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Income-Driven Repayment Plans in 2026: What’s Changing and What to Do

Federal repayment plans are going through their biggest overhaul in years. Here’s where things stand, what’s ending, and what’s replacing it.

If you’re currently on the SAVE Plan SAVE is ending. Under a December 2025 settlement, the Department of Education stopped enrolling borrowers in SAVE, and starting July 1, 2026, SAVE borrowers are being notified and given 90 days to choose a new plan. If you don’t choose a plan within 90 days of your notice, you’ll be placed in a standard plan, which often has higher payments. Choosing IBR or RAP keeps you on an income-driven path. Log into StudentAid.gov/idr to switch to an active plan now.

What’s a Free, Federal Program — Not a Loan Product

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Income-driven repayment (IDR) isn’t something you buy or apply for through a private company. It’s a set of federal programs, administered through StudentAid.gov, that calculate your monthly student loan payment as a percentage of your income rather than a fixed amount. There’s no cost to enroll and no lender involved.

The 2026 Timeline: What’s Ending, What’s Coming

Dec. 2025

SAVE settlement — the Department of Education agreed to stop enrolling borrowers in SAVE and move existing SAVE borrowers to other plans. Interest on SAVE loans had already resumed on August 1, 2025.

July 1, 2026

RAP launches — the new Repayment Assistance Plan becomes available, replacing SAVE as the primary income-driven option for most borrowers.

July 1, 2028

PAYE and ICR end — borrowers still on these plans must switch to IBR or RAP by this date, or be auto-enrolled by their servicer.

Once the transition finishes, only two income-driven options will remain long-term: IBR (Income-Based Repayment) and RAP (Repayment Assistance Plan).

IBR vs. RAP: The Two Plans That Remain

Factor	IBR (Income-Based Repayment)	RAP (Repayment Assistance Plan)
Payment formula	10% of discretionary income (income above 150% of poverty line)	1–10% of full adjusted gross income, tiered by bracket
Minimum payment	$0 if income is low enough	$10/month minimum, no $0 payments
Payment cap	Never exceeds the 10-year Standard Plan amount	No cap — high earners may pay more than IBR
Forgiveness timeline	20 years (loans from 2014+) or 25 years (older loans)	30 years
Unpaid interest	Subsidized for first 3 years on some loans	Waived monthly — balance can’t grow from unpaid interest
Eligibility	Loans disbursed before July 1, 2026	Any eligible federal loan; the only option for loans after July 1, 2026
PSLF qualifying	Yes	Yes

Which one is cheaper? It depends heavily on income. RAP’s lower brackets can mean smaller payments for borrowers earning under roughly $80,000–$90,000 a year. Above that range, IBR’s discretionary-income formula and payment cap tend to produce lower monthly payments. Family size and dependents also shift the math — there’s no universal answer, which is why running both numbers through the Federal Student Aid Loan Simulator before choosing is worth the ten minutes.

Important: Forgiven Balances May Now Be Taxable

The tax-free exemption expired A temporary federal tax exemption made IDR-forgiven balances tax-free through December 31, 2025. That exemption has expired. Balances forgiven under IBR or RAP starting in 2026 may be treated as taxable income unless Congress extends the exclusion. This does not apply to Public Service Loan Forgiveness, which remains permanently tax-free under current law.

Who Should Consider IDR

Income-driven repayment makes the most sense if your federal loan payment under the Standard 10-year plan would take up an uncomfortable share of your income, if you’re working toward Public Service Loan Forgiveness and want the lowest qualifying payment, or if your income is likely to stay low or moderate for the foreseeable future. If you have strong, stable income and could pay off your loans well within 10 years anyway, a standard plan — or refinancing, if you don’t need federal protections — may cost less overall.

Check Your IDR Options on StudentAid.gov →

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Frequently Asked Questions

I’m on SAVE right now — what do I do?

Choose IBR or RAP as soon as possible through StudentAid.gov/idr. If you don’t choose within 90 days of your notice, you’ll be placed in a standard plan, which often has higher payments.

Do I have to switch to RAP when it launches?

Not immediately. If you have loans from before July 1, 2026, you can stay on IBR (or a sunsetting plan until its deadline) rather than switching to RAP. Borrowers with loans first disbursed on or after July 1, 2026 only have RAP as their income-driven option.

Does income-driven repayment cost anything to apply for?

No. It’s a free federal program. You apply directly through StudentAid.gov — there’s no fee and no private company involved.

Sources: U.S. Department of Education, Federal Student Aid (studentaid.gov). This page reflects the federal repayment landscape as of June 2026 and is provided for general information, not financial or tax advice. Repayment plan details can change — verify current rules on StudentAid.gov before making a decision.