Federal student loan repayment rules changed in 2025 and 2026. The SAVE plan has ended, a new Repayment Assistance Plan (RAP) became available on July 1, 2026, and borrowers with older loans have until July 1, 2028 to choose among the remaining plans. The best option depends on your loan types, income, family size, and goals, so confirm the details at StudentAid.gov before you switch. This guide is general information, not personal advice.
Federal Student Loan Repayment Transition Architecture (2026–2028)
Navigating the statutory shift from the terminated SAVE plan and sunsetting PAYE/ICR into the Repayment Assistance Plan (RAP), reformed IBR, and Tiered Standard plans under the One Big Beautiful Bill Act.
What changed
- SAVE has ended. The Department of Education has said that the SAVE plan has ended and that borrowers who were enrolled need to choose a new plan.
- A new plan is available. The One Big Beautiful Bill Act created the Repayment Assistance Plan (RAP) and a new Tiered Standard plan, both available from July 1, 2026.
- Older plans are being phased out. PAYE and ICR are being eliminated no later than July 1, 2028. Borrowers on phased-out plans with loans made before July 1, 2026 have until July 1, 2028 to choose among RAP, the Tiered Standard plan, or Income-Based Repayment (IBR).
- IBR is easier to qualify for. The law removed the requirement that a borrower have a partial financial hardship to enroll in IBR.
The main options at a glance
| Plan | Status in 2026 | Key points from the Department of Education |
|---|---|---|
| Repayment Assistance Plan (RAP) | New; available July 1, 2026 | Payment is 1% to 10% of income depending on income, reduced by $50 per dependent, with a $10 monthly minimum. Unpaid monthly interest is waived when you make the on-time payment. Balances are forgiven after 360 qualifying payments (30 years). |
| Tiered Standard plan | New; available July 1, 2026 | A fixed-payment plan rather than an income-based one. |
| Income-Based Repayment (IBR) | Continues | No partial financial hardship requirement to enroll. Terms depend on when you borrowed, so check your own loan details. |
| SAVE | Ended | Borrowers who were enrolled must choose another plan. |
| PAYE and ICR | Being phased out by July 1, 2028 | Existing borrowers must move to another plan by that date. |
The 2026 Federal Repayment Plan Specification Matrix
| Statutory Feature | Repayment Assistance Plan (RAP) | Reformed IBR Plan | Tiered Standard Plan |
|---|---|---|---|
| Effective Availability | July 1, 2026 | Active (Continuous statutory authority) | July 1, 2026 |
| Monthly Payment Formula | 1% to 10% of annual AGI divided by 12, less $50 per dependent | 10% (post-2014 loans) or 15% (pre-2014) of income over 150% of Federal Poverty Line | Fixed monthly payments amortized over tiered balance terms (10–30 years) |
| Minimum Monthly Payment | $10.00 mandatory floor (Never $0.00) | $0.00 allowed if income is below 150% FPL | Amortized monthly standard minimum |
| Dependent Relief Mechanism | Direct cash reduction: -$50 per dependent/month | Expands Federal Poverty Line deduction bracket | None (Independent of household size) |
| Unpaid Interest Waiver Subsidy | 100% Interest Waived on remaining monthly accrual if on-time payment is satisfied | 100% subsidized on Subsidized loans for initial 3 years only; unpaid interest capitalizes or accrues | None (Interest accrues into standard balance) |
| Forgiveness Horizon | 360 qualifying payments (30 Years) | 240 payments (20 Yrs) for post-2014; 300 payments (25 Yrs) for pre-2014 | Zero (Loan fully paid off at term conclusion) |
| Enrollment Eligibility Barrier | Open to Direct Loan borrowers | Hardship Requirement Eliminated under 2025/2026 statutory amendments | Open to all federal student loan borrowers |
Plan rules, forms, and deadlines can change. The official repayment plans page on StudentAid.gov and your servicer’s notices are the authority.
How a RAP payment is calculated
Under RAP, your annual income (most commonly adjusted gross income) sets a percentage, and that annual amount is divided by 12. The monthly figure is then reduced by $50 for each dependent you claim, but it cannot fall below $10.
Illustration (hypothetical numbers)
Suppose the income-based calculation gives $250 a month. A borrower who claims two dependents subtracts $100, so the payment is $150 a month. A borrower who claims no dependents pays $250. If the calculation gave less than $10, the payment would be the $10 minimum. Use the official Loan Simulator to see your real figures.
Hypothetical Monthly Payment Simulations: RAP vs. IBR Across Income Tiers
Illustrative monthly payments modeled across Adjusted Gross Income tiers for a single borrower versus a married borrower claiming two dependents. Assumes 2026 contiguous U.S. Federal Poverty Guideline baseline ($15,650 single; $32,150 family of 4) and 10% IBR discretionary calculation.
| Adjusted Gross Income (AGI) | RAP: Single (0 Dependents) | RAP: Family of 4 (2 Dependents) | IBR (10%): Single Borrower | IBR (10%): Family of 4 |
|---|---|---|---|---|
| $35,000 / year | $58 / month | $10 / month (Floor applied) | $96 / month | $0 / month (Below 150% FPL) |
| $50,000 / year | $167 / month | $67 / month | $221 / month | $15 / month |
| $75,000 / year | $375 / month | $275 / month | $429 / month | $223 / month |
| $100,000 / year | $667 / month | $567 / month | $638 / month | $431 / month |
| $125,000 / year | $1,042 / month | $942 / month | $846 / month | $640 / month |
Hypothetical modeling only. Actual payment percentages under RAP follow graduated sliding scales established by Department of Education regulatory tables. Borrowers must use the official StudentAid.gov Loan Simulator prior to making formal plan elections.
