If you were on the Saving on a Valuable Education plan and are wondering what to do now that SAVE is gone, the short answer is this: pick a new repayment plan within the 90-day window your loan servicer gives you starting July 1, 2026, or you will be moved automatically into a fixed-payment plan that has no path to forgiveness. A federal appeals court vacated SAVE in early 2026, and Congress replaced the income-driven repayment system through the One Big Beautiful Bill Act. Your court-ordered forbearance does not last indefinitely, and the plan your servicer assigns by default is unlikely to be the one that fits your finances.
What Happens to Your Loans Now
SAVE borrowers have been sitting in a court-ordered forbearance during the litigation. Starting July 1, 2026, loan servicers begin sending transition notices giving each borrower 90 days to select a new plan.1U.S. Department of Education. U.S. Department of Education Announces Next Steps for Borrowers Enrolled in the Unlawful SAVE Plan If you do not choose one within that window, your servicer will move you into either the Standard Repayment Plan or the new Tiered Standard Plan.
The Standard Repayment Plan uses fixed monthly payments over 10 years, which often results in significantly higher bills than what SAVE borrowers were paying. The Tiered Standard Plan offers fixed terms of 10, 15, 20, or 25 years depending on your total loan balance, giving higher-balance borrowers a longer window and smaller monthly payments. Neither plan leads to forgiveness. If you want income-driven payments with a forgiveness timeline, you have to actively enroll in Income-Based Repayment (IBR) or the new Repayment Assistance Plan (RAP).2Federal Student Aid. IDR Court Actions
Contact your servicer as soon as you receive a transition notice. Do not wait for the 90-day deadline to arrive. The earlier you choose, the less likely you are to end up somewhere by default.
Which Plans You Can Actually Choose
After July 1, 2026, the Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE) plans are eliminated for future borrowers. The two income-driven options going forward are IBR and RAP. Which of them you can access depends on when your loans were disbursed.3Federal Student Aid. Federal Student Aid Big Updates
- Loans disbursed before July 1, 2026, with no new borrowing after that date: you can enroll in IBR, and you can also opt into RAP.
- New loans disbursed on or after July 1, 2026: RAP is your only income-driven option. Taking out any new federal loan or consolidation loan after that date locks you out of IBR, ICR, and PAYE permanently, even if you were previously enrolled.
That cutoff matters more than it looks. IBR offers better terms for many borrowers than RAP does, both in monthly payment amounts and in time to forgiveness. If you are considering consolidating your loans or borrowing anything else in federal student loans, doing so before July 1, 2026 preserves your access to IBR. Doing so after that date eliminates it.
How IBR Works
IBR calculates your monthly payment as a percentage of your discretionary income, defined as the difference between your adjusted gross income and 150% of the federal poverty guideline for your family size. In 2026, the poverty guideline for a single individual is $15,650, so 150% comes to $23,475.4The LIHEAP Clearinghouse. Federal Poverty Guidelines for FFY 2026 Income below that amount is shielded from payment calculations entirely.
The payment percentage and forgiveness timeline depend on when you first borrowed:
- Loans originated on or after July 1, 2014: you pay 10% of discretionary income, with forgiveness after 20 years.
- Loans originated before July 1, 2014: you pay 15% of discretionary income, with forgiveness after 25 years.
