Student Loan Repayment: Everything You Need to Know

Student Loan Repayment Options

The U.S. Department of Education currently offers several repayment options, giving borrowers flexibility based on their income and goals. Here's a quick summary of what's available.

Standard Repayment Plan

The standard repayment plan is the default for federal student loans. In most cases, you'll make fixed monthly payments over 10 years. If you consolidate your student loans, you may be able to extend that to up to 30 years.

Current borrowers can stay on this plan, but anyone with loans disbursed on or after July 1, 2026, will use a new tiered version with terms of 10 to 25 years based on the loan balance—more on that in a minute.

Graduated Repayment Plan

The graduated repayment plan starts with lower monthly payments that increase over time, usually every two years, so your loans are paid off within 10 years (or up to 30 years with a consolidation loan).

Be aware: This plan will not be available for loans disbursed on or after July 1, 2026, though current borrowers can keep using it for their existing loans.

Extended Repayment Plan

If you have more than $30,000 in outstanding direct loans, you may qualify for the extended repayment plan. You can choose fixed or graduated monthly payments, with the debt paid off within 25 years.

Be aware: Like the graduated plan, the extended plan will close to loans disbursed on or after July 1, 2026, but current borrowers can keep using it.

Pay As You Earn (PAYE) Plan

The PAYE plan caps your monthly payment at 10% of your discretionary income, calculated as the difference between your annual income and 150% of the federal poverty guideline. Your payment will never exceed what you'd pay on the 10-year standard plan, and any balance you still owe is forgiven after 20 years.

Be aware: PAYE will no longer be available to new enrollees on July 1, 2026, and it sunsets entirely by July 1, 2028, at which point current PAYE borrowers will need to switch to another plan.

Income-Based Repayment (IBR) Plan

The IBR plan is designed for borrowers with high loan balances relative to their income. If you took out your first loan on or after July 1, 2014, your payment is 10% of discretionary income—the same threshold as the PAYE plan—with forgiveness after 20 years. If you borrowed before that, your payment is 15%, and any remaining balance is forgiven after 25 years.

IBR remains available indefinitely, but only to borrowers with loans disbursed before July 1, 2026.

Income-Contingent Repayment (ICR) Plan

The ICR plan sets your monthly payment as the lesser of 20% of your discretionary income or what you'd pay on a 12-year fixed plan adjusted for your income. Discretionary income here is the amount above 100% of the federal poverty guideline, and any remaining balance is forgiven after 25 years.

Be aware: If you have parent PLUS loans, ICR is the only income-driven option, and you'll need to consolidate your loans to use it. That said, ICR closes to new enrollees on July 1, 2026, and fully sunsets by July 1, 2028.

Tiered Standard Repayment Plan

Launching July 1, 2026, the new tiered standard repayment plan replaces the existing standard plan for borrowers with loans disbursed on or after that date. Like the current standard plan, payments are fixed for the life of the loan, and your repayment term is based on your total loan balance:

Repayment Assistance Plan (RAP)

Launching July 1, 2026, the new repayment assistance plan is an income-driven repayment plan that sets monthly payments at 1% to 10% of your total adjusted gross income, with a $10 minimum.

Each dependent you claim on your taxes reduces your payment by $50, and any remaining balance is forgiven after 30 years. RAP will be available to any borrower with eligible direct loans and is the only income-driven plan available to borrowers who take out loans on or after July 1, 2026.

What Is the Best Student Loan Repayment Plan?

The best plan depends on your income, balance and goals. Here's how to narrow it down:

• If you want to pay off your loans quickly: A fixed-payment plan like the standard plan—or the new tiered standard plan for newer borrowers with smaller balances—generally means paying less interest overall than with an income-driven plan. You can also pay more than the minimum on any plan without penalty to shorten your payoff timeline.
• If your payment feels unaffordable: Consider an income-driven repayment plan. For example, current borrowers can use IBR as long as their loans were disbursed before July 1, 2026. Anyone with loans disbursed on or after that date will use RAP instead. An income-driven plan can also unlock potential forgiveness after completing your term.
• If you're pursuing Public Service Loan Forgiveness (PSLF): You'll need to be on an income-driven plan to qualify, so IBR is your best bet for now. RAP will also qualify for PSLF once it launches in July 2026.
• If you took out your first loan before July 1, 2026: Existing borrowers have more flexibility to choose based on their needs, with access to the standard, graduated, extended and IBR plans. PAYE and ICR remain options for now but are sunsetting by July 1, 2028.
• If you're a parent PLUS borrower: ICR is currently the only income-driven plan available after consolidation, but parent PLUS loans taken out on or after July 1, 2026, can only be repaid under the new tiered standard repayment plan.

