How To Choose the Best Student Loan Repayment Plan in 2025

The default Standard Repayment Plan is just one of many federal student loan repayment plans available to borrowers. Different factors go into choosing a repayment plan, but it starts with finding a strategy that works with — not against — your budget.

Being tied to a repayment plan that isn't aligned with your financial reality can be stressful. A 2024 survey by The Pew Charitable Trusts revealed that 57% of student loan borrowers felt that keeping up with monthly payments was difficult.

Here's what you need to know about the available repayment options and how to choose the best student loan repayment plan to make chipping away at your debt more manageable.

Current student loan refinance rates

What are the federal student loan repayment plans? There are seven federal student loan repayment plans to choose from:

• Standard Repayment: This is the default repayment plan you're enrolled in if you don't select a plan. Your outstanding balance is equally divided over a 10-year term, and your monthly payment amount never changes.
• Graduated Repayment: Like its name suggests, this plan gradually increases your monthly payment amount over a 10-year repayment period. Increases typically occur every 2 years.
• Extended Repayment: This plan gives you a longer repayment term of 25 years, with monthly payments that are either fixed or graduated. You must have more than $30,000 in outstanding Direct Loans to qualify for the Extended Repayment Plan.
• Saving on a Valuable Education (SAVE): Payments are based on 10% of your discretionary income over a 20- or 25-year term, depending on whether your loans were borrowed for your undergraduate or graduate degree.
• Income-Based Repayment (IBR): Payments are 10% of your discretionary income over 20 years for loans borrowed after July 1, 2014. For loans borrowed before that date, payments are set at 15% of your discretionary income for 25 years. Your payments can't exceed what you'd pay on the Standard Plan.
• Pay As You Earn (PAYE): You pay 10% of your discretionary income over a 20-year term. Like IBR, PAYE payments can never be more than your payment under the Standard Plan.
• Income-Contingent Repayment (ICR): ICR sets payments at 20% of your discretionary income for 25 years. It's the highest payment and is the most costly of all IDR plans. However, it's the only IDR option accessible to parent PLUS loan borrowers.

When to choose the Standard Repayment Plan 

“The Standard Plan is a good option to consider for borrowers if you expect steady income growth, don't plan to pursue forgiveness, and want to minimize interest costs quickly,” says Cathy Lu Espel, certified financial planner (CFP) and certified student loan professional (CSLP) at First Horizon Advisors Financial Planning.

“In those cases, the 10-year payoff schedule is both efficient and predictable,” she adds.

Having a monthly payment amount that never changes also makes it easier to budget around your student debt. If you can afford the higher monthly payments up front, this option offers the lowest out-of-pocket cost for borrowers.

When to choose the Graduated Repayment Plan 

Borrowers pursuing careers with low entry-level salaries but high long-term earning potential might benefit from the Graduated Repayment Plan. This might be a good option for medical residents with modest incomes early in their careers, for example.

It raises your payment amount every two years for progressively larger payments as you earn more, and accrues more interest than the Standard Plan overall.

When to choose the Extended Repayment Plan

Borrowers who have more than $30,000 in Direct Loans and need a low monthly payment for a longer period might benefit from the Extended Repayment Plan. It lets you stretch your repayment term to 25 years, and your payment can either be fixed or graduated.

This might be a good option if, for example, you borrowed loans to attend a pricey private university and your payments on the Standard Plan are unreasonably high.

The Extended Repayment Plan isn't a qualifying repayment plan for Public Service Loan Forgiveness (PSLF), so it isn't ideal if you work in a qualifying public service role and might pursue loan forgiveness.

When to choose an income-driven repayment plan

A federal loan income-driven repayment (IDR) plan offers long-term payment relief by calculating fixed monthly payments based on your income and family size. IDR plans include SAVE, PAYE, IBR, and ICR.

You'll need to recertify your information annually while on an IDR plan, but the trade-off is significantly lower monthly payments, sometimes as low as $0.

“The main long-term trade-off is speed versus flexibility,” says Espel.

“Fixed repayment clears your debt faster and with less interest, but it requires higher payments up front,” she explains. “IDR allows for more breathing room if your income is low or fluctuates, but the typical repayment period is over 20 to 25 years, often with more interest. Borrowers may want to consider balancing peace of mind today against cost and duration over time.”

They also help borrowers access student loan forgiveness through two pathways:

• IDR forgiveness: After successfully making payments for a plan's full repayment term, any remaining balance on qualifying federal student loans is forgiven. The forgiven amount might be considered taxable income.
• Public Service Loan Forgiveness: IDR plans qualify for PSLF and can help you achieve forgiveness within 10 years if you meet the other eligibility requirements.

Changes to IDR plans

Due to recent legislation, SAVE, PAYE, and ICR are being phased out. Borrowers with loans that were disbursed prior to July 1, 2026, and who are currently enrolled in these plans must transition to the new Repayment Assistance Plan (RAP), IBR, or a fixed repayment plan by July 1, 2028.

While RAP is an income-based repayment plan, it can be more expensive for borrowers overall, especially compared with the SAVE Plan.

“The monthly payments under RAP are lower than under IBR for low- and moderate-income borrowers (up to about $75,000) and higher for higher-income borrowers,” says Mark Kantrowitz, author of “How To Appeal for More College Financial Aid.”

“But, the remaining debt in RAP is forgiven after 30 years, instead of 20 years under IBR, so the borrowers will pay more in total under RAP than under IBR,” he adds.

For borrowers seeking a faster student loan forgiveness pathway, a 10-year timeline remains in effect for PSLF eligibility, regardless of the PSLF repayment plan you select.

How to switch repayment plans 

To change your repayment plan, follow these steps:

1. Use a student loan repayment calculator: This can help you compare monthly payments for each repayment plan.
2. Contact your loan servicer: Request a new repayment plan directly through your servicer, or submit an online request by logging in to your StudentAid.gov account.

You can request a new plan at any time, and there's no limit on the number of times you can switch. However, enrolling in an IDR plan requires annual income and family size recertification.