The Saving on a Valuable Education plan is over. A federal court approved a settlement on March 10, 2026 that formally ended SAVE, and if you were enrolled in it or had applied, your loans are sitting in administrative forbearance right now. You need to pick a new repayment plan. If you don’t, your loan servicer will pick one for you, and interest has already been accruing on your balance since August 1, 2025.
How SAVE Ended
Legal challenges started almost as soon as the plan launched in 2023. A federal court blocked key parts of SAVE in June 2024, which is when the Department of Education first moved affected borrowers into forbearance at a zero percent interest rate. In February 2025 the Eighth Circuit held the plan unlawful, and a district court entered an injunction in April 2025. The Department then settled with the State of Missouri, agreed to vacate the 2023 regulations that created SAVE, and the court approved that settlement on March 10, 2026.1U.S. Department of Education. U.S. Department of Education Announces Next Steps for Borrowers Enrolled in Unlawful SAVE Plan
The REPAYE formula is blocked by the same order, so that plan is not an option either.2Federal Student Aid. IDR Plan Court Actions: Impact on Borrowers
What to Do Right Now
If your loans are in forbearance because you were enrolled in or applied for SAVE, you are required to select a new repayment plan and begin making payments. There is no grace period, and your servicer will move you to a default plan if you don’t choose one yourself.2Federal Student Aid. IDR Plan Court Actions: Impact on Borrowers
Log into StudentAid.gov or contact your servicer directly. You can apply for an income-driven plan through the IDR application and link your IRS data so income figures are pulled in automatically, or submit a paper application to your servicer. Expect delays: a backlog of roughly one million unprocessed IDR applications built up during the SAVE litigation.3Federal Student Aid. SAVE Plan Fact Sheet
One extra wrinkle for anyone already on PAYE or ICR: those borrowers must also eventually select a new plan no later than June 30, 2028, due to separate changes affecting those programs.2Federal Student Aid. IDR Plan Court Actions: Impact on Borrowers
Your Current Plan Options
Three income-driven plans remain available until the Repayment Assistance Plan launches in July 2026. You can also pick a non-IDR option like the Standard or Graduated plans.2Federal Student Aid. IDR Plan Court Actions: Impact on Borrowers The right fit depends on your loan types, income, and how long you’ve already been in repayment.
- Income-Based Repayment (IBR). Payments are 10 or 15 percent of discretionary income, depending on when your loans were first disbursed. Forgiveness after 20 or 25 years. Requires a partial financial hardship. Parent PLUS loans not eligible.
- Pay As You Earn (PAYE). Payments are 10 percent of discretionary income with forgiveness after 20 years. Only open to borrowers who had no outstanding federal student loan balance before October 1, 2007 and received a Direct Loan disbursement on or after October 1, 2011. Parent PLUS loans excluded.
- Income-Contingent Repayment (ICR). Available only for Direct Loans, with payments based on adjusted gross income, family size, and total balance. Forgiveness after 25 years. This is the only IDR plan available to parent borrowers who consolidate Parent PLUS loans into a Direct Consolidation Loan.
Interest and PSLF Credit You Lost in Forbearance
The Department of Education kept the SAVE forbearance at zero percent interest at first, then instructed servicers to resume charging interest on August 1, 2025. The Department said the injunction blocking SAVE also blocked the regulatory authority behind the zero rate.4U.S. Department of Education. U.S. Department of Education Continues to Improve Federal Student Loan Repayment Options, Addresses Illegal Biden Administration Actions Interest has been building on your balance since.
Time in SAVE forbearance also does not count toward Public Service Loan Forgiveness. If you’re pursuing PSLF, you lost ground on the 120-payment requirement for every month you sat in that forbearance. A buyback option may let you retroactively purchase those months once you reach 120 months of qualifying employment, but only if buying them back actually triggers forgiveness. One narrow piece of SAVE did survive the settlement: a provision allowing certain deferments and forbearances to count as qualifying time toward income-driven repayment forgiveness.
The Repayment Assistance Plan Starting July 1, 2026
Congress created the Repayment Assistance Plan (RAP) through P.L. 119-21, the FY2025 reconciliation law. It launches July 1, 2026 and takes a different approach than SAVE or any earlier IDR plan.5Congressional Research Service. The Repayment Assistance Plan (RAP) in P.L. 119-21, the FY2025 Reconciliation Law
Payments under RAP are calculated from total adjusted gross income rather than discretionary income. The percentage follows a sliding scale: for AGI of $10,000 or less, the monthly payment is a flat $10. Above $10,000, the percentage starts at 1 percent and rises by one percentage point for each additional $10,000 of AGI, capping at 10 percent for income above $100,000. Each dependent reduces the monthly payment by $50, but the payment can never drop below $10. Forgiveness comes after 30 years, which is longer than the 20- or 25-year windows under prior IDR plans. If your monthly payment doesn’t cover accrued interest, the unpaid portion isn’t charged to you, and the plan adds a matching principal payment for borrowers who pay less than $50 in monthly principal.5Congressional Research Service. The Repayment Assistance Plan (RAP) in P.L. 119-21, the FY2025 Reconciliation Law
Eligible loans track what SAVE covered: Direct Subsidized, Unsubsidized, Graduate PLUS, and Consolidation Loans. Parent PLUS loans are excluded, as are consolidation loans that include a Parent PLUS balance.
The New-Loan Trap for Existing Borrowers
If all your Direct Loans were made before July 1, 2026, RAP will be one option among several income-driven plans. For any new Direct Loan taken out on or after July 1, 2026, RAP is the only IDR plan available. And here is the part worth pausing on: taking out even one new loan after that date makes RAP the only income-driven option for all of your Direct Loans, including the older ones. Benefits tied to whatever IDR plan your existing loans were on would be lost.5Congressional Research Service. The Repayment Assistance Plan (RAP) in P.L. 119-21, the FY2025 Reconciliation Law
How RAP’s Terms Differ from SAVE
RAP is not SAVE under a new name, and for many borrowers the terms are less generous.
- Minimum payment. SAVE allowed $0 payments for very low-income borrowers. RAP has a $10 floor.
- Income calculation. SAVE shielded income below 225 percent of the poverty line. RAP uses total AGI with no protected amount, though the sliding scale means low earners still pay a small percentage.
- Forgiveness timeline. SAVE offered forgiveness in as few as 10 years for small balances, capped at 20 or 25 years. RAP sets a uniform 30-year maximum.
- Interest and principal. Both plans cover unpaid interest during negative amortization. RAP adds a matching principal payment that SAVE did not have.
If You’re Close to Forgiveness, Plan for a Tax Bill
The American Rescue Plan Act temporarily excluded most student loan forgiveness from federal taxable income, but only for loans forgiven between January 1, 2021 and December 31, 2025. Starting in 2026, forgiven balances under income-driven repayment are generally treated as cancellation of debt income. Your servicer will issue a Form 1099-C the following year, and you’ll report the forgiven amount on the return for the year the forgiveness occurred.6Taxpayer Advocate Service. What to Know About Student Loan Forgiveness and Your Taxes A $60,000 IDR forgiveness could produce a five-figure federal tax bill in that year. Discharges due to death or total and permanent disability remain excluded from gross income.7Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness State treatment varies, with some states following federal rules and others taxing forgiven debt independently.