Under the student loan provisions of the Working Families Tax Cut Act (WFTCA), also known as the One Big Beautiful Bill Act, new federal student loans disbursed on or after July 1, 2026 generally have two repayment options: the tiered Standard plan or the Repayment Assistance Plan (RAP). Some income-contingent repayment plans (ICR, PAYE, SAVE) will phase out by July 1, 2028. Private student loans may also offer flexible options, such as full deferral, interest-only or immediate repayment. After you leave school, most borrowers have a grace period before regular monthly payments begin.
During college, you can choose to set up your federal student loans so they are deferred, which means you don't need to make payments until you finish school or drop below part-time status. Most federal loans are deferred, but if you obtain a private student loan, you will also have the choice of immediate or interest-only repayment until graduation.
After you graduate (or leave school), you'll typically have a grace period before you enter your student loans' repayment period. At this point, you'll need to make regular monthly payments toward the principal and interest of your student loans.
Having access to the right student loan repayment information can help you make an informed choice. Learn more about your options below.
Private student loan repayment
How private student loan repayment choices can affect your total cost
Most lenders offer several repayment options. With our Citizens Student Loan you can choose between three different repayment options, with the ability to prepay on your loan without triggering full repayment or a prepayment penalty.†
The following are three standard options most lenders offer to repay private student loans:
- Full deferral. No principal or interest is due while you are still enrolled at least half-time, and payment begins six months after graduation
- Interest-only. You pay only the accrued interest while you are in school
- Immediate repayment. Payment of principal and interest begins as soon as the loan is disbursed
Check out the Citizens student loan repayment table for a breakdown of different loan terms.
It's important to closely read and understand the language in your loan's promissory note, since it governs terms and conditions of repayment.
Lenders will most likely notify you before repayment begins and you'll usually have between ten and twenty-five years to pay off your private student loan. Remember, as the borrower, you are responsible for knowing when your payments are due, regardless of whether you've been reminded. Failure to pay in a timely manner can lead to credit problems, student loan forbearance or even loan default.
Federal student loan repayment
Take the time to understand the steps necessary to repay federal student loans
Federal student loans can offer flexible repayment options, which may make it easier to find a plan that fits your budget. Typically, repayment begins six months after you graduate, leave school or drop below half-time enrollment. For unsubsidized federal student loans, interest begins accruing while you are still enrolled.
However, student loan provisions in the Working Families Tax Cut Act (WFTCA), also known as the One Big Beautiful Bill Act, have reshaped repayment options effective July 1, 2026. The plans available to you will depend on when your loans were first disbursed.
- If your loans were taken out before July 1, 2026: You may still have access to existing repayment plans (such as graduated, extended or income-based plans), though some will be phased out over time.
- If your loans were first disbursed on or after July 1, 2026: You will generally choose between just two options:
- A standard repayment plan
- The new Repayment Assistance Plan (RAP)
Learn more about these federal student loan repayment plans below.
Standard repayment plan
Under this plan, you are required to pay a fixed amount each month until your loans are paid in full. Repayment typically lasts up to 10 years, though newer versions of the plan may extend longer depending on your loan balance.
Extended federal student loan repayment plan (existing borrowers only)
Offering a fixed or graduated repayment amount, this plan allows repayment over a period of up to 25 years. Monthly payments can be lower than the standard plan, but you will pay more interest over time.
Note: This plan is generally not available for loans first disbursed on or after July 1, 2026.
Graduated federal student loan repayment plan (existing borrowers only)
With this structure, payments start lower and increase every two years. This plan assumes your income will grow over time and typically spans up to 10 years.
Note: This plan is generally not available for loans first disbursed on or after July 1, 2026.
Income-based repayment (IBR) (transitioning for existing borrowers)
This option caps your monthly payment based on your income and family size. Depending on when you borrowed the funds, forgiveness may be available after 20–25 years of qualifying payments, or sooner for those in public service.
Important:
- IBR will remain available only for borrowers with loans taken out before July 1, 2026.
- For newer loans, income-driven options like IBR are being phased out in favor of the Repayment Assistance Plan (RAP).
Repayment Assistance Plan (RAP) (new for borrowers after July 1, 2026)
The Repayment Assistance Plan (RAP) is a new income-driven repayment option introduced by the WFTCA. It is one of the primary repayment plans available to new federal student loan borrowers on or after July 1, 2026.