What about a $0 payment?
RAP has a $10 monthly minimum, so it does not produce a $0 payment. Some other income-driven plans calculate payments from income above a poverty-based threshold, so a $0 payment can be possible for borrowers with very low income. Ask your servicer which plans you are eligible for and what each would cost. If you cannot make payments, contact your servicer before you miss one and ask about deferment or forbearance, because missed payments can lead to delinquency and default.
Taxes on forgiven balances
⚠️ The Federal “Tax Bomb” Re-Emergence: Post-2025 IDR Forgiveness Rules
Under Section 9675 of the American Rescue Plan Act of 2021, Congress temporarily excluded all student loan debt forgiveness from federal gross taxable income. However, this statutory relief expired on December 31, 2025.
Starting in the 2026 tax year and forward, student loan balances forgiven under income-driven repayment plans (including RAP at 30 years and IBR at 20 or 25 years) are once again classified as ordinary taxable income under Internal Revenue Code Section 108.
- IRS Form 1099-C Issuance: When a remaining balance of $60,000 is forgiven under IDR, your servicer transmits Form 1099-C (Cancellation of Debt) to both you and the IRS, treating the $60,000 as if you earned that cash in wages.
- PSLF Safe Harbor: Forgiveness achieved through the Public Service Loan Forgiveness (PSLF) program remains permanently tax-free under IRC § 108(f)(1) and is completely unaffected by the ARPA expiration.
- The Insolvency Exclusion (IRS Form 982): If the fair market value of your total liabilities exceeds the total fair market value of your assets immediately prior to debt cancellation, you can file IRS Form 982 to legally exclude forgiven debt up to the amount of your insolvency.
A special federal rule from the American Rescue Plan kept student loan forgiveness out of taxable income for discharges through December 31, 2025. For discharges after 2025, forgiven income-driven repayment balances may be treated as taxable income at the federal level unless another exclusion applies. Forgiveness under Public Service Loan Forgiveness is generally not taxed federally, and discharges for death or total and permanent disability have their own rules. State treatment varies. The IRS Taxpayer Advocate Service explains the basics, and a tax professional can help if a large balance may be forgiven.
Steps to take now
- Log in to StudentAid.gov and list your loans: loan type, balance, interest rate, and when each was made.
- Check which plan you are on and any notice from your servicer about a required change.
- Use the Loan Simulator to compare your options with your real income and family size.
- Watch deadlines, especially July 1, 2028 for borrowers on phased-out plans.
- Keep copies of applications, income documents, and servicer messages.
- Never pay an upfront fee for help enrolling in a federal plan. The application is free at StudentAid.gov.
Actionable Servicer Transition & Compliance Protocol
Follow this structured checklist to ensure your repayment standing remains protected through the 2026–2028 regulatory reorganization:
- [ ] Inventory Servicer Data: Log into your account with MOHELA, Nelnet, Aidvantage, or Edfinancial. Download your full NSLDS (National Student Loan Data System) historical loan file to verify payment counters.
- [ ] Evaluate RAP Interest vs. IBR Term: If your priority is stopping runaway balance accumulation due to unpaid monthly interest, compare RAP’s 100% interest waiver against IBR’s shorter 20-year forgiveness timeline.
- [ ] Target the July 1, 2028 Sunset Window: If currently enrolled in PAYE or ICR, calendar reminders for Q1 2028 to submit a seamless transition application before automatic servicer default reassignment occurs.
- [ ] Recertify PSLF Annually: For qualifying public servants, ensure Employment Certification Forms (ECF) are uploaded via the PSLF Help Tool annually to lock in certified qualifying months regardless of IDR plan litigation.
Frequently asked questions
Can I still apply for SAVE? No. The SAVE plan has ended. Borrowers who were enrolled need to choose a different plan.
Should I consolidate my loans? Consolidation can change your loan type, interest rate, and how past payments count toward forgiveness. Check the effect on your situation before you consolidate.
Do Parent PLUS loans qualify for every plan? Eligibility can differ by loan type, and Parent PLUS loans have special rules. Check your loan type on StudentAid.gov.
What if I do nothing? Your servicer may assign a plan or require you to choose one. Read every notice and respond by its deadline.
- Federal Student Aid: Repayment plans
- Federal Student Aid: Loan Simulator
- Federal Student Aid: One Big Beautiful Bill Act updates
- Federal Student Aid: Loan forgiveness and cancellation
- IRS Taxpayer Advocate Service: Student loan forgiveness and your taxes
Rules and deadlines can change; check StudentAid.gov and your servicer for current terms. Komon Lab is not affiliated with the Department of Education or any loan servicer.