are fixed and will be higher than most other plans
• A good option if your goal is to pay off your loans quickly and save on interest

Graduated Repayment Plan: 10 year term*

• Payments start out low and increase every 2 years; early payments go to interest only
• Payments are much higher at the end of the term
• You’ll pay more interest than on the Standard Plan

*If you've consolidated your loans, your term will be longer than 10 years and your payments will be lower

Extended Repayment Plan: 25 year term

• You must owe at least $30,000 in federal student loans
• Payments can be fixed or graduated
• Lower payments help with affordability but total interest cost will be much higher

Income-Based Repayment (IBR)

• Payments are based on 10% or 15% of your discretionary income
  • 10% if you started borrowing after 7/1/14, 15% if you have older loans
• Payments are capped at the 10-year Standard amount
• Any remaining balance is forgiven after 20 or 25 years (the forgiven amount may be taxed)
• Payments count towards PSLF if you work in qualifying employment

Pay As You Earn (PAYE): Being phased out; you can enroll now but you’ll need to change plans by July 1, 2028

• Must have a partial financial hardship to qualify
• Payments are based on 10% of your discretionary income and are capped at the 10-year Standard amount
• Payments count towards PSLF if you work in qualifying employment

Income-Contingent Repayment (ICR): Being phased out; you can enroll now but you’ll need to change plans by July 1, 2028

• Payments are typically higher than the other income-driven plans but may be lower for borrowers with smaller balances
• No payment cap
• Payments count towards PSLF if you work in qualifying employment

A note for Parent PLUS loan borrowers: If you’ve already consolidated your loans into a Direct Consolidation Loan, you may be able to enroll in any of the plans mentioned above, with the exception of PAYE. To repay your consolidated loan on IBR, you’ll first need to make one payment on ICR. If you haven’t consolidated your Parent PLUS loans, it may be too late to access the income-driven repayment plans, as consolidation loans disbursed after July 1, 2026 will not be eligible for these plans.

What plans are available starting July 1st?

If you borrow any federal loans after July 1st, or you consolidate your existing loans after July 1st, you’ll be considered a “new” borrower and you will only have the options below. If you’re concerned about affordability, or you plan to pursue loan forgiveness, carefully consider your options before borrowing new federal loans.

On July 1st, the Department of Education (ED) will introduce two new plans:

• Tiered Standard Repayment Plan
• Repayment Assistance Plan (RAP)

New borrowers will ONLY have access to these two plans. You’re considered a new borrower if:

• You borrow any federal student loans after July 1, 2026
• You consolidate any existing federal student loans after July 1, 2026

Parent PLUS loan borrowers will not be able to repay their loans on RAP.

Tiered Standard Repayment Plan

• Fixed payments are based on your total loan balance
• Loan term will be 10, 15, 20 or 25 years, depending on your balance
• A higher balance will result in a longer repayment term

Repayment Assistance Plan (RAP)

• Payments range from 1% to 10% of your adjusted gross income (AGI), with a minimum monthly payment of $10 and no payment cap
• Your monthly payment is reduced by $50 per dependent
• If your payment doesn’t lower your principal balance by at least $50, ED will apply a subsidy so that your principal balance is reduced by at least $50 each month
• Payments on RAP may be higher compared to the other income-driven plans, particularly for higher earners.
• Any remaining balance is forgiven after 30 years (the forgiven amount may be taxed)
• Payments count towards PSLF if you work in qualifying employment

Final Thoughts

If you don’t plan to take out any new federal loans after July 1st, you’ll have the most flexibility in choosing a repayment plan that suits your needs.

If you need to borrow more loans but don’t want to lose access to these plans, consider borrowing private student loans instead. Private loans require a credit check and many students will need a co-signer to qualify.

If you do borrow federal loans after July 1st, keep in mind you’re not locked in to either RAP or the tiered Standard Plan (unless you have Parent PLUS loans). You can switch between these two plans if your circumstances change. You also may qualify for deferment or forbearance if you need to postpone your payments.

If you have Tuition.io: our student loan coaches are available to help you choose the best repayment plan and navigate the process. Log in to Tuition.io to schedule a 1:1 with a coach.

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