Student Loan Repayment Plans Compared: Which One Fits Your Income?
Federal student loan repayment rules just went through their biggest shake-up in a decade. SAVE is gone, RAP just launched, and old plans are closing their doors. Here's a clear, no-jargon breakdown of every option left, so you can pick the one that actually fits your income.
Federal student loan repayment changed a lot in the last year. The SAVE plan is gone. Two new plans opened up in July 2026. Some old plans are closing to new borrowers. If you feel confused, you are not alone. Millions of borrowers got a notice this year telling them to pick a new plan.
This guide breaks down the plans that exist right now, in plain language, with real numbers. By the end, you should know which plan fits your income and your goals.
Why This Changed
In July 2025, Congress passed a law called the One Big Beautiful Bill Act (OBBBA). It rewrote the rules for federal student loan repayment. Then, in March 2026, a federal court shut down the SAVE plan for good. Together, these two events forced millions of borrowers off their old plans and into new ones.
Here is the short version of what happened:
- The SAVE plan ended. It no longer exists.
- Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) are closing to new enrollees and will fully end by July 1, 2028.
- Income-Based Repayment (IBR) survived. It is now the main income-driven option for borrowers with older loans.
- A brand new plan called the Repayment Assistance Plan (RAP) launched on July 1, 2026.
- A new fixed-payment option called the Tiered Standard Plan also launched.
If your loans were disbursed before July 1, 2026, you have more choices. If you take out any new federal loan on or after that date, your choices shrink to just two: RAP or the Tiered Standard Plan. This matters even for your old loans, because taking out one new loan can pull your entire balance into the new system.
Now let's go through each plan.
The Standard Repayment Plan
This is the plan everyone starts on unless they choose something else.
How it works: You pay a fixed amount every month for 10 years. The amount is based on your loan balance and interest rate. Your income does not factor into the math at all.
Who it fits: Borrowers who earn enough to comfortably cover the payment and who want to pay off their loans fast with the least total interest. Because you are paying down principal from day one, you spend less money over the life of the loan compared to income-driven plans.
The tradeoff: No income-driven forgiveness. If your income is low or unpredictable, this payment can feel painful. There is no cap based on what you earn.
The Tiered Standard Plan (New in 2026)
How it works: Like the old Standard Plan, this is a fixed monthly payment with no income component. The difference is that your repayment term depends on how much you borrowed, not a flat 10 years. Borrowers with smaller balances get shorter terms. Borrowers with larger balances get longer terms, which lowers the monthly payment but increases total interest paid.
Who it fits: New borrowers taking out loans on or after July 1, 2026. This plan, along with RAP, is one of only two options available to them.
The tradeoff: Still no income-driven forgiveness path, other than Public Service Loan Forgiveness (PSLF) where it applies.
Income-Based Repayment (IBR)
IBR is the one legacy income-driven plan that survived the overhaul. It is a strong option for many borrowers right now.
How it works: Your payment is set at 10% or 15% of your discretionary income, depending on when you first borrowed. Discretionary income means the part of your income above a set poverty line threshold, not your full paycheck.
There are two versions:
- New IBR (loans first taken out on or after July 1, 2014): payments are 10% of discretionary income, with forgiveness after 20 years of qualifying payments.
- Old IBR (loans first taken out before July 1, 2014): payments are 15% of discretionary income, with forgiveness after 25 years.
Your payment can never be higher than what you would pay under the 10-year Standard Plan, no matter how much your income rises. And if your income is low enough, your payment can drop to $0 a month, while that time can still count toward forgiveness.
Another change worth knowing: the old rule that required proof of "partial financial hardship" to qualify has been removed. Any borrower with eligible loans can now enroll in IBR, regardless of income.
Who it fits: Borrowers with loans disbursed before July 1, 2026 who want an income-based option that is not going anywhere. If you were on SAVE, PAYE, or ICR and want a stable long-term plan, IBR is currently the safest landing spot, because it is the only IDR plan that stays open indefinitely.
