Federal student loan repayment was rebuilt on July 1, 2026. The SAVE plan is gone. Two new plans, the Repayment Assistance Plan and the Tiered Standard plan, replaced it. PAYE and ICR are closing. This page explains which plans you can actually enrol in right now, what each one costs per month, and how to choose.
Every figure below is sourced to the Department of Education, the RISE final regulations published in the Federal Register on May 1, 2026 (91 FR 23886), or the Code of Federal Regulations at 34 CFR 685.208 and 685.209. Last reviewed August 2026.
SAVE was struck down and eliminated. RAP and Tiered Standard launched July 1, 2026. IBR survives for existing borrowers. PAYE and ICR sunset June 30, 2028. If you took your first federal loan on or after July 1, 2026, your only two options are RAP and Tiered Standard.
The one question that decides your options
Before you compare anything, answer this: have you received a federal student loan disbursed on or after July 1, 2026?
That single fact splits every borrower into two groups with completely different menus. Borrowers who were already in repayment keep access to the older plans. Borrowers whose loans are new get the two new plans and nothing else.
| Your situation | Plans you can use | Eligible for PSLF? |
|---|---|---|
| No new loans on or after July 1, 2026Most existing borrowers | 10-year Standard, Graduated, Extended, IBR, RAP, plus ICR and PAYE until they sunset | Yes, if enrolled in the 10-year Standard, ICR, PAYE, IBR or RAP |
| New loans on or after July 1, 2026Newer borrowers | Tiered Standard and RAP only | Yes, but only if enrolled in RAP |
| Parent PLUS, no new loans after July 1, 2026 | 10-year Standard, Graduated, Extended, and ICR only if consolidated into a Direct Consolidation Loan before July 1, 2026 | Yes, if in the 10-year Standard or ICR |
| Parent PLUS, new loans after July 1, 2026 | Tiered Standard and Graduated style fixed plans only, no income-driven option | No qualifying plan available |
That last row matters and gets glossed over constantly. A parent who borrows a new Parent PLUS loan after July 1, 2026 has no route into an income-driven plan and no route to Public Service Loan Forgiveness. Read student loans 101 before a parent signs anything.
What happened to SAVE
The SAVE plan was held unlawful in federal court and then eliminated by statute. The Department of Education confirmed that beginning July 1, 2026, servicers started notifying the roughly 7.5 million borrowers parked in SAVE that they had at least 90 days to move to a legal plan.
According to the Department, borrowers who do not choose within the window their servicer gives them are automatically enrolled into either the Standard Repayment Plan or the new Tiered Standard Plan. Both are fixed payment plans with no forgiveness attached, and Tiered Standard payments do not count toward PSLF.
Auto-enrolment into a fixed plan is the worst outcome for a low earner and for anyone chasing PSLF. If you were in SAVE, pick a plan yourself before your servicer's deadline expires.
The Repayment Assistance Plan (RAP)
RAP is the new income-driven plan and it is the only income-driven plan open to brand new borrowers. It works differently from every plan that came before it.
Older income-driven plans charge a percentage of discretionary income, meaning income above a poverty-line threshold. RAP skips that step and charges a percentage of your total adjusted gross income, on a sliding scale.
Here is the actual statutory table, from 34 CFR 685.209(b)(2). The figure shown is your annual base payment. Divide it by 12 to get the monthly payment.
| Adjusted gross income | Annual base payment | Roughly per month |
|---|---|---|
| $10,000 or less | $120 flat | $10 |
| $10,001 to $20,000 | 1% of AGI | $8 to $17 |
| $20,001 to $30,000 | 2% of AGI | $33 to $50 |
| $30,001 to $40,000 | 3% of AGI | $75 to $100 |
| $40,001 to $50,000 | 4% of AGI | $133 to $167 |
| $50,001 to $60,000 | 5% of AGI | $208 to $250 |
| $60,001 to $70,000 | 6% of AGI | $300 to $350 |
| $70,001 to $80,000 | 7% of AGI | $408 to $467 |
| $80,001 to $90,000 | 8% of AGI | $533 to $600 |
| $90,001 to $100,000 | 9% of AGI | $675 to $750 |
| Over $100,000 | 10% of AGI | $833 and up |
Monthly figures are the arithmetic result of the statutory percentages applied to the ends of each band. They are illustrative, not a quote of your payment.
