Federal student loan repayment went through its biggest overhaul in years in 2026, and if the last thing you heard about repayment plans is now out of date, you're not alone, the SAVE plan was struck down, and two new repayment options launched for loans taken out after July 1, 2026. Understanding what actually applies to your loans now is the first step toward a repayment strategy that fits your situation.
This guide breaks down how student loans work, the repayment plans currently available, and how to think through which one fits your income and goals.
Federal vs. Private Student Loans
Federal student loans are issued by the U.S. Department of Education and come with borrower protections private loans generally don't offer: income-driven repayment options, deferment and forbearance provisions, and eligibility for federal forgiveness programs. Private student loans are issued by banks, credit unions, or online lenders, are underwritten based on credit (often requiring a co-signer for a young borrower with limited credit history), and carry far fewer built-in protections. Federal loans are generally the better default choice when available, with private loans typically used to fill a remaining funding gap after federal aid, grants, and scholarships.
Within federal loans, there are also subtypes worth knowing: subsidized loans (available based on financial need, with the government covering interest while you're in school) and unsubsidized loans (available regardless of financial need, with interest accruing the entire time, including while you're still in school). Knowing which type of federal loan you have affects how much interest has likely already accrued by the time repayment begins.
What Changed in 2026
The 2025 One Big Beautiful Bill Act significantly restructured federal student loan repayment, and a federal court struck down the SAVE plan (an income-driven repayment option introduced in prior years) in early 2026. Borrowers who were enrolled in SAVE are being transitioned to a different plan, with servicers required to notify affected borrowers and give them a window to actively choose a new plan before being automatically enrolled in a default option.
Two new repayment plans became available for loans first disbursed on or after July 1, 2026: the Repayment Assistance Plan (RAP), a new income-driven option, and the Tiered Standard Plan, a fixed-payment plan with terms based on loan balance. Meanwhile, the Graduated and Extended repayment plans stopped accepting new loans disbursed after that same date, though borrowers with older loans can generally keep using them.
PAYE and ICR, two older income-driven plans, are also being phased out under the new rules, they stopped accepting new enrollees in mid-2026 and are set to sunset entirely within a couple of years, meaning borrowers currently on those plans will eventually need to transition to one of the remaining options.
Repayment Plans for Loans Taken Out Before July 2026
Standard Repayment Plan
Fixed monthly payments over 10 years (up to 30 for consolidation loans). This plan generally results in the lowest total interest paid over the life of the loan, and is the default if you don't actively select a different plan.
Graduated Repayment Plan
Payments start lower and increase every two years, typically over a 10-year term. Useful if you expect meaningfully rising income, but results in more total interest paid than the Standard plan.
Extended Repayment Plan
Available if you owe more than $30,000 in eligible federal loans, with fixed or graduated payments stretched over up to 25 years, lower monthly payments, but more total interest.
Income-Based Repayment (IBR)
Ties your monthly payment to a percentage of discretionary income, with remaining balance forgiveness after 20 or 25 years depending on when you first borrowed. Recent changes removed the previous partial financial hardship requirement, opening IBR to any borrower with eligible loans.
Repayment Plans for Loans Taken Out After July 2026
Repayment Assistance Plan (RAP)
The new income-driven plan for loans disbursed after July 1, 2026, setting payments at roughly 1% to 10% of adjusted gross income (or a flat $10 a month for very low income), with potential forgiveness of any remaining balance after 30 years of qualifying payments.
Tiered Standard Repayment Plan
A fixed-payment plan with a term of 10, 15, 20, or 25 years depending on your total loan balance, replacing the old Graduated and Extended options for these newer loans.
How to Choose the Right Plan
If minimizing total interest paid is the priority and the payment is affordable, the Standard (or Tiered Standard) plan is usually the most cost-effective choice. If your income is currently low relative to your loan balance, an income-driven plan like IBR or RAP keeps payments manageable, though typically at the cost of more total interest paid over a longer period, and potential tax implications if a balance is eventually forgiven. Because this decision has real long-term financial consequences and the rules continue to evolve, using your loan servicer's repayment estimator with your actual numbers, rather than relying on general guidance alone, is worth the time before committing to a plan.
It's also worth revisiting your plan periodically rather than treating the initial choice as permanent. A significant raise, a new job, marriage, or a growing family can all change the math meaningfully, a plan that made sense at graduation may no longer be the cheapest or most sensible option five years later, and federal borrowers are generally free to switch plans as circumstances change.
Working With Your Loan Servicer, and Avoiding Scams
Your loan servicer is the company that manages your billing and payments on behalf of the Department of Education, and it's worth knowing who yours is and how to log in to their portal, since that's where you'll actually select a repayment plan, apply for deferment or forbearance, and see your current balance and interest accrual. Servicers do occasionally change, sometimes without much notice, so if your usual login stops working, check studentaid.gov to confirm your current servicer before assuming something is wrong.
Student loan repayment is also a common target for scams, particularly during periods of major policy change like 2026, when confusion creates an opening for bad actors. Legitimate servicers never charge an upfront fee to enroll you in an income-driven plan or consolidate your loans, both are free services you can complete yourself directly through your servicer or studentaid.gov. Be skeptical of any company that contacts you unprompted promising loan forgiveness in exchange for an upfront payment or your Federal Student Aid ID login information.
Refinancing Student Loans: When It Does and Doesn't Make Sense
Refinancing replaces one or more student loans with a new private loan, ideally at a lower interest rate. This can reduce total interest paid for borrowers with strong credit and stable income, but it's important to understand the trade-off: refinancing federal loans into a private loan permanently forfeits federal protections, including income-driven repayment eligibility and access to federal forgiveness programs. Refinancing is generally a more straightforward decision for existing private loans, or for federal loans from a borrower confident they won't need federal protections going forward.
Managing Loans During and After School
Most federal loans offer a grace period, commonly six months, after you leave school before payments must begin, a useful window to find employment and set up a budget around your new payment, but not a reason to ignore the loans entirely during that time. If your financial situation changes after repayment begins, a job loss, a pay cut, an income change, federal loans offer deferment or forbearance options that can temporarily pause or reduce payments, generally with less damage to your finances than simply missing payments would cause. Contact your servicer proactively if you're struggling, rather than waiting until you've already missed a payment.
Frequently Asked Questions
The SAVE plan, an income-driven repayment option, was vacated by a federal court in early 2026. Borrowers enrolled in SAVE are being transitioned to a different repayment plan, with servicers providing notice and a window to actively select one before automatic enrollment in a default option.
The Repayment Assistance Plan and Tiered Standard Plan apply to loans first disbursed on or after July 1, 2026. Borrowers with older loans generally continue using the previously available plans, such as Standard, Graduated, Extended, and IBR, based on their loan's disbursement date.
It depends on your current income relative to your loan balance and your priorities. Standard repayment minimizes total interest if you can afford the payment; income-driven plans keep payments manageable on a lower income but generally cost more in total interest over a longer repayment period.
Certain forgiveness pathways remain available depending on your specific plan and circumstances, including forgiveness after a set number of years on an income-driven plan. Given how much has changed recently, confirm current eligibility directly with your loan servicer or the Federal Student Aid website rather than relying on older information.
Only after carefully weighing the trade-off, refinancing federal loans into a private loan permanently gives up federal protections like income-driven repayment and forgiveness eligibility, even if it lowers your interest rate.
Borrowers who don't actively select a plan within the notice period are generally auto-enrolled into a default option, such as Standard Repayment or the Tiered Standard Plan, which may not be the most cost-effective choice for your specific situation.
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