Which student loan repayment plan is best now that SAVE is gone?

For most federal borrowers the choice now comes down to three plans: the new Repayment Assistance Plan (RAP), Income-Based Repayment (IBR) if all your loans were first disbursed before July 1, 2026, or a fixed Standard plan. RAP usually gives a moderate-income borrower the lowest payment and keeps the balance from growing; IBR can be cheaper at very low incomes and forgives sooner; Standard costs the least in total if you can afford it. If you were on SAVE, the deadline matters more than the choice: do nothing within 90 days of your notice and you are placed in a Standard plan, not in RAP.

Plan rules here were checked against the Department of Education’s final rule of May 1, 2026, and Federal Student Aid servicer pages on October 2, 2026. They are still changing, so confirm your own options at StudentAid.gov.

What happened to SAVE

A federal court order on March 10, 2026, ended the SAVE plan. Servicers began notifying SAVE borrowers in July 2026 and are sending notices in waves; MOHELA, for example, says its notices go out between July and October 2026. You have 90 days from the date of your notice to pick a new plan.

If you miss that window, you are placed in the Standard plan or, if you have a loan first disbursed on or after July 1, 2026, the new Tiered Standard plan. Either one can mean a payment several times higher than what SAVE asked. Tiered Standard also does not count toward Public Service Loan Forgiveness (PSLF), so a public service worker who lands there by default stops earning PSLF credit.

How RAP calculates your payment

RAP takes a percentage of your adjusted gross income (AGI) that rises with income: 1% of AGI between $10,001 and $20,000, 2% up to $30,000, and so on up to 10% above $100,000. At $10,000 or less, the payment is $120 a year. The annual amount is divided by 12 and reduced by $50 for each dependent on your tax return, with a floor of $10 a month. The percentage applies to your whole AGI, so crossing a band boundary raises the payment on every dollar.

Two features make RAP different from older plans. If your payment does not cover the month’s interest, the unpaid interest is not charged to you, so your balance cannot grow while you pay on time. And if an on-time payment reduces your principal by less than $50, the Department adds a matching principal payment, so the balance goes down every month you pay. Whatever remains is forgiven after 360 qualifying monthly payments, 30 years’ worth, although some earlier payments under other plans count toward that total.

RAP is open to Direct Loans and Direct Consolidation Loans, but not to Parent PLUS loans or consolidation loans that repaid a Parent PLUS loan. If you have any loan first disbursed on or after July 1, 2026, RAP is the only income-driven plan open to you.

RAP, IBR or Standard: four example borrowers

The table uses each plan’s formula with the 2026 federal poverty guideline ($15,960 for one person, $21,640 for two). IBR is shown at 10% of income above 150% of the poverty guideline, the rate for anyone who first borrowed on or after July 1, 2014; earlier borrowers pay 15%. Standard is a 10-year payment at a rate of 6%, chosen as an example. Your servicer’s numbers will differ with your real rate and income.

Three things stand out. At very low income IBR can be $0, while RAP never drops below $10. In the middle rows the payments are close, so the deciding features are elsewhere: RAP stops the balance from growing, while IBR forgives after 20 years (25 for borrowers before July 2014) instead of 30. And for the high earner, neither income-driven plan helps: the Standard payment of $444 clears the debt in 10 years.

A rough rule follows from that. If your balance is below your annual income and you can afford the Standard payment, pay it and be done. If your balance is well above your income and you expect forgiveness, compare IBR and RAP in the Loan Simulator on StudentAid.gov, looking at how many years remain until forgiveness on each, not just the first payment.

If you work in public service

PSLF forgives the remaining balance after 120 qualifying monthly payments while you work full time for government or a qualifying nonprofit. Payments under RAP count, but only on-time payments; IBR and the 10-year Standard plan also count. Tiered Standard does not. Because whatever you owe after 120 payments is forgiven, the plan with the lowest payment is usually the right one for a PSLF candidate. PSLF forgiveness is not taxed as federal income.

The tax bill on forgiveness outside PSLF

The federal exclusion that made income-driven forgiveness tax-free applied to discharges from 2021 through December 31, 2025. Balances forgiven under RAP or IBR from 2026 on count as taxable income in the year they are forgiven, unless Congress changes the law again or you qualify for the insolvency exclusion on IRS Form 982. Discharges for death or total and permanent disability remain tax-free.

Say $80,000 is forgiven after you have paid for 20 years. At a marginal federal rate of 22%, that adds $17,600 to that year’s tax bill, and more if the extra income pushes you into a higher bracket. Many borrowers on track for forgiveness set aside a small amount each year toward that bill. State treatment varies.

Parent PLUS and the plans that are closing

PAYE and ICR stop on July 1, 2028; anyone still in them must move to RAP, IBR or a fixed plan by then. Graduated and Extended repayment remain only for borrowers whose loans were all first disbursed before July 1, 2026.

Parent PLUS borrowers have the narrowest path. Their only income-driven route is to consolidate the Parent PLUS loan into a Direct Consolidation Loan, which had to be completed before July 1, 2026, and enroll in ICR; under the final rule, those borrowers move into IBR, keeping PSLF eligibility, if they have made at least one payment under an income-driven plan by July 1, 2028. A parent with a new Parent PLUS loan disbursed on or after July 1, 2026 has only the Tiered Standard plan for that loan.

How to switch

1. Log in at StudentAid.gov and check which of your loans were first disbursed before July 1, 2026; that decides whether IBR is open to you.
2. Run the Loan Simulator with your latest tax return to compare RAP, IBR and Standard side by side.
3. Apply through StudentAid.gov or your servicer before your 90-day deadline. The application is free; a company that charges to enroll you is offering nothing you cannot do yourself.
4. Recertify your income every year when your servicer asks, or your payment can change.

If you are also applying for a mortgage, the payment your plan produces feeds directly into your debt-to-income ratio.