With RAP:
- Monthly payments may range from about 1% to 10% of your income
- Payments can change as your income changes
- A minimum monthly payment, such as $10, may apply
- Any remaining balance may be forgiven after up to 30 years of qualifying payments
- Unpaid interest may be reduced or waived in certain cases
RAP is designed to simplify income-driven repayment while ensuring steady progress toward paying down your loan balance. However, it may result in longer repayment timelines for some borrowers when compared to previous income-driven plans.
Federal student loan deferment and deferred interest
Temporary federal student loan deferment scenarios
Repaying your student loans is a long-term financial commitment. According to the U.S. Department of Education, missed payments or default can negatively affect your credit and financial standing, just like any other form of debt.
Under certain circumstances, you may qualify for temporary federal student loan deferment, which allows you to pause your monthly payments. Common qualifying situations include:
- In-school enrollment. If you're enrolled at least half-time in an eligible college or career school, you may qualify for an in-school deferment.
- Economic hardship or unemployment. Borrowers experiencing financial difficulty or actively seeking employment may qualify for deferment, typically for up to three years, depending on eligibility.
- Military service. Active-duty service in the U.S. Armed Forces, National Guard or certain post-active-duty periods may qualify for deferment.
- Graduate fellowship or rehabilitation training programs. Participation in approved programs may qualify for deferment.
- Parent borrower deferment. Federal Parent PLUS borrowers may qualify while their child is enrolled at least half-time.
Generally speaking, if your underlying federal student loan was subsidized, interest will not accumulate during a deferment period. To find out more about federal student loan deferment, visit the Federal Student Aid website or check with your loan servicer.
Strategies to pay off student loans early
Why it makes sense to pay student loans off early
You can make early payments no matter which repayment plan you choose. While deferment can help if payments are difficult, interest can increase your total loan cost over time.
If you want to reduce interest costs, paying extra when you can may help. Most private student lenders don't charge a prepayment penalty, and starting payments in school or during your grace period usually won't trigger full repayment. These strategies can help if you are thinking of paying off your private student loan early.
Begin federal student loan repayment during the grace period
Federal student loans usually include a grace period before repayment begins. If you start working before it ends, consider making payments sooner to reduce your balance.
Apply more money toward the principal to pay off federal student loans faster
Federal student loan interest builds daily. Paying earlier in the month or adding extra to your principal can lower your balance and reduce total interest.
Use financial windfalls to prepay your student loans
Unexpected money, such as a bonus, tax refund, inheritance or raise, can help you pay down student loans faster. Consider putting some or all of it toward your balance.
Federal student loan forbearance
Get federal student loan help when you need it the most
Forbearance can temporarily pause or reduce federal student loan payments if you're facing financial difficulty, but unlike forgiveness, you still owe the balance. Some borrowers use federal student loan forbearance when they don't qualify for deferment.
What federal student loan forbearance means to you
Federal student loan forbearance is typically granted in one-year intervals for up to three years. To help avoid delinquency or default, continue making payments until your federal loan servicer approves your request. Interest will continue to accrue during forbearance and may be added to your outstanding principal if unpaid.
Do you qualify for mandatory federal student loan forbearance?
Lenders may be required to grant federal student loan forbearance in certain situations, including:
- A medical or dental internship or residency
- A time when your student loan payments represent 20% or more of your monthly income
- A time when your student loan payments are being made by the Department of Defense
Frequently asked questions
How long is the grace period before student loan repayment begins?
For federal Stafford Loans, the grace period is six months after graduation or dropping below half-time enrollment. Federal Perkins Loans have a nine-month grace period. Private student loan grace periods vary by lender: some offer six months, while others may require immediate repayment. Check your promissory note for your specific terms.
What is the difference between student loan deferment and forbearance?
Deferment allows you to temporarily pause payments, and if your federal loan is subsidized, interest does not accrue during that period.
Forbearance also pauses or reduces payments, but interest continues to accrue on all loan types, including subsidized and unsubsidized loans, and is added to your outstanding principal. Learn more about the differences between deferment and forbearance.
Can you pay off student loans early without a penalty?
Yes. Federal student loans carry no prepayment penalty, and most private student lenders, including Citizens, also allow you to pay off your loan early without penalty. Starting payments during your grace period or paying extra toward principal each month can reduce total interest over the life of the loan.
Get student loan help from Citizens
We want to help you find the financing you need, as well as provide the student budgeting resources that support your journey.
If you have more questions, visit our Student Hub or call an Education Finance Specialist at 1-800-708-6684, and we'll help walk you through the process.