The SAVE plan was struck down in federal court and the Department of Education is barred from implementing it, so if your loans were parked in SAVE forbearance, you need to pick a new repayment plan before your servicer moves you to the Standard 10-year plan automatically.1Federal Student Aid. IDR Court Actions A replacement income-driven plan called the Repayment Assistance Plan (RAP) takes effect no later than July 1, 2026, and three older income-driven plans remain open in the meantime.
Where Your Loans Stand Right Now
In February 2025, the Eighth Circuit Court of Appeals affirmed a broad injunction blocking the entire SAVE rule.2United States Court of Appeals for the Eighth Circuit. State of Missouri et al v Donald J Trump et al, No 24-2332 A March 2026 order went further, preventing the Department from implementing the plan or parts of other IDR plans affected by the ruling.1Federal Student Aid. IDR Court Actions
While the litigation played out, the Department placed most SAVE borrowers into an administrative forbearance. No payments were required, but no time counted toward forgiveness either. Interest accrual restarted on August 1, 2025, so balances have been growing quietly since then.3U.S. Department of Education. U.S. Department of Education Continues to Improve Federal Student Loan Repayment Options, Addresses Illegal Biden Administration Actions
Pick a New Plan Before Your Servicer Picks One for You
If you enrolled in or applied for SAVE, you are required to select a new repayment plan. If you don’t, your loan servicer will move you to a different plan, most likely the Standard Repayment Plan.1Federal Student Aid. IDR Court Actions Standard payments are based on your loan balance, not your income, and they are usually much higher than what you paid under an income-driven plan. If a jump to Standard would strain your budget, get into another income-driven plan first.
Your Income-Driven Options Right Now
Three income-driven plans remain available. Each bases payments on income and family size and forgives any remaining balance after 20 to 25 years.4Federal Student Aid. Repayment Plans
- Income-Based Repayment (IBR): 10% or 15% of discretionary income (calculated against 150% of the poverty level) depending on when you first borrowed, capped at what you’d pay on the 10-year Standard plan. Forgiveness after 20 years for newer borrowers, 25 for older ones.
- Pay As You Earn (PAYE): 10% of discretionary income against the same 150% threshold, forgiveness after 20 years. You must show a partial financial hardship to enroll.
- Income-Contingent Repayment (ICR): The lesser of 20% of discretionary income or a 12-year fixed schedule adjusted for income, forgiveness after 25 years. ICR is the only income-driven option that accepts Parent PLUS loans, and only after they’re rolled into a Direct Consolidation Loan.
A few eligibility catches trip people up. Parent PLUS Loans cannot be repaid under IBR, PAYE, or the coming RAP; consolidation into a Direct Consolidation Loan and enrollment in ICR is the only income-driven path for parents. Older FFEL and Perkins loans aren’t directly eligible for most income-driven plans either, but consolidating them into a Direct Consolidation Loan opens the door.
Your marital status and tax filing method matter. If you file jointly, your spouse’s income enters the calculation on most plans; filing separately keeps your spouse’s earnings out of IBR and PAYE, though not ICR.5Federal Student Aid. 4 Things to Know About Marriage and Student Loan Debt
The Repayment Assistance Plan Arriving July 1, 2026
The One Big Beautiful Bill Act, signed July 4, 2025, created the Repayment Assistance Plan. RAP takes effect no later than July 1, 2026, and will be the only income-driven plan available for new Direct Loans made on or after that date.6Congressional Research Service. The Repayment Assistance Plan (RAP) in PL 119-21 Existing borrowers with older loans can also enroll.
RAP calculates payments from your total adjusted gross income rather than discretionary income. The scale runs like this:6Congressional Research Service. The Repayment Assistance Plan (RAP) in PL 119-21
- AGI of $10,000 or less: $10 per month, the minimum payment under RAP.
- AGI above $10,000: between 1% and 10% of AGI, with the percentage climbing one point per $10,000 of income.
- $50 off the monthly payment for each dependent.
One consequence of this formula: RAP never produces a $0 payment. Every borrower pays at least $10 a month. Under SAVE, anyone earning below 225% of the federal poverty level (about $35,910 for a single person in 2026) owed nothing.7U.S. Department of Health and Human Services. 2026 Poverty Guidelines
RAP carries forward SAVE’s most useful protection. If your monthly payment doesn’t cover the interest that accrues, the unpaid interest is not charged to you, so your balance won’t grow as long as you make the required payments. RAP also adds a matching principal payment for borrowers whose monthly payment applies less than $50 to principal.6Congressional Research Service. The Repayment Assistance Plan (RAP) in PL 119-21 Any remaining balance is forgiven after 360 monthly payments, meaning 30 years, longer than the 20 or 25 years under the older income-driven plans. RAP payments count toward Public Service Loan Forgiveness if you otherwise qualify.8Federal Student Aid Partners. Federal Student Loan Program Provisions Effective Upon Enactment Under One Big Beautiful Bill Act
How to Apply
Applications go through the Income-Driven Repayment Plan Request at StudentAid.gov.9Federal Student Aid. Apply for or Manage Your Income-Driven Repayment Plan The online version pulls your tax data automatically; a paper form mailed to your servicer works too. You’ll need three things:
- Your FSA ID, the username and password that acts as your legal signature for Department of Education transactions. If you don’t have one, create it with your Social Security number, name, and date of birth, and expect one to three days for Social Security Administration verification.10Federal Student Aid. Creating and Using the FSA ID
- Your most recent federal tax return, or consent for the IRS to share your data directly during the application. The IRS shares limited tax data with the Department in real time when you consent.11Internal Revenue Service. Tax Information for Federal Student Aid Applications
- Your family size, meaning you, your spouse if applicable, and anyone who receives more than half their financial support from you.
Recertify Every Year, or Your Payment Jumps
Every income-driven plan requires you to recertify income and family size once a year, even if nothing has changed. Your servicer sends a notification when it’s time. Miss the deadline under IBR, PAYE, or ICR and your monthly payment jumps to the amount you’d owe under the Standard 10-year plan based on your original balance, and any unpaid interest may be capitalized into your principal.12MOHELA. Income-Driven Repayment (IDR) Plans
You can recertify online through StudentAid.gov or by submitting a new application with income documentation to your servicer. Consenting to automatic tax data sharing is the least painful option: the Department pulls your information each year without you having to track the date.
Forgiveness Is Now Taxable Income
The American Rescue Plan Act’s exclusion for forgiven student loan debt expired on December 31, 2025. Starting in 2026, any student loan balance forgiven through an income-driven plan is generally treated as taxable income at your ordinary rate.13Taxpayer Advocate Service. What to Know about Student Loan Forgiveness and Your Taxes If $40,000 is forgiven after 20, 25, or 30 years of payments, the IRS counts that $40,000 as income for that year.
Not every type of forgiveness is taxed. Public Service Loan Forgiveness, Teacher Loan Forgiveness, and discharges for death or total and permanent disability remain tax-free, and the One Big Beautiful Bill Act made those exclusions permanent.13Taxpayer Advocate Service. What to Know about Student Loan Forgiveness and Your Taxes
There is one escape valve for income-driven forgiveness. If your total liabilities exceed the fair market value of your assets when the debt is forgiven, you’re insolvent, and you can exclude some or all of the canceled amount by filing IRS Form 982.14Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness The exclusion is limited to the amount by which you’re insolvent, so it may not wipe out the entire tax bill. Expect a Form 1099-C in January or February after any forgiveness event showing the canceled amount, and start setting money aside years before you cross the finish line.