How Do New Repayment Rules Affect Your Credit?

Recent rule changes have raised the stakes for borrowers when it comes to credit. Here's what to watch for:

• The end of SAVE forbearance: Starting July 1, 2026, the roughly 7.5 million borrowers in SAVE forbearance will need to choose a new repayment plan within 90 days. Otherwise, they'll be moved to the standard repayment plan or the new tiered standard plan. Missing payments after the transition can lead to delinquency and credit damage.
• Defaulted loans still report to credit bureaus: In January 2026, the Education Department delayed involuntary collections like wage garnishment and Treasury offset to give borrowers more time to evaluate new repayment options. But defaulted loans are still reported to the credit bureaus, which can damage your credit score.
• Higher payments under new plans: Borrowers moving from SAVE or other income-driven plans to a new option like RAP or the new tiered standard repayment plan may see higher monthly payments. A bigger bill increases the risk of falling behind if your budget can't absorb it.

To check how your student loans are showing up on your credit history, you can request your reports from each bureau through AnnualCreditReport.com. You can also access your Experian credit report for free anytime.

How to Budget for Student Loan Repayment

Restarting student loan payments after a few years can impact your financial situation, even if you can afford it. Depending on your circumstances, you may need to make adjustments to your investing and savings goals, debt payoff plan or lifestyle spending.

Here are some tips to help you make room in your budget for student loan payments:

• Evaluate your income and expenses. Take a look at your income and expenses for the past few months to get a general idea of how much you earn and where your money is going. Categorizing your expenses can give you an even better look at how you're spending your money so you can decide your next steps.
• Look for opportunities to cut spending. As you evaluate your expenses, consider ways you can reduce your spending. For example, you may consider canceling subscriptions you don't use or sharing subscriptions with a family member or friend to reduce your cost. You can also minimize eating out and entertainment and even evaluate your necessary expenses—such as utilities, insurance premiums and groceries—to see if you can save.
• Consider ways to increase your income. Earning more money may be difficult if you have special demands on your time outside of work, or you're subject to other circumstances outside of your control. But if you do have the time and capacity, consider ways to increase your income, such as working overtime hours, asking for a raise, switching jobs or adding a second job or side hustle.
• Look at other financial goals. If you were able to take advantage of the student loan payment pause to put more money toward other financial goals, such as retirement, education, emergency savings or paying off high-interest debt, consider adjusting some of those contributions to make room for student loans.
• Consider consolidating your federal loans. If you're juggling multiple loan payments, a direct consolidation loan rolls them into one monthly bill, which can make your budget easier to manage. Extending the repayment term can also lower that monthly payment to free up cash, though you'll pay more interest over the life of the loan.

Should You Refinance Your Student Loans?

If you have an excellent credit score and a high income, student loan refinancing can potentially help you secure a lower interest rate than what you're currently paying. You could also shorten your repayment term to as little as five years with some lenders, which can be helpful if you can afford a higher monthly payment and want to pay down your debt faster.

However, most federal student loan borrowers won't benefit from refinancing their loans with a private lender. Doing so would cause you to lose access to federal loan benefits, including forgiveness programs, income-driven repayment plans and generous forbearance and deferment options.

Frequently Asked Questions

Monitor Your Credit as You Repay

Making on-time student loan payments is one of the most reliable ways to build and maintain a good credit score. With Experian's free credit monitoring service, you'll get access to your Experian credit report and FICO^® Score^Θ, plus real-time alerts when changes are made to your credit file. That makes it easier to catch issues early and see exactly how your repayment progress is shaping your score.