Federal Student Loan Repayment Plans in 2026: What Changed and How to Choose
Federal student loan repayment plans changed in 2026. SAVE is dead, RAP and Tiered Standard launch July 1. Here's every active plan and how to choose.
Federal student loan repayment changed more in the past year than in the previous decade. The SAVE planSAVE Plan (SAVE)The Saving on a Valuable Education Plan, a federal income-driven repayment plan introduced in 2023 to replace REPAYE. Its implementation has been subject to ongoing litigation, and enrolled borrowers have faced court-ordered forbearance periods. is dead. Two new plans — the Repayment Assistance Plan (RAP) and the Tiered Standard Plan — launch July 1, 2026. PAYEPay As You Earn (PAYE)A federal income-driven repayment plan that caps monthly payments at 10% of discretionary income and forgives remaining debt after 20 years. It is only available to borrowers who took out their first federal loans on or after October 1, 2007. and ICR stop accepting new borrowers on the same date and sunset entirely by July 2028. IBRIncome-Based Repayment (IBR)A federal income-driven repayment plan that caps monthly payments at 10% or 15% of discretionary income, depending on when the loans were taken out. Remaining debt is forgiven after 20 or 25 years of qualifying payments. is the only legacy income-driven plan that survives long-term.
What Changed in Federal Student Loan Repayment
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, overhauled federal student loan repayment. A federal court in the Eastern District of Missouri vacated the SAVE plan on March 10, 2026, and the Department of Education announced the transition plan on March 27, 2026.
Starting July 1, 2026, servicers will send notices to all 7.5 million SAVE borrowers, giving them 90 days to choose a new plan. Borrowers who don’t respond within 90 days will be auto-enrolled into either Standard Repayment or the new Tiered Standard Plan. You can contact your servicer before July 1 to switch without waiting for the notice.
On the same date, two new plans become available: RAP, a new income-driven plan, and the Tiered Standard Plan, a fixed-payment option with terms based on your balance. For loans first disbursed on or after July 1, 2026, only RAP and the new Standard Repayment PlanStandard Repayment PlanThe default federal repayment plan, which spreads loan payments evenly over 10 years — or up to 30 years for consolidation loans. It usually results in the lowest total interest paid among federal plans. are available — no legacy plans.
PAYE and ICRIncome-Contingent Repayment (ICR)The oldest federal income-driven repayment plan, with payments generally set at 20% of discretionary income or a fixed 12-year amount, whichever is lower. It is the only IDR plan available to Parent PLUS borrowers after consolidation. close to new enrollees on July 1, 2026, and sunset entirely by July 1, 2028. Borrowers still on those plans at sunset will be automatically moved to RAP (if eligible) or IBR. IBR remains permanently open to borrowers with loans disbursed before July 1, 2026.
Related: Student Loan Changes on July 1, 2026: What Borrowers Need to D o
Fixed-Payment Repayment Plans
Fixed-payment plans set your monthly amount based on your loan balance and interest rate — your income doesn’t factor in. These plans offer no path to forgiveness (other than PSLFPublic Service Loan Forgiveness (PSLF)A federal program that forgives the remaining balance on Direct Loans after 120 qualifying monthly payments made while working full-time for a government or qualifying nonprofit employer., where applicable), but they cost less in total interest because you’re paying down principal from the start.
Standard Repayment
The defaultDefaultThe status of a federal student loan after the borrower has failed to make required payments for 270 days. Default can trigger collection actions such as wage garnishment, tax refund offset, and damage to credit reports. plan for all federal student loans. Fixed monthly payments over 10 years. If you never choose a plan, this is what you’re on. It produces the lowest total cost of any repayment option but the highest monthly payment.
Related: Standard Repayment Plan
Graduated Repayment
Payments start low and increase every two years over a 10-year term. Designed for borrowers who expect their income to rise. You’ll pay more in total interest than Standard because the early payments barely cover interest. Available only for loans disbursed before July 1, 2026.
Related: Graduated Repayment Plan
Extended Repayment
Stretches repayment to 25 years with either fixed or graduated payments. Available only to borrowers with more than $30,000 in outstanding Direct Loans. Lower monthly payments than Standard, but significantly more interest over the life of the loan. Like Graduated, this plan is available only for loans disbursed before July 1, 2026.
Related: Extended Repayment Plan
Tiered Standard Plan (New — July 2026)
A new fixed-payment plan created by the OBBBA. Unlike the 10-year Standard plan, the Tiered Standard Plan adjusts its term based on your total outstanding balance: 10, 15, 20, or 25 years. It’s one of two auto-enrollment destinations for SAVE borrowers who don’t choose a plan within their 90-day window.
The Tiered Standard Plan is not income-driven — there’s no forgiveness timeline, no income recertification, and no payment tied to what you earn.
