Income-Driven Repayment 2026: IBR, RAP, No More SAVE

2026 is the biggest year for federal repayment since income-driven repayment was created. The SAVE plan was struck down, ICR and PAYE are being closed and then eliminated, and a brand new plan called the Repayment Assistance Plan takes their place for the borrowers who need income-based relief most. There are now two completely different sets of rules depending on one date: whether you borrowed before or on or after July 1, 2026. Here is the whole picture in one place.

The Short Version

• SAVE is gone. Interest started accruing again in August 2025 and the plan was struck down in 2026.
• ICR and PAYE close to new enrollments on July 1, 2026 and are eliminated no later than July 1, 2028.
• IBR survives. It is the only legacy income-driven plan still available to borrowers with older loans.
• RAP is new, available from July 1, 2026, and open to borrowers with older loans as well as new ones.
• Borrowing on or after July 1, 2026 changes everything. If you take out a new loan on or after that date, your entire portfolio loses access to IBR, ICR, and PAYE, and you move to RAP or the new Tiered Standard plan.

If Your Loans Were Disbursed Before July 1, 2026

You have the widest set of options. You can access, and switch between, these plans:

Plan	Status in 2026
Standard (fixed 10 year)	Available
Graduated	Available
Extended	Available
Income-Based Repayment (IBR)	Available, no end date
Income-Contingent Repayment (ICR)	Available through July 1, 2028
Pay As You Earn (PAYE)	Available through July 1, 2028
Repayment Assistance Plan (RAP)	Available from July 1, 2026

Practical deadline to keep in mind: if you are on SAVE, ICR, or PAYE, you need to choose a new plan. Borrowers who do not act before July 1, 2028 get placed automatically, with most Direct Loans moving into RAP and Parent PLUS or excepted consolidation loans moving into IBR. You do not get to pick once that happens, so choose deliberately rather than by default.

If You Borrow On or After July 1, 2026

New borrowers get exactly two choices:

• Tiered Standard Plan: fixed payments over a term that stretches with your balance, from 10 years for balances under $25,000 up to 25 years at $100,000 or more.
• Repayment Assistance Plan (RAP): income-based, and the only income-driven option available to you.

There are also new borrowing limits that arrive with this date, including caps on grad PLUS and parent PLUS borrowing. Those matter for planning how much you borrow in the first place, because a larger balance no longer buys you a longer income-based runway the way it used to.

How the Repayment Assistance Plan Is Calculated

RAP has a very different shape from the plans you may be used to.

• Percentage of AGI, scaled by income. Your payment is set as a percentage of your adjusted gross income, starting at 1% and rising to 10% as income increases.
• No poverty allowance. Older income-driven plans subtract 150% of the poverty guideline for your family size before applying the percentage. RAP does not. This is the main reason RAP produces a higher payment than legacy plans at the same income, which is a documented feature of the design rather than an accident.
• $50 per dependent. Your monthly payment drops by $50 for each dependent you claim.
• $10 minimum. After dependent reductions, $10 a month is the floor.
• Interest is subsidized. If your payment does not cover the interest that accrues, the government covers the difference, so the balance stops growing.
• Principal is matched. If your payment would reduce principal by less than $50, the government adds enough to guarantee at least $50 of principal reduction each month.
• Forgiveness at 30 years. The forgiveness clock is longer than IBR's.

An illustrative example

A single borrower with $45,000 of AGI and no dependents falls in the 4% band, which works out to $1,800 a year, or about $150 a month. At $75,000 of AGI, the band rises to 7%, or $5,250 a year, about $438 a month.

Compare that to the structure of IBR, which applies 10% of discretionary income, where discretionary income means AGI minus 150% of the poverty guideline for your household. At modest incomes the poverty allowance can make IBR the cheaper option. At higher incomes the two plans converge, and RAP's interest subsidy becomes the more valuable feature. Use the official Loan Simulator for your exact figure, and our IDR Calculator for a fast estimate.

