Federal Repayment Plans After the 2025 Law

If you have federal loans, the plan you are on decides your monthly payment, how much interest you pay, and whether anything is ever forgiven. The menu changed more in 2025 and 2026 than in the previous decade: one popular plan is gone, two are closing, and a new one opened in July 2026. This chapter sets out which plans you can choose now, how each one calculates the payment, and why the plan with the lowest payment is not always the cheapest.

Which plans you can choose in 2026

Your choices depend on when your loans were first paid out. The budget law passed in July 2025, Public Law 119-21, split borrowers into two groups.

Three older plans are on their way out:

• SAVE was blocked by federal courts in 2024. Borrowers enrolled in it were placed in a forbearance, interest on their loans resumed in August 2025, and the 2025 law ends the plan. Months in that forbearance generally do not count toward forgiveness.
• Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) are closed to new enrollment and the law sets July 1, 2028 as the final date for borrowers to move off them.

If you are in any of these, the Department of Education and your servicer will tell you the date by which you must choose a new plan; borrowers who do not choose are moved automatically. Choose yourself, after comparing, rather than accepting the default. One more caution: taking out a new federal loan on or after July 1, 2026 can change which plans your older loans may use, so check studentaid.gov before borrowing again.

These rules are new and some of the details are still being put in place by servicers. Treat studentaid.gov and your servicer's notices as the final word for your own loans.

The standard plan: highest payment, least interest

The standard plan repays the loan with a fixed payment over 10 years for most existing loans (consolidation loans can run longer, depending on the balance). It is the default and the benchmark: no plan costs less in total interest unless part of the balance is forgiven.

On $60,000 at 6.5%, the standard plan costs $681 a month and $21,755 in interest over ten years. Stretching the same balance to 25 years, as the Extended plan or the longest tier of the new standard plan can, cuts the payment to $405 but raises the interest to $61,537. A longer term is a lower payment, not a cheaper loan.

Income-Based Repayment

IBR ties the payment to income instead of the balance. The payment is a share of your discretionary income, which IBR defines as your adjusted gross income (AGI) minus 150% of the federal poverty guideline for your family size and state.

• The share is 10% if you first borrowed on or after July 1, 2014, and 15% if you borrowed earlier.
• The poverty guideline in 2026 is $15,960 for one person in the 48 contiguous states and D.C., plus $5,680 for each additional person in the household (Alaska and Hawaii are higher).
• The payment is divided by twelve and is never more than the 10-year standard payment.
• It is recalculated every year from your latest income and family size.
• Any balance left after 20 years (for the 10% group) or 25 years (for the 15% group) of qualifying payments is forgiven.

Because the first 150% of the poverty guideline is protected, a borrower with a low income can owe nothing at all, and a zero payment still counts as a qualifying month. Two cautions: if your payment does not cover the interest, the unpaid interest stays on the account, and if you later leave IBR that interest is capitalized.

The Repayment Assistance Plan

RAP, which opened on July 1, 2026, uses your whole AGI with no poverty-line allowance. The share rises with income in bands of $10,000: 1% of AGI in the lowest band above $10,000, one more point for each band after that, and 10% once AGI is above $100,000. That yearly amount is divided by twelve, then reduced by $50 a month for each dependent. The minimum payment is $10 a month.

Two features make RAP gentler than older plans when the payment is small relative to the debt:

• Unpaid interest is waived. If your payment does not cover the month's interest, the rest is not added to what you owe.
• Principal is matched. If your payment would reduce the principal by less than the smaller of your payment and $50, the government adds the difference to principal. Your balance goes down every month you pay.

Any balance left after 360 qualifying payments, thirty years, is forgiven. RAP payments also count toward Public Service Loan Forgiveness, covered in chapter 4.

Which of IBR and RAP charges less depends on income and family. IBR's poverty-line allowance favours lower incomes and larger households; RAP's lower share at modest incomes and its waived interest can favour others. The only reliable way to know is to run both on your own numbers in the student loan repayment plan calculator, which shows the standard plan, IBR and RAP side by side, year by year.

When a lower payment costs more

A plan that keeps your payment low also keeps the balance high for longer. Suppose an income-driven plan set the payment on the same loan at a fixed $400 a month, just above the interest.

At that payment the loan would take 310 months to repay and cost $63,951 in interest, far more than the $21,755 on the standard plan. In reality an income-driven payment rises as income rises, and the plan forgives what is left after 20, 25 or 30 years, so the true cost depends on your income path. That is the core trade-off:

• If you expect to repay the loan in full anyway, a lower payment mostly buys you more interest.
• If the balance is large compared with your income, an income-driven plan keeps payments affordable and forgiveness can erase much of the cost. Chapter 3 covers that strategy, including the tax that may come with it.

Switching plans and staying enrolled

You can generally change federal plans when your situation changes, by applying through studentaid.gov or your servicer. Before switching, check three things: whether unpaid interest will be capitalized when you leave your current plan, whether your months so far count toward forgiveness on the new plan, and whether the new plan is open to your loans at all.

Income-driven plans require you to update your income and family size every year. If you miss the deadline, your payment can jump to the standard amount. When you apply, give consent for the Department of Education to get your tax information directly from the IRS where the option is offered; it lets the annual recertification happen without paperwork.