Federal student loan repayment in 2026 looks very different from the pandemic-era arrangement most borrowers got used to. The SAVE plan was struck down by a federal court on March 10, 2026, the 12-month on-ramp that shielded missed payments from credit damage ended September 30, 2024, and the One Big Beautiful Bill Act introduces a new income-driven plan and a hard cutoff date of July 1, 2026 that permanently changes which repayment options are available to some borrowers. If you have federal student loans, the decisions in front of you now are which repayment plan to choose, whether to consolidate before the deadline, and how to avoid default now that the safety nets are gone.
If You Were on SAVE, You Need to Pick a New Plan
The Saving on a Valuable Education plan no longer exists. The Department of Education will not accept new SAVE enrollments or process pending applications, and borrowers whose loans were placed in forbearance during the SAVE litigation must move to a different plan.1Federal Student Aid. IDR Court Actions
Starting July 1, 2026, servicers will send affected borrowers a notice giving them 90 days to pick a new plan. If you don’t respond, you’ll be placed on either the Standard Repayment Plan or the new Tiered Standard Plan automatically.2U.S. Department of Education. U.S. Department of Education Announces Next Steps for Borrowers Enrolled in Unlawful SAVE Plan The default assignment almost always produces a higher monthly payment than an income-driven plan would, so waiting out the 90-day clock is rarely in your interest.
The July 1, 2026 Deadline That Locks In Your Options
Under the One Big Beautiful Bill Act, any new federal loan or new consolidation loan disbursed on or after July 1, 2026 gets access only to the new Repayment Assistance Plan and the Tiered Standard Plan for income-driven repayment. Income-Based Repayment, Income-Contingent Repayment, and Pay As You Earn come off the table permanently for those borrowers.3Federal Student Aid. One Big Beautiful Bill Act Updates
This matters most in two situations. If you hold older FFEL or Perkins loans, consolidating them into a Direct Consolidation Loan is the only way to access income-driven plans or Public Service Loan Forgiveness, but a consolidation disbursed after June 30, 2026 loses access to IBR, ICR, and PAYE. If you’re a Parent PLUS borrower who consolidated to reach ICR, the picture is worse: after the deadline, consolidated Parent PLUS loans qualify only for the standard plan, with no income-driven option at all.3Federal Student Aid. One Big Beautiful Bill Act Updates
The law also cuts forbearance availability. Loans disbursed on or after July 1, 2026 are limited to 9 months of general forbearance in any 2-year period, down from the previous 12-month blocks with consecutive extensions available.
Repayment Plans Still Available for Pre-July 2026 Loans
If your loans were disbursed before July 1, 2026, three income-driven repayment plans remain available:1Federal Student Aid. IDR Court Actions
- Income-Based Repayment (IBR): 10% of discretionary income with forgiveness after 20 years if you first borrowed on or after July 1, 2014, or 15% with forgiveness after 25 years for earlier borrowers.4Federal Student Aid. Income-Driven Repayment Plans
- Pay As You Earn (PAYE): 10% of discretionary income, forgiveness after 20 years, requires demonstrating financial need. Borrowers who leave PAYE after July 1, 2027 cannot re-enroll.5MOHELA. Repayment Options
- Income-Contingent Repayment (ICR): 20% of discretionary income, forgiveness after 25 years. The same post-July 2027 re-enrollment restriction applies, with limited exceptions for certain Parent PLUS consolidation borrowers.5MOHELA. Repayment Options
All three cap payments based on income and family size, forgive any remaining balance at the end of the repayment period, and allow $0 monthly payments for borrowers with low enough income while still counting those months toward forgiveness. Standard, Graduated, and Extended plans with fixed schedules are also still available.
The New Repayment Assistance Plan
The Repayment Assistance Plan (RAP) becomes available on July 1, 2026 and will be the only income-driven plan for anyone taking out a new federal loan or new consolidation loan after that date.6Congressional Research Service. The Repayment Assistance Plan (RAP) in P.L. 119-21 Borrowers with pre-July 2026 loans can voluntarily choose RAP alongside the legacy plans.
RAP calculates payments from total adjusted gross income rather than discretionary income, on a sliding scale:
- AGI of $10,000 or less: $10 per month.
- AGI above $10,000: the percentage rises by one point for each $10,000 increment, starting at 1% and capping at 10% for incomes above $100,000.
- Dependents: monthly payment drops by $50 per dependent.
- Forgiveness: any remaining balance is forgiven after 360 monthly payments (30 years).6Congressional Research Service. The Repayment Assistance Plan (RAP) in P.L. 119-21
RAP includes a matching principal contribution for borrowers paying less than $50 per month in principal, and unpaid monthly interest isn’t charged to the borrower during negative amortization. Parent PLUS loans are not eligible for RAP.
How to Apply for an Income-Driven Plan
You apply at StudentAid.gov, and most people finish in about 10 minutes.7Federal Student Aid. Apply for or Manage Your Income-Driven Repayment Plan A PDF version is available if you’d rather mail or fax the form.
You’ll need your most recent adjusted gross income from your federal tax return. If your income has dropped since your last filing, you can submit alternative documentation like recent pay stubs. The form also asks for your marital status, tax filing status, and family size, meaning how many children and other dependents receive more than half their support from you. Social Security numbers are required for you and your spouse if applicable, but not for children or dependents.8Federal Student Aid. Income-Driven Repayment (IDR) Plan Request
While your application is processing, your servicer may place your account in a processing forbearance of up to 60 days so you don’t fall behind.9Federal Student Aid. Top FAQs About Income-Driven Repayment Plans Interest accrues during that period, but you won’t be reported as delinquent.