Two adjustments then apply. Your monthly payment is reduced by $50 for every dependent you claim on your federal return. And no matter what the formula produces, the minimum payment is $10 a month.
The two features that make RAP unusual
Unpaid interest is waived. If your RAP payment does not cover the month's interest, the Department waives the shortfall when you pay on time. Your balance does not grow. That is a real protection and it did not exist on IBR, PAYE or ICR.
Principal is matched down to $50. If your on-time payment reduces principal by less than $50, the Secretary applies a matching principal payment to top it up, capped at $50 a month. So even a $10 payer sees their balance fall every month.
The catch is the timeline. RAP forgives the remaining balance only after 360 qualifying monthly payments over at least 30 years. That is five to ten years longer than the plans it replaced.
Under the regulations, paying more than the amount due normally advances your next due date, and you do not receive the interest or principal match for months with no due date. If you want to overpay and keep the subsidy, tell your servicer not to advance the due date.
Income-Based Repayment (IBR)
IBR is the only legacy income-driven plan with a long-term future, but it is closed to anyone who takes out a new federal loan on or after July 1, 2026.
IBR charges a percentage of discretionary income, defined as AGI above 150% of the federal poverty guideline for your family size:
| Borrower type | Payment | Forgiveness after |
|---|---|---|
| New borrower on or after July 1, 2014 | 10% of discretionary income | 20 years |
| Not a new borrowerBorrowed before July 1, 2014 | 15% of discretionary income | 25 years |
For a lot of PSLF candidates IBR still produces a lower monthly payment than RAP, because it only counts income above the poverty threshold rather than every dollar of AGI. If you are ten years from public service forgiveness, that difference compounds.
The Tiered Standard plan
Tiered Standard is a fixed payment plan for borrowers with loans disbursed on or after July 1, 2026. Your term depends on your balance when you enter repayment, per 34 CFR 685.208(c)(1):
| Total Direct Loan balance | Repayment term |
|---|---|
| Less than $25,000 | 10 years |
| $25,000 to $49,999 | 15 years |
| $50,000 to $99,999 | 20 years |
| $100,000 or more | 25 years |
Payments are at least $50 a month. There is no forgiveness at the end, and Tiered Standard payments do not count toward PSLF. Stretching a $100,000 balance over 25 years lowers the monthly bill and raises lifetime interest substantially. Treat the longer tiers as a cash-flow tool, not a plan.
Plans that are closing
| Plan | Status | What to do |
|---|---|---|
| SAVE / REPAYE | Struck down and eliminated | Choose a new plan before your servicer's 90-day window closes |
| PAYE | Sunsets June 30, 2028. Eligible borrowers must enrol before July 1, 2027 | Move to IBR or RAP before July 1, 2028 or you are placed into RAP |
| ICR | Sunsets June 30, 2028 | Switch before July 1, 2028. Consolidated Parent PLUS borrowers may be moved into IBR |
| IBR | Open to existing borrowers, closed to new loans after July 1, 2026 | Nothing, but do not take a new federal loan casually if IBR is your plan |
Public Service Loan Forgiveness still works
PSLF is intact. It still forgives your remaining Direct Loan balance after 120 qualifying monthly payments while working full time for a qualifying employer, and PSLF forgiveness is still tax-free under its own provision of the tax code.
What changed is the plan list. Payments count toward PSLF under the 10-year Standard plan, IBR, RAP, and, until they sunset on June 30, 2028, PAYE and ICR. Payments under Graduated, Extended and Tiered Standard do not count.
