Should I Use a Student Loan Repayment Program?

By Carolyn Morris | Published on October 21, 2025

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Repaying student loans can be intimidating—but there are ways to make them more manageable.

Refinancing your student loans is one way to lessen the burden—when you refinance¹, you typically get a lower interest rate which can save you money. Refinancing is a great option for graduates who have a steady income; parents with PLUS loans can also refinance.

Check our student loan calculator to compare your rates.

However, if you’re experiencing difficulties because your federal student loan payments take up a large percentage of your income—and refinancing is not for you—one of the government’s income-driven repayment plans may be a better fit.

The federal government offers at least four income-driven repayment plans, and most loans are eligible for at least one of these. These plans include:

• SAVE Plan – Income-Driven Repayment Plan formerly known as REPAYE Plan
• ICR Plan – Income-Contingent Repayment Plan
• IBR Plan – Income-Based Repayment Plan
• PAYE Plan – Pay as You Earn Repayment Plan

These plans have been designed specifically to help make it easier for you to manage your student loan debt, but they aren’t for everyone. Some require you to prove financial hardship and others are aimed at certain types of loans; eligibility for some plans might also change if you get married.

Let’s look further into each of these repayment plans to see who’s eligible, what benefits you might get from each, how long you can expect repayment to take, and potential downsides to each.

You can get more details at the Federal Student Aid website.

Who’s Eligible?

SAVE Plan

This is the newest income-driven repayment plan and an updated version of the REPAYE Plan. Under the SAVE Plan, more borrowers will be able to lower their payments and qualify for relief, and it includes a unique interest rate benefit. Under the SAVE Plan, your discretionary income (how much money someone in your income bracket and household should have left over after essential bills and taxes). If that amount is $0, your payment will be $0.

Also, the government will cover any interest leftover from your monthly payment to help keep your debt down.

Income-Contingent Repayment Plan (ICR)

Anyone who has eligible federal student loans can qualify for an ICR plan. In fact, if you are a parent with a PLUS loan, you can even take advantage of this option.

While you cannot directly use an income-driven repayment plan (even an ICR plan) to pay off a PLUS loan, you can consolidate your Federal Plus loans or Direct PLUS loans into a Direct Consolidation Loan and use an ICR plan to pay that off. PLUS loans are not eligible for any other form of federal repayment plan.

Income-Based Repayment Plan (IBR) and Pay as You Earn Repayment Plan (PAYE)

If your student loan payments add up to more than your discretionary income, then you will likely be eligible for an IBR or PAYE plan. In either case, if an IBR or PAYE plan is less than the amount you’d be paying per month for a standard 10-year repayment plan, then you will qualify for one of these plans, so long as your loan originated on or before October 1, 2007, and you’ve received at least one disbursement since October 1, 2011.

The Pros of Federal Repayment Plans

In general, the greatest benefit of choosing any repayment plan will be your monthly loan payments based on your income, rather than on the total principal and interest of the loan itself.

Under the SAVE plan you have the greatest chance for a significantly lower monthly payment, and the government will cover your interest if your payment is lower than the interest accrued.

With the PAYE plan, you’ll generally pay 10% of your discretionary income per month for your student loans.

For the IBR plan, if you’re a new borrower (your loan origin date was on or after July 1, 2014), your payments will generally be 10% of your discretionary income, as well. For older borrowers, it’s typically 15% of income.

If you opt for an ICR plan, you’ll pay either 20% of your discretionary income, or you’ll pay the amount you would ordinarily pay on a 12-year fixed payment plan. Whichever of these amounts is less will be your monthly payment.

How Long Will Repayment Take?

Repayment plans vary in length. Typically, depending on your plan, you can expect the following:

• SAVE Plan – 20 years if all loans you’re repaying under the plan were received for undergraduate study, and 25 years if any loans you’re repaying under the plan were received for graduate or professional study.
• ICR Plan – 25 years
• IBR Plan – 20 years if you started borrowing on or after July 1, 2014, or 25 years if you started borrowing before this date.
• PAYE Plan – 20 years

If you’re making payments under the Public Service Loan Forgiveness Program, you could see your debt wiped out after 10 years of qualifying payments instead of 20-25 years.

The Cons of Federal Repayment Plans

As you can see, any federal repayment plan you opt for will extend your student loan repayment period. Taking longer to pay off your student loans can result in paying much more in interest over the long term if you don’t qualify for the SAVE plan, which offers interest relief.

Also, while you will be making smaller payments each month, you will still be in debt for a longer period. This could affect your credit rating, your ability to qualify for a mortgage loan to purchase a home, and/or have an effect on the terms you can get for other loans until you finish your repayment plan.

Another downside is that any debt that is forgiven after your term is over could be liable to be taxed—that forgiven debt may be treated as income by the IRS.

Student Loan Refinancing with Earnest

Fortunately, for borrowers who want to pay less per month and/or reduce the length of time they’ll be paying off their loans, there is an alternative. If you have a regular income, and you know what you will be able to pay each month for your student loans, you may be able to improve your interest rate, decrease your monthly payments, and/or shorten your loan’s repayment period.

You can check your rate for Earnest refinancing in just 3 minutes to see if you can save, and it won’t hurt your credit score.

About the Author

Carolyn Morris

Carolyn is a content marketer and editor who specializes in financial services. With over a decade of experience in the financial services industry, Carolyn has a passion for demystifying the loan application and repayment process for students and their families.

Disclaimer

This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.
1 You may lose benefits associated with your underlying federal and/or private loans if you refinance such as federal Income-driven Repayment Plans, Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options. If you file for bankruptcy, you may still be required to pay back this loan. Choosing to refinance to a longer term may lower your monthly payment, but increase the amount of interest you may pay. Choosing to refinance to a shorter term may increase your monthly payment, but lower the amount of interest you may pay. Review your loan documentation for the total cost of your refinanced loan.