Federal student loans offer multiple repayment plans, from the standard 10-year plan to income-driven options that can stretch to 25 years with forgiveness. Choosing the right plan can save you tens of thousands of dollars.
All Federal Student Loan Repayment Plans at a Glance
| Plan | Monthly Payment | Term | Forgiveness |
|---|---|---|---|
| Standard | Fixed (over 10 years) | 10 years | None |
| Graduated | Starts low, increases | 10 years | None |
| Extended | Fixed or graduated | 25 years | None |
| SAVE/REPAYE | 5–10% of discretionary income | 20–25 years | After 20-25 years |
| PAYE | 10% of discretionary income | 20 years | After 20 years |
| IBR (new) | 10% of discretionary income | 20 years | After 20 years |
| IBR (old) | 15% of discretionary income | 25 years | After 25 years |
| ICR | 20% of discretionary income | 25 years | After 25 years |
Standard Repayment Plan
| Feature | Details |
|---|---|
| Monthly payment | Fixed amount |
| Term | 10 years |
| Eligibility | All federal loan borrowers (default plan) |
| Interest paid | Least of any plan |
| PSLF eligible | Yes |
Example ($37,850 at 5.5%)
- Monthly payment: $411
- Total paid: $49,285
- Total interest: $11,435
Best for: Borrowers who can afford the payments and want to pay the least overall.
SAVE Plan (Saving on a Valuable Education)
| Feature | Details |
|---|---|
| Monthly payment | 5% of discretionary income (undergrad) / 10% (grad) |
| Discretionary income definition | Income above 225% of federal poverty line |
| Term | 20 years (undergrad) / 25 years (grad or mixed) |
| Interest subsidy | Government covers unpaid interest |
| Forgiveness | Remaining balance after 20-25 years |
| PSLF eligible | Yes |
Example ($37,850, $50,000 income, single)
- 225% of poverty line (2026): ~$35,100
- Discretionary income: $50,000 – $35,100 = $14,900
- Monthly payment: $14,900 × 5% ÷ 12 = $62/month (undergrad)
- Monthly payment: $14,900 × 10% ÷ 12 = $124/month (grad)
Key advantages:
- Lowest payments of any IDR plan for undergrad
- Government pays all unpaid interest (balance won’t grow)
- Forgiveness after 20-25 years
- $0 payments count toward forgiveness and PSLF
Best for: Lower-income borrowers, public service workers pursuing PSLF, those with undergraduate loans.
PAYE (Pay As You Earn)
| Feature | Details |
|---|---|
| Monthly payment | 10% of discretionary income |
| Cap | Never more than Standard plan payment |
| Term | 20 years |
| Eligibility | New borrowers as of Oct 1, 2007, with disbursement after Oct 1, 2011 |
| Forgiveness | After 20 years |
| PSLF eligible | Yes |
Example ($37,850, $50,000 income, single)
- Discretionary income: $50,000 – $22,590 (150% FPL) = $27,410
- Monthly payment: $27,410 × 10% ÷ 12 = $228/month
Best for: Borrowers who don’t qualify for SAVE or who want the 10% cap with 20-year forgiveness.
IBR (Income-Based Repayment)
New IBR (borrowed after July 1, 2014)
| Feature | Details |
|---|---|
| Monthly payment | 10% of discretionary income |
| Cap | Never more than Standard plan payment |
| Term | 20 years |
| Forgiveness | After 20 years |
| PSLF eligible | Yes |
Old IBR (borrowed before July 1, 2014)
| Feature | Details |
|---|---|
| Monthly payment | 15% of discretionary income |
| Cap | Never more than Standard plan payment |
| Term | 25 years |
| Forgiveness | After 25 years |
| PSLF eligible | Yes |
ICR (Income-Contingent Repayment)
| Feature | Details |
|---|---|
| Monthly payment | 20% of discretionary income or 12-year fixed (whichever is less) |
| Term | 25 years |
| Forgiveness | After 25 years |
| PSLF eligible | Yes |
| Unique feature | Only IDR plan available for Parent PLUS loans (via consolidation) |
Repayment Plan Comparison ($37,850, 5.5% Rate)
For a borrower earning $50,000 with 3% annual income growth:
| Plan | Monthly Payment (Year 1) | Total Paid | Forgiven |
|---|---|---|---|
| Standard | $411 | $49,285 | $0 |
| Graduated | $282 (starts) | $52,100 | $0 |
| Extended | $247 | $73,965 | $0 |
| SAVE (undergrad) | $62 | ~$25,000 + forgiveness | ~$30,000 |
| PAYE | $228 | ~$42,000 + forgiveness | ~$8,000 |
| IBR (new) | $228 | ~$42,000 + forgiveness | ~$8,000 |
| IBR (old) | $342 | ~$51,000 | $0 (likely paid off) |
Note: Forgiven amounts under IDR plans may be taxable income (though currently waived). PSLF forgiveness is always tax-free.
Public Service Loan Forgiveness (PSLF)
PSLF forgives your remaining balance after 120 qualifying monthly payments (10 years) while working full-time for:
- Federal, state, or local government
- 501(c)(3) nonprofits
- Military
- Public schools and universities
- Public hospitals
PSLF Strategy
The optimal PSLF strategy maximizes forgiveness:
| Strategy | Year 1 Payment | Total Paid (10 years) | Amount Forgiven |
|---|---|---|---|
| Standard plan + PSLF | $411 | $49,285 | $0 |
| SAVE + PSLF (undergrad) | $62 | ~$15,000 | ~$35,000 |
| PAYE + PSLF | $228 | ~$35,000 | ~$15,000 |
Using SAVE instead of Standard while pursuing PSLF saves over $34,000 in this example.
Decision Framework
Choose Standard Repayment If:
- You can comfortably afford the payment
- You want to pay the least interest
- Your debt-to-income ratio is manageable
- You don’t qualify for or want forgiveness
Choose SAVE If:
- You have undergraduate loans
- Your income is low relative to your debt
- You work in or plan to work in public service (PSLF)
- You want the lowest possible payment
Choose PAYE/IBR If:
- You don’t qualify for SAVE
- You want income-driven payments with forgiveness
- You’re pursuing PSLF
Choose Extended Repayment If:
- You want lower fixed payments without income verification
- You don’t qualify for or want IDR plans
- You understand the significantly higher total cost
Refinancing vs. Federal Repayment Plans
| Factor | Federal Plans | Private Refinancing |
|---|---|---|
| Interest rates | Fixed, set by Congress (5-8%) | Fixed or variable (4-10%+) |
| Income-driven options | Yes | No |
| Forgiveness eligibility | Yes (PSLF, IDR) | No |
| Deferment/forbearance | Yes | Limited or none |
| Cosigner release | N/A | Sometimes available |
| Rate based on | Same for all borrowers | Credit score + income |
Never refinance federal loans with a private lender if: You’re pursuing PSLF, you may need income-driven payments, or you may need deferment protections.
Consider refinancing if: You have private loans already, you have high income and excellent credit, and you don’t need federal protections.
Related: Average Student Loan Debt by State | Average American Debt | Debt Payoff Strategies | Income Percentile Calculator