The tradeoff: The percentage of income (10% or 15%) can still be higher than what some borrowers were paying under SAVE, which used a lower rate. Also, IBR is only available to borrowers whose loans were disbursed before July 1, 2026. If you borrow anything new after that date, your whole balance gets pulled into the new system and IBR is no longer an option for it.
Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR)
These two plans still exist, but only temporarily.
How they work: PAYE generally caps payments at 10% of discretionary income, with forgiveness after 20 years. ICR sets payments at 20% of discretionary income, with forgiveness after 25 years. ICR is usually the most expensive of the older income-driven plans.
Status: Both plans stopped accepting new enrollees on July 1, 2026. Borrowers who are already on one of these plans can stay enrolled until July 1, 2028. After that date, anyone still on PAYE or ICR gets automatically moved to RAP or IBR, depending on eligibility.
Who it fits: Only borrowers who are already enrolled in one of these plans. If you are already on PAYE, you can generally keep the lower payment structure for a couple more years before you have to make a new choice.
The tradeoff: This is a countdown clock. You will need to pick a new plan before July 2028 regardless.
The Repayment Assistance Plan (RAP)
RAP is the newest plan, and it works differently from anything that came before it.
How it works: Instead of using discretionary income, RAP bases your payment on your full adjusted gross income (AGI). Your payment is a percentage of your AGI, and that percentage rises in steps as your income rises.
Here is roughly how the brackets work:
| Annual Income | Payment as % of AGI |
|---|---|
| $0 to $10,000 | $10 per month minimum |
| $10,001 to $20,000 | 1% |
| $20,001 to $30,000 | 2% |
| $30,001 to $40,000 | 3% |
| $40,001 to $50,000 | 4% |
| $50,001 to $60,000 | 5% |
| $60,001 to $70,000 | 6% |
| $70,001 to $80,000 | 7% |
| $80,001 to $90,000 | 8% |
| $90,001 to $100,000 | 9% |
| Above $100,000 | 10% |
The formula is: (AGI multiplied by your bracket rate, divided by 12), minus $50 for each dependent you claim. Your payment can never fall below $10 a month.
RAP has two features that soften the blow. First, if your payment does not cover the interest that accrues each month, the government waives the leftover interest so your balance does not grow. Second, if your payment reduces your principal by less than $50 a month, the government kicks in extra money so your balance always drops by at least $50 with every on-time payment.
Forgiveness happens after 30 years of qualifying payments, which is longer than the 20 or 25 years under IBR. Borrowers pursuing Public Service Loan Forgiveness can still reach forgiveness in 10 years while on RAP, since PSLF works separately from the standard forgiveness timeline.
Who it fits: Anyone taking out a new federal loan on or after July 1, 2026, since RAP is one of only two options available to them. It can also make sense for existing borrowers with very low income or several dependents, since the dependent reduction and interest waiver can make payments quite small.
The tradeoff: RAP has no payment cap tied to the Standard Plan amount, unlike IBR. If your income is high, your RAP payment can end up larger than a Standard Plan payment would be. The 30-year timeline is also long. And married borrowers should note that RAP still allows filing taxes separately to exclude a spouse's income from the calculation, which can matter a lot if one spouse earns much more than the other.
How to Choose: A Quick Framework
Instead of memorizing every rule, ask yourself these questions.
1. When were your loans disbursed? If all your loans came before July 1, 2026, you likely have access to IBR, and possibly PAYE or ICR for a limited time. If you plan to borrow anything new after that date, understand that doing so can shift your entire balance onto RAP or the Tiered Standard Plan.
2. Is your income low or unstable right now? An income-driven plan like IBR or RAP will likely keep your payment manageable. Between the two, run the numbers for your specific income and dependents, since IBR's 10% or 15% of discretionary income can be higher or lower than RAP's bracket system depending on your situation.
3. Do you have dependents? RAP gives you $50 off per dependent, which can meaningfully lower your payment if you have children or other dependents. IBR does not have a dependent adjustment built into its formula the same way.