One meaningful change under the new law: IBR previously required borrowers to demonstrate a “partial financial hardship,” meaning their IBR payment had to be lower than what they would pay under the standard 10-year plan. That requirement has been eliminated. Borrowers with loans made between July 1, 2014 and July 1, 2026 who previously could not qualify for IBR because their income was too high can now enroll.5Federal Student Aid Partners. GEN-25-04 Federal Student Loan Program Provisions Effective Upon Enactment Under One Big Beautiful Bill Act
If you file taxes separately from your spouse, only your income is used to calculate your IBR payment. This can substantially lower your monthly bill if your spouse earns significantly more than you do.6Federal Student Aid. 4 Things to Know About Marriage and Student Loan Debt
How the Repayment Assistance Plan Works
RAP is the new income-driven option created by the One Big Beautiful Bill Act and is available starting July 1, 2026. Unlike IBR, RAP does not shield any portion of income from payment calculations. It uses a graduated payment schedule where the percentage of income owed rises with income, starting at very low amounts for low earners and scaling up to 10% for borrowers earning above $100,000.1U.S. Department of Education. U.S. Department of Education Announces Next Steps for Borrowers Enrolled in the Unlawful SAVE Plan
Any remaining balance after 360 monthly payments (30 years) is forgiven.7Congressional Research Service. The Repayment Assistance Plan (RAP) in P.L. 119-21 That is longer than SAVE offered and longer than IBR’s 20- or 25-year window. For borrowers who have access to both IBR and RAP, IBR will often be the better deal. RAP becomes the primary option for anyone who borrows after June 30, 2026, because IBR will no longer be available to them.
Parent PLUS Borrowers Have a Narrow Window
New Parent PLUS loans disbursed on or after July 1, 2026 cannot enroll in RAP or IBR. The only repayment option for those borrowers is the Standard Repayment Plan.5Federal Student Aid Partners. GEN-25-04 Federal Student Loan Program Provisions Effective Upon Enactment Under One Big Beautiful Bill Act
Existing Parent PLUS borrowers have one path in. The new law allows borrowers with a consolidation loan that repaid a Parent PLUS Loan to enroll in IBR, but you must consolidate your Parent PLUS loans before July 1, 2026. Any consolidation disbursed after that date locks you out of IBR. If you hold Parent PLUS loans and are working toward Public Service Loan Forgiveness, getting onto IBR through consolidation before that deadline is essential, since PSLF requires an income-driven plan.
Recertifying Your Income Each Year
Both IBR and RAP require you to submit updated income information every year. Under IBR, missing your annual recertification deadline has real consequences: your payments get recalculated using a standard fixed-payment formula that ignores your income, and any accrued interest gets capitalized (added to your principal balance). You then pay interest on interest going forward. Put the recertification date on your calendar the moment you enroll.
Taxes on Forgiveness Starting in 2026
This is the part that catches many borrowers off guard. The American Rescue Plan Act temporarily excluded forgiven student loan debt from federal taxable income, but that exclusion expired on December 31, 2025. Any federal student loan balance forgiven under an income-driven repayment plan in 2026 or later is generally treated as taxable income.8Taxpayer Advocate Service. What to Know About Student Loan Forgiveness and Your Taxes You will receive a Form 1099-C reporting the canceled amount, and you must include it on your tax return for the year the debt is canceled.
A borrower who has $80,000 forgiven in a single tax year could face a federal tax bill of $15,000 or more, depending on their bracket. If forgiveness is 20 or 30 years away, that liability feels abstract. It should not. Planning for it years ahead is the only realistic way to handle it.
Several types of forgiveness remain exempt from federal taxes: Public Service Loan Forgiveness after 120 qualifying payments while working for a government or nonprofit employer, Teacher Loan Forgiveness, and discharge due to death or total and permanent disability. Borrowers who were insolvent when their debt was forgiven (total liabilities exceeded total assets) may be able to exclude some or all of the forgiven amount by filing Form 982 with the IRS. State tax treatment varies. Some states follow the federal rules, others impose their own income tax on forgiven debt, and a handful have no income tax at all.
Deadlines to Watch
- June 30, 2026: last day to have a consolidation loan disbursed if you need to consolidate FFEL, Perkins, or Parent PLUS loans to access IBR. Miss it and RAP becomes your only income-driven option.3Federal Student Aid. Federal Student Aid Big Updates
- July 1, 2026: RAP and the Tiered Standard Plan become available. Loan servicers begin issuing 90-day transition notices to SAVE borrowers.
- 90 days after your servicer’s notice: if you have not chosen a plan, your servicer places you in the Standard or Tiered Standard Plan automatically.
Any new federal loan or new consolidation loan taken out on or after July 1, 2026 permanently ends your access to IBR, ICR, and PAYE. If you are weighing whether to borrow more, the timing of that disbursement carries long-term repayment consequences that did not exist before this law.