Income-Driven RepaymentIncome-Driven Repayment (IDR)A category of federal student loan repayment plans that calculate monthly payments based on income and family size rather than loan balance. Any remaining balance can be forgiven after 20–25 years of qualifying payments. Plans
Income-driven repayment (IDR) plans calculate your payment based on your income and family size. Under legacy IDR plans like IBR, your payment can be as low as $0 if your income is low enough. Under RAP, the minimum is $10 per month. All IDR plans offer loan forgiveness after a set number of years — and all qualify for Public Service Loan Forgiveness (PSLF) if you work for an eligible employer.
The trade-off: IDR plans extend your repayment timeline. Under legacy plans like IBR, interest can be capitalized, meaning you may owe more than you originally borrowed before forgiveness kicks in. RAP handles this differently — see below.
Related: Income-Driven Repayment Plans
Income-Based Repayment (IBR)
IBR is the only legacy income-driven plan that remains permanently available. If your loans were disbursed before July 1, 2014, your payment is 15% of discretionary incomeDiscretionary IncomeFor federal income-driven repayment plans, a borrower's adjusted gross income minus a set percentage of the federal poverty guideline for their family size. Monthly IDR payments are calculated as a percentage of this amount. with forgiveness after 25 years. If your first loan was disbursed on or after July 1, 2014, it’s 10% of discretionary income with forgiveness after 20 years. IBR caps your payment at the 10-year Standard amount.
IBR is available to any borrower with federal Direct Loans disbursed before July 1, 2026. The OBBBA removed the partial financial hardshipPartial Financial HardshipA federal eligibility standard used historically for IBR and PAYE, where a borrower qualifies if their calculated IDR payment is lower than the payment they would owe under a 10-year Standard Repayment Plan. requirement, so borrowers who were previously denied IBR due to high income can now enroll.
Related: Income-Based Repayment (IBR)
Repayment Assistance Plan — RAP (New — July 2026)
RAP is the new default income-driven plan for borrowers taking out loans after July 1, 2026. Existing borrowers can opt in voluntarily starting July 1, 2026, with auto-enrollment by July 2028 for those still on sunsetting plans.
RAP works differently from legacy IDR plans. Instead of using discretionary income, RAP places your full adjusted gross incomeAdjusted Gross Income (AGI)A borrower's total taxable income minus specific deductions, as reported on a federal tax return. Federal income-driven repayment payments are generally calculated using AGI. (AGI) into one of 11 income brackets, each with a corresponding payment percentage — ranging from 1% at the lowest income levels to 10% at the highest. There is no poverty guideline buffer. RAP also deducts $50 per month from your payment for each dependent you claim. Unlike IBR, RAP has a $10 minimum monthly payment — there are no $0 payment months — and no payment cap, so high earners can pay more under RAP than they would under IBR’s 10-year Standard cap. Forgiveness comes after 30 years — longer than IBR’s 20–25 year timeline.
RAP includes two features that no legacy plan offers. First, if your monthly payment doesn’t cover all accruing interest, the unpaid interest is waived — not capitalized, not added to your balance. This eliminates the negative amortization that causes balances to grow under IBR and PAYE. Second, if your payment doesn’t reduce your principal by at least $50, the Department of Education contributes up to $50 per month toward principal reduction.
Parent PLUS borrowers are not eligible for RAP, even after consolidation.
Related: What Is the Repayment Assistance Plan (RAP)?
Income-Contingent Repayment (ICR) — Sunsets July 2028
ICR calculates payments at 20% of discretionary income or the amount you’d pay on a 12-year fixed plan adjusted for income — whichever is lower. Forgiveness comes after 25 years. ICR closes to new enrollees July 1, 2026, and sunsets entirely July 1, 2028.
ICR is the only income-driven plan available to borrowers with consolidated Parent PLUS loans. If you’re a Parent PLUS borrower, consolidation into a Direct Consolidation Loan and enrollment in ICR must happen before June 30, 2026 — that’s a disbursement deadline, not an application deadline, so the consolidation must be complete — not just submitted — by that date. Missing this window permanently eliminates IDR and forgiveness options for unconsolidated Parent PLUS loans.
For high-income borrowers pursuing PSLF, ICR’s 12-year fixed payment prong can produce lower payments than IBR when your balance is low relative to your income.
Related: Income-Contingent Repayment (ICR)
Pay As You Earn (PAYE) — Sunsets July 2028
PAYE sets payments at 10% of discretionary income with forgiveness after 20 years and a payment cap at the 10-year Standard amount. It’s functionally similar to new-borrower IBR but with different eligibility rules. PAYE closes to new enrollees July 1, 2026, and sunsets July 1, 2028. Current PAYE borrowers can stay on through sunset, then must choose IBR or RAP.
Related: PAYE vs. RAP
Comparing IDR Plans
The right IDR plan depends on when your loans were disbursed, your income trajectory, and whether you’re pursuing forgiveness through PSLF or the IDR forgivenessIDR ForgivenessThe forgiveness of any remaining federal student loan balance after a borrower has completed 20 or 25 years of qualifying payments under an income-driven repayment plan, depending on the specific plan. timeline.