Once you’re enrolled, you must recertify your income every year. Missing recertification bumps your payment up to the standard amount until you submit updated information, which can produce a sudden and unwelcome jump in your monthly bill.
Public Service Loan Forgiveness Still Works
PSLF erases any remaining federal Direct Loan balance after 120 qualifying monthly payments made while working full-time for a qualifying employer, which includes federal, state, and local government agencies and most nonprofits. Payments must be made under an income-driven plan or the standard 10-year plan to count.
The most common mistake is failing to certify employment along the way. Submit the PSLF form annually and whenever you change employers, either through the PSLF Help Tool on StudentAid.gov (where your employer can sign electronically) or by printing and mailing it.10Federal Student Aid. Public Service Loan Forgiveness Form Skipping annual certification forces you to reconstruct years of employment history at the end. After your 120th qualifying payment, submit a final form; the employment period on that final form must overlap with your last qualifying payment.
Forgiveness Is Taxable Again in 2026
The American Rescue Plan Act’s temporary exclusion of forgiven student loan balances from taxable income expired on December 31, 2025. Any federal balance forgiven in 2026 or later under an income-driven plan is treated as taxable income.11Taxpayer Advocate Service. What to Know About Student Loan Forgiveness and Your Taxes Your lender will send a Form 1099-C early the following year, and you report the forgiven amount on your return. On a large balance, that can be a substantial bill.
Two exceptions matter. PSLF forgiveness is permanently excluded from taxable income under federal law regardless of when it’s processed.12Office of the Law Revision Counsel. 26 U.S. Code 108 – Income From Discharge of Indebtedness Discharges for death or total and permanent disability are also excluded. If you were insolvent when your loan was forgiven, meaning your total debts exceeded the fair market value of your assets, you may be able to exclude some or all of the forgiven amount by filing Form 982 with the IRS.11Taxpayer Advocate Service. What to Know About Student Loan Forgiveness and Your Taxes
Note that everything above applies to federal loans. Private loans from banks or credit unions never qualified for federal income-driven plans, PSLF, or the pandemic pause, and private lenders set their own hardship terms.
What Happens If You Don’t Pay
The Department began reporting missed payments to credit bureaus in early 2025, and the full range of default consequences now applies.13Congressional Research Service. The Potential Increase in Federal Student Loan Defaults in Fall 2025 Delinquency can stay on your credit report for up to seven years and affects mortgage, auto loan, and rental applications.14Consumer Financial Protection Bureau. Initial Fresh Start Program Changes Followed by Increased Credit Scores for Affected Student Loan Borrowers
After 270 days of missed payments, your loan enters default.15Federal Student Aid. Student Loan Delinquency and Default Default triggers:
- Administrative wage garnishment of up to 15% of disposable pay, with no court order required.16Office of the Law Revision Counsel. 31 U.S. Code 3720D – Garnishment
- Treasury Offset Program interception of federal and state tax refunds and a portion of Social Security payments.17Federal Student Aid. Collections on Defaulted Loans
- Loss of eligibility for future federal student loans, Pell Grants, and other federal aid until the default is resolved.15Federal Student Aid. Student Loan Delinquency and Default
- Collection fees that can increase the total owed by 20% or more.15Federal Student Aid. Student Loan Delinquency and Default
In some states, defaulted borrowers can also face suspension of professional licenses.
Getting Out of Default
The temporary Fresh Start program has ended, leaving two main routes back to good standing.18Federal Student Aid. Student Loan Default and Collections: FAQs
Loan Rehabilitation
You agree to and complete nine on-time monthly payments, which are set based on income and can be quite low if you’re in hardship. Once all nine are made, the default is removed from your credit report and the loan returns to good standing.18Federal Student Aid. Student Loan Default and Collections: FAQs Rehabilitation takes longer than consolidation, but the credit cleanup is a real advantage. You can only rehabilitate a given loan once.
Loan Consolidation
Consolidation is faster, usually a few weeks. A new Direct Consolidation Loan pays off the defaulted loans and starts in good standing. The default history stays on your credit report, and all outstanding interest, fees, and collection charges roll into the new balance. The new rate is the weighted average of your existing rates, rounded up to the nearest one-eighth of a percent.
Timing is critical here because of the July 1, 2026 cutoff. A consolidation loan disbursed before that date can access IBR, ICR, or PAYE. Disbursed on or after that date, your only income-driven option is RAP, and if the consolidation includes Parent PLUS loans, you’re limited to the standard plan with no income-driven option at all.3Federal Student Aid. One Big Beautiful Bill Act Updates If you’ve been putting off consolidation, the window is closing.
Finding Your Servicer
Many borrowers were reassigned to new servicers during the pause. Log in at StudentAid.gov to see your assigned servicer, balance, interest rate on each loan, and next payment due date. Current federal servicers include MOHELA, Nelnet, Aidvantage, and EdFinancial.19Federal Student Aid. Who’s My Student Loan Servicer? If you can’t log in, call the Federal Student Aid Information Center at 1-800-433-3243. Your dashboard shows only federal loans; anything you owe that isn’t listed there is likely private and follows the lender’s own rules.