IBR vs RAP: The Trade-Off in One Table

Feature	IBR	RAP
Payment basis	10% or 15% of discretionary income	1% to 10% of AGI
Poverty allowance	Yes	No
Dependent reduction	Reflected in the poverty allowance	$50 per dependent
Minimum payment	Can be $0	$10
Interest subsidy	Limited	Unpaid interest is covered
Principal guarantee	No	At least $50 per month
Forgiveness term	20 or 25 years	30 years
Counts toward PSLF	Yes	Yes
Availability	Loans disbursed before July 1, 2026	All borrowers except Parent PLUS

Which One Should You Pick?

The decision comes down to which one is doing the work for you.

• If you are pursuing PSLF: the plan choice changes your monthly cost but not the forgiveness date, because both IBR and RAP count. Pick the lower payment and expect forgiveness to be tax free.
• If your income is low relative to your balance: IBR's poverty allowance usually produces the smaller payment, and a longer-run forgiveness balance may be larger. Run both.
• If your balance is growing because your payment does not cover interest: RAP's interest subsidy is the feature that addresses that problem directly, and it can be worth paying slightly more per month for.
• If you borrowed on or after July 1, 2026: RAP is your only income-based choice, and it is also the only path that keeps a PSLF clock running.
• If you are a parent PLUS borrower: RAP is not available to you, and if you borrowed a new loan on or after July 1, 2026, the option set narrows sharply. Get specific advice for your situation rather than working from general rules.

Two Mistakes to Avoid

1. Assuming progress transfers between plans

Payments made under SAVE, PAYE, IBR, or ICR count toward forgiveness in the newer plans, which is good news. But one direction does not work the way people expect: if you enroll in RAP, the progress you earn toward forgiveness while in RAP does not count toward the IBR, ICR, or PAYE forgiveness clocks if you later switch to one of those plans. RAP progress does count toward PSLF. If there is any chance you will move between plans, factor that asymmetrical rule into the decision now.

2. Taking a new loan or consolidating without understanding the cutoff

This is the expensive one. If you take out a new Direct Loan on or after July 1, 2026, you lose access to IBR, ICR, and PAYE for all of your loans, not just the new one. The same applies if you consolidate on or after that date. Borrowers who consolidate in 2026 to simplify their loans can accidentally trade a 20-year IBR forgiveness track for a 30-year RAP track. If you are close to forgiveness or you value the legacy plans, the timing of a consolidation is a decision worth getting right.

Don't Forget the Tax Side

RAP forgiveness at 30 years is taxable, and so is IBR forgiveness at 20 or 25 years, because the temporary federal exclusion for forgiven student loan debt expired at the end of 2025. On a $50,000 forgiven balance, a middle-income borrower can owe around $10,000 in federal tax in the year of discharge. That is a planning problem, not a reason to avoid forgiveness, but it should be part of your projection. Our guide to the 2026 student loan tax bomb covers how the bill is calculated and how to prepare for it.

Your Action Checklist

1. Find out whether any of your loans were disbursed on or after July 1, 2026. That single fact determines your options.
2. If you are on SAVE, ICR, or PAYE, decide where you are going and act well before July 1, 2028.
3. Price both IBR and RAP with the official Loan Simulator rather than assuming.
4. Check whether RAP's interest subsidy changes the balance trajectory in your favor.
5. If you are married and considering filing separately, note that this can lower an income-driven payment but costs you other tax benefits.
6. Model the tax on forgiveness in the year you expect it, and start a reserve now.

The Bottom Line

The 2026 repayment overhaul splits borrowers into two groups. If your loans predate July 1, 2026, you still have IBR, plus RAP as a new option, plus a few years of ICR and PAYE. If you borrow on or after that date, RAP is your only income-driven choice and the Tiered Standard plan is your alternative, and Tiered Standard payments do not earn PSLF credit. Payments under SAVE still count, SAVE forbearance months generally do not, and long-run forgiveness is now a taxable event. Get the plan right in 2026 and the rest of the decade takes care of itself.