Related:
Temporary Relief: Deferment and Forbearance
Deferment and forbearance aren’t repayment plans — they’re temporary pauses. Both stop your required monthly payments, but interest usually continues accruing (except on subsidized loans during certain deferments). They exist for short-term hardships: job loss, medical emergencies, and returning to school.
Neither option counts toward IDR forgiveness or PSLF. Borrowers who stay in forbearance for extended periods often see their balances grow substantially. By contrast, a $0 payment on an income-driven plan still counts toward forgiveness — an important distinction for borrowers weighing forbearance against IDR enrollment.
Starting July 1, 2027, new borrowers will face tighter restrictions: no economic hardship or unemployment deferments, and forbearance capped at 9 months in any 24-month period. These limits apply only to borrowers who take out their first loans after that date.
Related: Forbearance vs. Deferment: What’s the Difference?
How to Choose a Repayment Plan
The right plan depends on what you’re optimizing for — total cost, monthly affordability, or forgiveness.
If your goal is to pay the least total cost, the Standard Repayment Plan wins. You’ll pay the highest monthly amount, but you’ll be done in 10 years with the least interest.
If you need the lowest possible monthly payment, an income-driven plan is the path. IBR can produce $0 payments for borrowers whose income falls below the threshold. RAP has a $10 minimum, but its interest waiver prevents your balance from growing while you’re in a low payment — IBR does not offer that protection.
If you’re pursuing Public Service Loan Forgiveness, you want the qualifying IDR plan that produces the lowest monthly payment. Every dollar you pay on an IDR plan while working toward PSLF is a dollar that would have been forgiven. IBR and RAP both qualify for PSLF. The IBR vs. RAP and PAYE vs. RAP comparisons show which plan produces the lower payment for your income and family size.
Related:
If you were on SAVE, your servicer will send you a notice starting July 1, 2026, giving you 90 days to choose a new plan. Your most likely options are IBR (if your loans predate July 2026) or RAP (available to all borrowers starting July 2026). Borrowers who already know which plan they want can contact their servicer before July 1 to switch proactively.
Related: Should You Switch From SAVE to IBR?
If you have Parent PLUS loans, consolidate before June 30, 2026. After that date, unconsolidated Parent PLUS loans permanently lose access to every income-driven plan and every forgiveness program. The Department of Education recommends applying by April 1, 2026, to ensure disbursement by the deadline.
Related:
How to Switch Your Repayment Plan
Contact your federal loan servicerLoan ServicerThe company that manages a borrower's federal student loan account, processes payments, and handles applications for repayment plans, deferment, forbearance, and forgiveness on behalf of the U.S. Department of Education. to change your repayment plan. You can switch plans at any time. If you don’t know who your servicer is, log in to StudentAid.gov and check under “My Aid.”
To switch to a fixed-payment plan (Standard, Graduated, Extended, or Tiered Standard), request it. No income documentation required.
To switch to an income-driven plan (IBR, RAP, ICR, or PAYE), you’ll complete the IDR application on StudentAid.gov. The application asks you to provide income information — the fastest method is the IRS Data Retrieval Tool, which pulls your AGI from your most recent tax return. Have your latest tax return or pay stubs available in case manual entry is needed.
Processing times vary by servicer. During high-volume periods — like the July 2026 SAVE transition — expect delays. Applying early gives you a buffer.
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FAQs
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The One Big Beautiful Bill Act, signed July 4, 2025, creates two new plans. The Repayment Assistance Plan is a new income-driven plan that calculates payments as 1–10% of AGI and offers forgiveness after 30 years. The Tiered Standard Plan is a fixed-payment plan with 10, 15, 20, or 25-year terms based on your balance. Both launch July 1, 2026.
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SAVE was vacated by court order on March 10, 2026. PAYE and ICR close to new enrollees on July 1, 2026, and sunset entirely on July 1, 2028. Graduated and Extended repayment are no longer available for loans disbursed after July 1, 2026. IBR and Standard Repayment remain permanently available to legacy borrowers.
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Starting July 1, 2026, your servicer will send a notice giving you 90 days to pick a new plan. If you don’t choose within the window, you’ll be auto-enrolled in Standard Repayment or the Tiered Standard Plan. You can call your servicer now to switch to IBR or wait until July to evaluate RAP.
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No. IBR is the only legacy income-driven plan that survives permanently. It remains available to all borrowers with Direct Loans disbursed before July 1, 2026.
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A new fixed-payment plan created by the OBBBA launches on July 1, 2026. Unlike the traditional 10-year Standard plan, the Tiered Standard adjusts its repayment term — 10, 15, 20, or 25 years — based on your total outstanding balance. It’s not income-driven, offers no forgiveness timeline, and is one of the default auto-enrollment options for SAVE borrowers who don’t choose a plan.
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For existing borrowers, no — if you’re already on Graduated or Extended, your plan continues. But neither plan is available for loans first disbursed on or after July 1, 2026. New borrowers after that date choose between Standard, Tiered Standard, and RAP.
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