Student Loan Repayment in 2026: SAVE Plan Ending & New RAP Explained

2026 is the biggest shake-up to federal student loan repayment in years. The SAVE Plan has been shut down by court order, several other income-driven repayment (IDR) plans are being phased out, and a brand-new plan called the Repayment Assistance Plan (RAP) launches on July 1, 2026. If you have federal student loans, here's what's actually changing, who it affects, and the steps to take before you're automatically moved to a plan you may not want.

What Changed: The Short Version

• The SAVE Plan — the most generous income-driven plan — has been eliminated following a federal court ruling
• A new law created the Repayment Assistance Plan (RAP) and a new Tiered Standard Plan, both available starting July 1, 2026
• For loans disbursed after July 1, 2026, RAP becomes the only income-driven option
• PAYE and ICR plans will sunset by July 1, 2028
• IBR remains available, but only for loans disbursed before July 2026

What Is the Repayment Assistance Plan (RAP)?

RAP is the new income-driven repayment plan created to eventually replace most existing IDR plans. Unlike SAVE, RAP does not offer a $0 monthly payment regardless of income — every borrower pays something, generally between 1% and 10% of their income depending on how much they earn. The repayment term can extend up to 30 years, after which any remaining balance may be forgiven.

RAP also includes interest relief provisions designed to prevent your loan balance from growing out of control if your payment doesn't fully cover the interest charged each month — a problem that affected borrowers on older plans.

If You Were on the SAVE Plan — What Happens Now?

If you were enrolled in SAVE (or had applied and were waiting), your loan was likely placed in forbearance while the plan was tied up in litigation. With SAVE now eliminated, borrowers need to select a new repayment plan — typically within about 90 days of July 1, 2026, based on communications from your loan servicer.

If you don't choose a plan by your deadline, you will likely be automatically moved to the Standard Repayment Plan, which calculates payments based on your loan balance rather than your income — and is often significantly higher than what you were paying under SAVE.

Your Repayment Plan Options Going Forward

Standard Plan vs Income-Driven Plans: The Core Trade-Off

This is the same fundamental trade-off that exists with any loan term: the Standard Plan generally means higher monthly payments but a faster payoff and less total interest. Income-driven plans like IBR or RAP lower your monthly payment to a level tied to your income, but stretch the loan out for much longer — sometimes decades — which usually means paying more interest overall, even with forgiveness at the end.

Use the calculator above to see what your payment would look like under a 10-year Standard Plan versus a 20-, 25-, or 30-year term, so you can compare the monthly difference for yourself.

Is Public Service Loan Forgiveness (PSLF) Still Available?

Yes — PSLF continues to forgive remaining federal loan balances after 120 qualifying monthly payments (10 years) for borrowers working full-time for a qualifying government or nonprofit employer. However, you generally need to be on a qualifying repayment plan — historically this has included the Standard 10-year plan and most income-driven plans.

If you're pursuing PSLF and your old plan (such as SAVE) is no longer available, it's especially important to choose a new qualifying plan promptly so your payments continue to count toward the 120 needed for forgiveness. Confirm which plans currently qualify at studentaid.gov before switching.

How to Decide Which Plan Is Right for You

• If your income is low relative to your loan balance: An income-driven option like IBR (if your loans qualify) or RAP will likely give you the most manageable monthly payment
• If you want to minimize total interest and pay off your loan fastest: The Standard Plan, especially over 10 years, will cost less overall — use the calculator to compare
• If you're working toward PSLF: Prioritize staying on a qualifying plan without gaps, even if it means a higher payment in the short term
• If you're unsure: Run your numbers under a few different terms using the calculator above before contacting your servicer, so you know what to expect

Steps to Take This Year

• Log into your account at studentaid.gov to see your current loan status and any deadlines specific to you
• Watch for emails or letters from your loan servicer about choosing a new repayment plan
• If you were on SAVE, don't wait until the deadline — review your options now so you're not auto-enrolled into a payment you can't afford
• If you're pursuing PSLF, confirm your new plan still counts toward your 120 payments before switching
• Use the calculator above to estimate payments under different terms before you decide

Frequently Asked Questions

Is the SAVE Plan really gone?

Yes. Following a federal court ruling, the Department of Education has ended the SAVE Plan and is transitioning enrolled borrowers to other repayment options. If you were on SAVE, you'll need to select a new plan.

What is RAP and how is it different from SAVE?

RAP (Repayment Assistance Plan) is the new income-driven repayment plan launching July 1, 2026. Unlike SAVE, which allowed $0 payments for very low incomes, RAP requires every borrower to pay something — generally 1% to 10% of income — with forgiveness available after up to 30 years.

Will I still get loan forgiveness under the new rules?

Income-driven plans like IBR and RAP still offer forgiveness of any remaining balance after a set number of years (20–25 years for IBR, up to 30 for RAP). PSLF also remains available for qualifying public service workers after 120 payments.

What happens if I miss the deadline to choose a new plan?

If you don't actively choose a plan, your loan will likely be automatically moved to the Standard Repayment Plan, which is based on your balance rather than your income and is often a higher monthly payment than an income-driven plan would be.

Are forgiven student loan balances taxable?

Tax treatment of forgiven student loan balances has changed under recent legislation, and some forgiveness may now be subject to federal income tax starting in 2026. Check the latest guidance on studentaid.gov or with a tax professional, since this can significantly affect your financial planning if you're nearing forgiveness.