I Asked Claude To Explain Every Student Loan Repayment Option
There are several changes to federal student loan repayments underway. The One Big Beautiful Bill Act, signed into law on July 4, 2025, overhauled the entire repayment system. The SAVE plan is officially dead, two plans are being phased out and a new option called RAP just launched.
With millions of borrowers facing the 90-day deadline to select a new plan, I asked Claude to walk me through all the available repayment options and to name a winner. It made the clearest comparison I’ve seen. Here’s what it said.
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Fixed Payment Plans
Claude grouped the non-income-driven plans first:
Standard: Fixed payments over 10 years and up to 30 years for consolidated loans. This is the cheapest option as it accrues less interest.
Graduated: Payments are usually lower at first but increase every two years. However, you'll pay more interest than Standard "for the privilege of easing in."
Extended: Stretches repayment to 25 years for borrowers with $30,000 or more. While the payments may be lower, it means more interest.
Tiered Standard: Fixed monthly payments over 10 to 25 years depending on the amount you borrow. The plan is only available to those who take out a new loan after July 1, 2026.
Income-Driven Repayment Plans
IDR plans calculate your monthly payments based on your income and household size. Saving on a Valuable Education (SAVE) was part of IDR, but it’s officially dead. SAVE borrowers can now pick a new plan.
The OBBA will also eliminate Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans. If you’re enrolled in any of these programs, you must move to another repayment plan in July 2028.
According to Claude, the remaining IDR plans include:
Income-Based Repayment (IBR): The IBR takes 10% of your discretionary income per month for loans on or after July 1, 2014 and 15% for older loans. Forgiveness is available after 20 to 25 years.
Repayment Assistance Plan (RAP): This is the new IDR plan available to borrowers who take out new loans on or after July 1, 2026 or those who consolidate after this date. Payments are based on your adjusted gross income, meaning the more you earn, the higher your monthly payments. Claude says the RAP is likely the most expensive IDR plan and 30 years to forgiveness is longer.
So, Is There a Winner?
According to Claude, there isn’t one universal winner anymore because borrowers now fall into two groups.
If you have pre-July 2026 loans and need income-based payments, IBR is the winner. It’s the only legacy IDR that survives after 2028, with forgiveness coming five to 10 years sooner than the RAP and it qualifies for Public Service Loan Forgiveness (PSLF).
If you plan to borrow a new loan after July 2026, the RAP wins. And if you can comfortably afford payments and want to lower your cost, the 10-year standard plan is ideal.
The Bottom Line
Claude recommends running your numbers through the Federal Student Aid Loan Simulator before the 90-day window decides for you. The worst plan is the one you're defaulted into because you didn't pick your best repayment option.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice. It was created with the assistance of artificial intelligence and reviewed by our editorial team for accuracy; however, AI-generated content may be inaccurate, incomplete, or outdated. You should independently verify important information through reliable sources before making any decisions based on this content.
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