Guide
Repayment Plans
A guide to every federal repayment plan: how payments are set, what happens if you pause them, and how to switch when your situation changes.
A repayment plan sets your monthly payment amount, repayment length, and how interest is handled. Federal plans range from a fixed standard schedule to income-driven options where the payment is a percentage of your discretionary income, recalculated every year.
Every federal student loan enters repayment on a schedule — and the schedule you are on shapes your monthly cash flow, total interest paid, and eligibility for certain forgiveness programs. This section maps all of those schedules: what makes them different, how payments within each one are calculated, and what the trade-offs are between paying less now and paying more overall.
The pages here are grouped around three practical questions: Which plan am I on and what does it mean? What happens when I can't pay? And how do I change course? You do not need to read everything in order, but if you are approaching graduation or have just received your first repayment notice, starting with *Choosing a Plan at Graduation* and *How Repayment Plans Differ From One Another* will orient you before you dig into the details.
One distinction runs through almost every page here: the difference between plans with a fixed payment set at disbursement and plans where the payment is recalculated based on what you earn. That difference affects not just your monthly bill but how interest accrues, whether any balance can grow over time, and which forgiveness timelines apply. Understanding it is the foundation for every other decision in this section.
This section covers repayment plan mechanics — how payments are set, paused, and switched — but does not cover what happens at the end of a repayment term under forgiveness or discharge programs; that is handled in Forgiveness and Discharge. If you are weighing whether to refinance federal loans into a private loan, see Refinancing and Consolidation.
What you need to understand first
Standard repayment
The default plan for most federal loans. Payments are fixed — the same amount every month — and the repayment term is set so the loan is paid in full by the end. Because the term is shorter than extended or income-driven alternatives, total interest paid over the life of the loan is typically lower, but the monthly payment is higher.
Income-driven repayment (IDR)
A family of plans that set your monthly payment as a percentage of your discretionary income rather than your loan balance. Because income varies from person to person, the payment is different for every borrower. You must recertify your income each year for the payment to stay accurate. Different IDR plans use different formulas; a rule change effective 1 July 2026 affects which formula applies to which borrowers.
Discretionary income
The figure IDR plans use to calculate your payment. It is the difference between your adjusted gross income and a set multiple of the federal poverty guideline for your family size. The multiple varies by plan. Because the poverty guideline is updated annually, your discretionary income — and therefore your payment — can shift even if your salary stays the same.
Grace period
The window between leaving school and the date your first payment is due. Interest on unsubsidized loans continues to accumulate during this period. What happens to that accrued interest — whether it capitalizes onto the principal — depends on the plan you enter and the loan type. The grace period length is set by loan type, not by the borrower.
Deferment and forbearance
Two ways to pause payments when you cannot make them. Both suspend your obligation to pay, but they treat interest differently, and the conditions that qualify you for each are not the same. Deferment on subsidized loans may include an interest subsidy; forbearance generally does not. Using either without understanding the interest consequences is one of the most common sources of unexpected balance growth.
Capitalization
The moment unpaid interest is added to your principal balance, making future interest calculations larger. It can occur at the end of a grace period, when you leave deferment, when you switch plans, or when you miss recertification on an IDR plan. A rule change on 1 July 2026 limits certain capitalization events for borrowers on newer IDR plans; the rules differ for loans disbursed before that date.
Mistakes to avoid with Repayment Plans
Staying on standard repayment because it is the default
Why it happens: Borrowers assume the default plan is the right one, or do not realize they can switch.
What to do instead: Log in to your servicer's account and compare your current plan against IDR options using the Loan Simulator on studentaid.gov before your first payment is due.
Missing annual IDR recertification
Why it happens: Borrowers set up an income-driven plan and treat it as permanent, not realizing it must be renewed every year.
What to do instead: Set a calendar reminder at least sixty days before your recertification deadline — your servicer is required to notify you, but delays happen — and submit updated income documentation on time.
Using forbearance without checking whether deferment applies
Why it happens: Forbearance is easier to request and servicers sometimes offer it first, so borrowers accept it without asking about alternatives.
What to do instead: Before accepting forbearance, ask your servicer explicitly whether you qualify for deferment, because deferment on subsidized loans may stop interest from accruing where forbearance does not.
Repayment Plans: common questions
How many federal repayment plans are there?
There is no single fixed count because plans have been added and modified by legislation and regulation over time, and some have been restricted to borrowers who took out loans before certain dates. The current list is published on studentaid.gov. Broadly, they fall into three groups: fixed-payment plans (standard and graduated), extended fixed plans, and income-driven plans, of which there are several with different formulas.
Can I switch repayment plans after I have already started paying?
Yes. Federal borrowers can request a plan change through their loan servicer at any time. Switching resets your repayment term under the new plan, which can lower monthly payments but extend how long you are paying and increase total interest. Certain switches — particularly out of an income-driven plan — may trigger capitalization of unpaid interest, so it is worth reviewing that consequence before you request the change.
What is the difference between deferment and forbearance?
Both pause your required payments. Deferment is available in specific circumstances defined by regulation — enrollment, economic hardship, unemployment, and others — and on subsidized loans the federal government may cover interest during that pause. Forbearance is available more broadly but interest generally continues to accrue on all loan types. After a 1 July 2026 rule change, some interest subsidy provisions changed; which version applies depends on when your loans were disbursed.
Does my repayment plan affect forgiveness eligibility?
Yes, in some cases. Public Service Loan Forgiveness requires that you be on a qualifying repayment plan — generally an income-driven plan — while making the payments that count toward forgiveness. IDR plans themselves carry their own forgiveness timelines based on when repayment began and how long you have been enrolled. Forgiveness rules are covered in the Forgiveness and Discharge section, not here.
What happens if I miss a payment?
A missed payment starts a clock toward delinquency, and delinquency that continues long enough leads to default. Each stage carries consequences — credit reporting, collection fees, loss of eligibility for future federal aid — that worsen the longer the loan stays unpaid. The page 'What Happens If You Miss a Payment' in this section explains the timeline and what steps can stop the progression before default is reached.
Does paying extra reduce my total interest?
It can, but only if the extra amount is applied to principal rather than credited toward future payments. How your servicer applies extra payments is not automatic — it depends on whether you direct them. The page 'Paying Extra and How Payments Are Applied' explains how to instruct your servicer to direct overpayments to principal, which is the step that actually reduces the balance interest is calculated on.
Sources for the figures on this page
- ED fact sheet on repayment simplification — checked 30 July 2026 Federal