A Department of Education final rule that would have narrowed which employers qualify was vacated in court on June 30, 2026, the day before it was to take effect.
Forgiveness is taxable again
The American Rescue Plan provision that made forgiven student debt federally tax-free expired December 31, 2025. Balances forgiven on or after January 1, 2026 at the end of an income-driven plan, including RAP, IBR, PAYE and ICR, are generally treated as taxable income again.
PSLF is the exception and remains tax-free, as do death and total and permanent disability discharges and Teacher Loan Forgiveness. If you are on a 20, 25 or 30 year income-driven track, budget for a tax bill in the year your balance is cancelled. That single fact reshapes the maths in the wider student loan crisis.
Should you refinance instead?
Refinancing means a private lender pays off your loans and issues you a new one at a new rate. For private student loans, that is often a straightforward win if your credit and income have improved.
The moment a private lender refinances a federal loan, that loan stops being federal. You permanently give up PSLF eligibility, every income-driven plan including RAP and IBR, the RAP interest waiver and principal match, income-driven $10 minimum payments, federal deferment and forbearance, and death and disability discharge. There is no path back. A lower rate does not buy any of it back.
Refinancing federal debt makes sense for a narrow group: high stable income, no interest in forgiveness, no realistic chance of needing an income-driven safety net, and a rate offer meaningfully below what you hold. For everyone else it trades a valuable insurance policy for a modest rate cut. Work through whether you should refinance your student loans before you apply anywhere, and if you are only dealing with private debt, compare private student loan options.
How to actually choose
Going for PSLF? You need a qualifying plan, so compare IBR and RAP directly. IBR usually wins on monthly payment because it excludes income below the poverty threshold. RAP wins if you have several dependents, since each one cuts $50 off the payment.
Low income, no forgiveness plan? RAP protects you better than anything else available. The interest waiver stops your balance from spiralling and the principal match guarantees progress.
High income and want out fast? A fixed plan with the shortest term you can afford minimises total interest. Do not stretch to a longer Tiered Standard tier unless cash flow forces it.
Already struggling or in default? Start with the options in how to get out of student loan debt. Borrowers can now rehabilitate a defaulted loan twice under the new rules.
Can I still enrol in SAVE?
No. SAVE was held unlawful in federal court and eliminated by statute. Enrolment is closed and existing enrollees are being moved off it.
Will my payment go up when I leave SAVE?
For most borrowers, yes. SAVE used a 225% of poverty threshold, more generous than IBR at 150%, and RAP charges a percentage of total AGI rather than discretionary income. Run your own numbers on both IBR and RAP before choosing.
Does RAP count for PSLF?
Yes. RAP is a qualifying repayment plan for PSLF, along with the 10-year Standard plan, IBR, and PAYE and ICR until they sunset on June 30, 2028.
What happens if I ignore my servicer's notice?
The Department of Education has said borrowers who do not transition within the 90-day window are automatically enrolled into either the Standard Repayment Plan or the Tiered Standard Plan. Neither offers forgiveness, and Tiered Standard payments do not count toward PSLF.
Is loan forgiveness taxed?
PSLF is tax-free. Income-driven forgiveness under RAP, IBR, PAYE or ICR received on or after January 1, 2026 is generally taxable federally, because the American Rescue Plan exclusion expired at the end of 2025. State treatment varies.
Can I switch plans later?
Generally yes, within the menu available to you. But switching does not undo a refinance. Once a federal loan is refinanced privately it can never return to a federal plan.
Bottom line
The plan you were on in 2024 probably does not exist any more. If you have not logged into StudentAid.gov since the July 2026 changes took effect, do that first, confirm which plan you are actually in, and check whether a servicer deadline is running against you. Then compare IBR and RAP on your real numbers rather than accepting whatever default you were placed into.
