Starting July 1, 2026, the federal student loan repayment landscape is the most different it has been in over a decade. The SAVE Plan is permanently gone. Two older plans — PAYE and ICR — are being phased out by 2028. Most borrowers will end up choosing between two options: Income-Based Repayment (IBR) or the brand new Repayment Assistance Plan (RAP). What you pay each month, and for how long, depends almost entirely on which one you're on.
What Actually Changed and Why It Matters
The SAVE Plan was eliminated on March 10, 2026 under the One Big Beautiful Bill Act. If you were enrolled in SAVE, your loan servicer will move you off of it — you are not automatically placed on a better plan. You need to act.
| Your situation | Your realistic options |
|---|---|
| New loans taken after July 1, 2026 | Standard repayment or RAP |
| Existing loans, previously on SAVE | Need to switch — IBR or RAP |
| Existing loans, already on IBR | Can stay on IBR or switch to RAP |
| On PAYE or ICR currently | These phase out by July 1, 2028 — plan to transition |
| Parent PLUS loans | RAP not available — consolidate before June 30, 2026 to access IBR |
The Parent PLUS situation is the most urgent. If you have Parent PLUS loans and want access to income-driven repayment, consolidation into a Direct Consolidation Loan is required — and doing it before June 30, 2026 gives you access to IBR before the rules tighten further.
IBR vs RAP: The Core Difference
IBR calculates your payment as a percentage of your discretionary income — 10% if you first borrowed after July 1, 2014, or 15% if you borrowed before that. Discretionary income is your AGI minus 150% of the federal poverty guideline for your family size. Forgiveness comes after 20 years (new borrowers) or 25 years (older borrowers).
RAP uses a simpler bracket system based on your total AGI — from 1% to 10% of annual income depending on where you fall, with a $50/month reduction per dependent and a floor of $10/month if your AGI is $10,000 or below. Forgiveness also comes after 20 years, and RAP qualifies for Public Service Loan Forgiveness (PSLF).
For lower incomes, RAP often produces a smaller monthly payment than IBR. For moderate-to-higher incomes, IBR can be lower. The only way to know for your specific numbers is to run both side by side.
One Number Most Borrowers Don't Think About
Forgiveness under both IBR and RAP may be taxable as ordinary income in the year it's forgiven — meaning a $40,000 forgiven balance could generate a significant tax bill 20 years from now. PSLF forgiveness is the exception: it remains completely tax-free.
If you're working toward PSLF — government or qualifying nonprofit employment — this changes the math considerably. A lower monthly payment under RAP means more potential forgiveness after 120 qualifying payments, all of it tax-free. That's worth calculating carefully rather than assuming one plan is better.
What to Do Right Now
If you're on SAVE or don't know what plan you're on, log in to StudentAid.gov and check. Then run your actual numbers — your loan balance, interest rate, income, and family size — through our student loan calculator comparing IBR and RAP side by side. The monthly difference between plans can be hundreds of dollars, and the total interest difference over 20 years can be larger still.
The deadline pressure is real for some borrowers (Parent PLUS, PAYE/ICR). For others it's less acute but the decision still matters. Don't let your servicer make it for you by default.