Credible takeaways
- Federal student loan repayment plans range from fixed monthly payments to income-driven options that adjust based on your earnings.
- New federal legislation passed in 2025 will dramatically reshape available repayment plans for new borrowers starting July 1, 2026 — consolidating many existing options into just two.
- Current borrowers will retain access to most repayment plans, but some will be phased out, requiring action before July 1, 2028.
- The best repayment plan for you depends on income stability, loan balance, eligibility for forgiveness, and whether you’ll benefit from protections available only in federal programs.
Federal student loan repayment plans determine how much you pay each month and how long it takes to eliminate your debt. Borrowers can choose from several repayment structures, including income-driven repayment (IDR) options tied to earnings. But sweeping changes signed into law in 2025 will dramatically narrow repayment choices for future borrowers beginning July 1, 2026, while phasing out most current IDR plans.
This guide explains how today’s repayment plans work, how the upcoming changes may affect you depending on when you borrowed, and how to choose the right repayment approach for your financial goals.
Current private student loan rates
How does income-driven repayment work?
Income-driven repayment (IDR) plans are designed to make student loan payments more manageable by adjusting the amount you owe each month based on your income and family size. Payments under IDR plans range from 5% (starting in July 2024) to 25% of your discretionary income, depending on the specific plan.
Unlike other federal repayment options, IDR plans offer the benefit of forgiving any remaining loan balance at the end of your repayment period — 10 to 25 years, depending on the plan.
Existing IDR plans
There are currently four income-driven repayment plans for federal student loans:
1. Saving on a Valuable Education (SAVE) Plan
Payments equal 5% of discretionary income for undergraduate loans and 10% for graduate loans. Forgiveness is available after 10 to 25 years, depending on your starting loan balance.
Note
Due to ongoing litigation, the SAVE Plan is on hold, and borrowers are currently in forbearance that doesn’t count toward forgiveness. However, as of Aug. 1, 2025, interest has begun accruing again for borrowers in the SAVE Plan.
2. Income-Based Repayment (IBR)
Payments on IBR equal 10% of discretionary income or 15% if you first borrowed before July 1, 2014. Forgiveness is available after 20 years or 25 if you borrowed before July 1, 2014. Payments are capped and won't exceed the amount due on the Standard Repayment Plan.
3. Income-Contingent Repayment (ICR)
Payments on ICR equal the lesser of 20% of discretionary income or the amount you'd pay on a repayment plan with a fixed payment over 12 years, adjusted to your income. Forgiveness is available after 25 years. Payments may exceed the amount due under the Standard Repayment Plan if your income is too high.
4. Pay as You Earn (PAYE)
Payments on PAYE equal 10% of your discretionary income, and forgiveness is available after 20 years. Payments are capped and cannot exceed the amount due under the Standard Repayment Plan. Note that the PAYE plan has been discontinued as of July 1, 2024, and no new enrollments are being accepted.
Good to know:
Discretionary income is defined as the difference between your annual income and 150% of the poverty guideline for your family size and state. Under the SAVE Plan, this threshold increases to 225%.
Federal student loan repayment plan changes effective in 2026
The “One, Big, Beautiful Bill Act” restructures federal student loan repayment and eliminates many current plans. These changes affect borrowers differently depending on whether they borrowed before or after July 1, 2026.
What’s changing for new borrowers in July 2026
New borrowers will have only two repayment plan options:
- Standard Repayment Plan: Terms range from 10 to 25 years, depending on loan amount. Payments are fixed.
- Repayment Assistance Plan (RAP): A new income-driven plan tied to income over a 30-year repayment term. Any remaining balance after 30 years is forgiven. Unpaid monthly interest is waived, preventing negative amortization.
New borrowers after July 1, 2026, will not be eligible for:
- PAYE
- SAVE
- ICR
- IBR
What’s changing for current borrowers in July 2026?
Borrowers with loans disbursed before July 2026 may retain access to most income-driven repayment plans. However, after July 2028, all except those in the IBR Plan will be shifted into the new RAP plan if they don’t select a plan.
Important
If your loans were made before July 1, 2026, you can still enroll in IBR as long as you do so by July 1, 2028, and don’t take out any new loans after July 2026.
Read More: IBR vs. RAP: How These Repayment Assistance Programs Compare
Editor insight: “Don’t wait too long to rethink your strategy if income-driven repayment is important to you. If you have pre-2026 loans, I recommend reviewing your plan now and deciding whether enrolling in IBR before the 2028 deadline makes sense. Once the transition hits, your options narrow, and the right choice can significantly affect your long-term costs.”
— Richard Richtmyer, Student Loans Managing Editor, Credible
How to apply for an IDR plan
To enroll in an income-driven repayment plan, follow these steps:
- Sign in to your Federal Student Aid Account.
- Complete an Income-Driven Repayment Plan Request. Be prepared to answer questions about your employment, marital status, and family size.
- Provide proof of income. You can authorize the IRS to release your tax returns to satisfy this requirement.
- Select an IDR plan you're eligible for that offers the lowest monthly payment and works best for you.
You can also download a copy of the IDR enrollment form from the Department of Education's forms library and fax or mail the request to your loan servicer.
Recertify annually to stay on track for forgiveness
IDR plans must be recertified annually. You can provide consent for automatic recertification if you have at least one federal student loan that's not in default and no active FFEL program loans. If you don't sign up for automatic recertification, you'll need to recertify manually by submitting another IDR application. Your loan servicer should notify you at least three months before the recertification deadline.
Recertification ensures you pay the correct amount based on income and family status. If you fail to recertify by the deadline, you'll be placed back on a different plan, which may increase your monthly payments.
Once you've made your final qualifying payment, any remaining balance on your student loans is eligible for forgiveness.
Good to know:
Federal taxes are waived on forgiveness obtained through IDR plans through 2025. After that time, unless Congress acts, you'll be federally taxed on the outstanding balance that was eliminated.
Is income-driven repayment right for me?
An IDR plan can be financially wise if you have a limited income and don't expect your earnings to increase substantially while you're in repayment. Consider switching to an income-driven plan if:
- You can't afford your monthly student loan payments and are at risk of default.
- You have high student loan debt relative to your income.
- You're unemployed or your income has recently dropped.
FAQ
How will federal student loan repayment plans change in 2026?
Open
Which student loan repayment plans are being phased out?
Open
Is the SAVE Plan going away?
Open
What is the Repayment Assistance Plan (RAP)?
Open
