Which federal student loan repayment plan costs me the least?
Compare the 10-year Standard Plan, Income-Based Repayment and the new Repayment Assistance Plan on your balance and income: monthly payment, time, total paid and what is forgiven.
Where you liveThe poverty guideline used by IBR is higher in Alaska and Hawaii.
When you first borrowed
IBR takes 10% of discretionary income and forgives after 20 years.
LOWEST FIRST PAYMENT
$681
On $60,000 at 6.50%, the Standard Plan is $681 a month, repaid in 10 years for $81,755 in all. IBR starts at $681 a month (10% of discretionary income, never more than the Standard payment), repaid in 10 years for $81,755 in all. RAP starts at $1,172 a month (10% of your AGI), repaid in 4 years 9 months for $70,053 in all. Forgiven balances may be taxed as income.
Standard a month
$681
IBR a month
$681
RAP a month
$1,172
Least paid in all
RAP
UNDERSTAND YOUR RESULT
Monthly payment by year
Standard (10 years)IBR (10%)RAP
The Standard payment stays at $681 for 10 years. IBR starts at $681 and follows your income, capped at the Standard payment; RAP starts at $1,172 and rises as your AGI moves into higher bands. A plan that repays early stops sooner.
What you still owe, year by year
After one year you owe $55,595 on Standard, $55,595 on IBR and $49,527 on RAP. The longest plan runs 10 years here.
The three plans side by side
| Plan | First payment | Time | Total paid | Forgiven |
|---|---|---|---|---|
| Standard (10 years) | $681 | 10 years | $81,755 | $0 |
| IBR (10%) | $681 | 10 years | $81,755 | $0 |
| RAP (least paid) | $1,172 | 4 years 9 months | $70,053 | $0 |
Total paid counts every payment: $81,755 on Standard, $81,755 on IBR, $70,053 on RAP. A forgiven balance may count as taxable income when it is forgiven, and the plans differ in what they forgive, so the least paid is not always the best for you.
How it's computed
FORMULA
Standard payment = balance × i ÷ (1 − (1 + i)^−120), with i = rate ÷ 12
IBR payment = (10% or 15%) × (AGI − 150% of the poverty guideline for family size) ÷ 12, never more than the Standard payment, recalculated each year
RAP payment = (AGI × band share) ÷ 12 − $50 × dependents, at least $10; band share 1% over $10,000 rising a point per $10,000 to 9% at $100,000 and 10% above; $120 a year base at $10,000 or less
Each month: interest = balance × rate ÷ 12; Standard and IBR pay accrued interest first, RAP waives interest the payment does not cover and adds up to $50 of matching principal
Forgiveness: what is left after 120 months (Standard, repaid), 240 or 300 (IBR) or 360 (RAP)
- These rules are for Direct Loans disbursed before July 1, 2026 (studentaid.gov). Loans disbursed on or after that date are not eligible for the Standard Plan; they have the Tiered Standard Plan and RAP.
- Your income grows 3.0% a year and the poverty guideline 3% a year; one interest rate applies to the whole balance. IBR is shown for someone who qualifies; it requires a high debt relative to income, and this page does not test that.
- Unpaid interest on Standard and IBR is carried without compounding and is not capitalized; capitalization when leaving IBR is not modelled. Under RAP unpaid interest is waived.
- Only your income and dependents are used, as for a single or separate return. A joint return uses combined income, and Public Service Loan Forgiveness (which can forgive after 10 years) is not modelled.
- Forgiven balances may be taxed as income (the servicers say so); tax on them is not counted. The rules and the poverty guideline change, so check studentaid.gov before you choose.
WORKED EXAMPLE · SAMPLE NUMBERS
Standard: $60,000 at 6.50% over 120 months is $681 a month, $81,755 in all. IBR: 10% of ($140,650 − 150% of the guideline) ÷ 12 is $681 in year 1, capped at $681; over 10 years you pay $81,755. RAP: 10% of $140,650 ÷ 12 is $1,172 in year 1; over 4 years 9 months you pay $70,053.
SOURCES
[1]Repayment Assistance Plan (RAP): payment calculation, forgiveness, interest subsidy, matching principal paymentFederal Student Aid loan servicer information center (Edfinancial Services)[2]Income-Based Repayment (IBR): payment calculation and forgivenessFederal Student Aid loan servicer information center (Edfinancial Services)[3]Standard Repayment Plan (and the Tiered Standard Plan for loans disbursed on or after July 1, 2026)Federal Student Aid[4]2026 poverty guidelinesU.S. Department of Health and Human Services, ASPEHSBuilt by Hussain Sehorewala · checked against worked examples · Sep 29, 2026
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Questions about this result
A plan for Direct Loan borrowers that sets your payment as a share of your adjusted gross income, from 1% above $10,000 up to 10% above $100,000, less $50 for each dependent, with a $10 minimum. Interest a payment does not cover is waived, the government adds up to $50 to principal if a payment reduces it by less, and the balance is forgiven after 30 years of payments. You can apply from July 1, 2026.
It depends on your income and balance, and none is best for everyone. On the example on this page, $60,000 at 6.5% with $140,650 of income, IBR is capped at the Standard payment of $681.29, so it costs the same as Standard, $81,755 in all over 10 years. RAP starts higher, at $1,172 a month, because it takes 10% of income at this level, but pays the loan off in 4 years 9 months for $70,053 in all.
Income-driven plans scale with income, so at a lower income the payment falls a lot and more of the loan is forgiven at the end. With the same loan and $25,000 of income, IBR starts at $8.83 a month and forgives $135,152 after 20 years; RAP starts at $41.67 and forgives $42,369 after 30 years. A forgiven balance may be taxed as income.
IBR takes 10% or 15% of your income above 150% of the poverty guideline, is capped at what you would pay on the 10-year Standard Plan, and forgives after 20 or 25 years, but unpaid interest keeps accruing. RAP takes a share of your whole AGI by band, has no such cap, waives unpaid interest and matches principal, and forgives after 30 years.
The loan servicers say a forgiven amount may be considered income for tax purposes. This page does not estimate that tax, and it can be large: a $135,000 forgiven balance could be taxed as ordinary income in the year of forgiveness.
Loans disbursed on or after July 1, 2026 (which have the Tiered Standard Plan and RAP), Parent PLUS loans, Public Service Loan Forgiveness, a spouse’s income on a joint return, capitalization of interest, the partial financial hardship test for IBR, and taxes.
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