4. Are you working toward Public Service Loan Forgiveness? If yes, both IBR and RAP count toward PSLF, and forgiveness can still arrive in 10 years of qualifying payments regardless of which plan you are on. In that case, pick whichever plan gives you the lowest monthly payment during those 10 years, since you will not be paying long enough to reach the plan's full forgiveness timeline anyway.
5. Do you want the lowest total cost, not the lowest monthly payment? If you can afford it, the Standard Plan or Tiered Standard Plan will cost you less in total interest than any income-driven plan, because you pay down principal faster and are not stretching payments out over 20 to 30 years.
6. Were you on SAVE? If you were on SAVE, your servicer has likely already reached out or will soon. You generally have 90 days from notice to choose a new plan. If you do nothing, you get automatically placed into the Standard Plan, which usually has the highest monthly payment of all the options. If your income is limited, this is the outcome you want to avoid by actively choosing IBR or RAP yourself.
A Word on the Backlog
The Department of Education has been processing a large number of income-driven repayment applications this year, and wait times have been long. If you plan to switch plans, apply as early as possible rather than waiting until close to a deadline. Submitting your application at StudentAid.gov and following up with your loan servicer directly can help avoid getting stuck in involuntary forbearance while your application sits in a queue.
The Bottom Line
There is no single best plan. The right one depends on when your loans were issued, how much you earn, whether you have dependents, and whether you are chasing forgiveness or trying to pay off your debt as fast as possible.
If you take one thing away from this guide, let it be this: do not let a servicer's default choice make this decision for you. Log into StudentAid.gov, use the repayment calculator, and compare your actual numbers under IBR, RAP, and the Standard Plan before your next payment is due. A few minutes of math now can save you hundreds of dollars a month.
References
- Tate Law. "Income-Based Repayment (IBR)." https://www.tateesq.com/learn/income-based-repayment
- Banzai. "From SAVE to RAP: 2026 Student Loan Changes." https://banzai.org/wellness/resources/from-save-to-rap-2026-student-loan-changes
- NerdWallet. "SAVE Ends, Borrowers Receiving Notice to Switch Plans." https://www.nerdwallet.com/student-loans/learn/save-lawsuits
- Finnita. "Income-Driven Repayment Plans After SAVE: 2026 Guide." https://finnita.com/blog/idr-plans-after-save-shutdown-2026/
- Spendify. "The SAVE Plan Is Gone: What Student Loan Borrowers Need to Do Before July 1." https://spendify.money/blog/save-plan-ended-july-2026-deadline/
- Finaid. "Income-Based Repayment." https://finaid.org/loans/ibr/
- SoFi. "Repayment Assistance Plan (RAP): What to Know for 2026." https://www.sofi.com/learn/content/repayment-assistance-plan-explained/
- Congress.gov, Library of Congress. "The Repayment Assistance Plan (RAP) in P.L. 119-21, the FY2025 Reconciliation Law." https://www.congress.gov/crs-product/IF13075
- Fidelity. "What is the Repayment Assistance Plan?" https://www.fidelity.com/learning-center/personal-finance/repayment-assistance-plan
- Student Loan Planner. "Repayment Assistance Plan (RAP) Explained: Forgiveness, Payments & More." https://www.studentloanplanner.com/repayment-assistance-plan-rap/
- Edfinancial Services. "Repayment Assistance Plan (RAP)." https://edfinancial.studentaid.gov/income-driven-repaymentinformation-center/rap
- Richify. "RAP Student Loan Calculator 2026." https://www.richify.ai/us/tools/rap-student-loan-calculator
- Mass.gov. "Repayment Assistance Plan (RAP)." https://mass.gov/info-details/repayment-assistance-plan-rap
- The Institute for College Access & Success (TICAS). "Explainer: Student Loan Repayment Changes Starting July 1, 2026." https://ticas.org/affordability-2/upcoming-changes-to-income-driven-repayment-plans/