The date that decides your options
The One Big Beautiful Bill Act, signed on July 4, 2025, split federal borrowers into two groups. The dividing line is July 1, 2026, and it applies to the date a loan was first disbursed:
- Any loan first disbursed on or after July 1, 2026, including a new Direct Consolidation Loan: StudentAid.gov says you must repay all of your eligible Direct Loans, old ones included, under the Repayment Assistance Plan (RAP) or the Tiered Standard Plan.
- All loans disbursed before July 1, 2026: you keep access to the Standard, Graduated and Extended plans, IBR, RAP, and ICR and PAYE through July 1, 2028. You do not have access to the Tiered Standard Plan.
Taking out one new loan therefore moves your whole Direct Loan portfolio into the new system. That is worth knowing before borrowing again or consolidating.
Every plan at a glance
| Plan | Who can use it | Payment basis | Discharge after |
|---|---|---|---|
| RAP | Most Direct Loan borrowers; the only income-driven plan for loans from July 1, 2026 | 1% to 10% of AGI ÷ 12, minus $50 per dependent, at least $10; no cap | 360 qualifying payments, at least 30 years |
| IBR, first borrowed after July 1, 2014 | Borrowers whose loans were made before July 1, 2026 | 10% of discretionary income, capped at the 10-year Standard payment | 20 years |
| IBR, borrowed before July 1, 2014 | Same | 15% of discretionary income, same cap | 25 years |
| PAYE | New borrowers as defined for PAYE; ends no later than July 1, 2028 | 10% of discretionary income, same cap | 20 years |
| ICR | Loans from before July 1, 2026; ends no later than July 1, 2028 | Lesser of 20% of discretionary income or a 12-year fixed payment adjusted for income; no cap | 25 years |
| SAVE | Nobody: ended by court order on March 10, 2026 | n/a | n/a |
| Standard, Graduated, Extended, Tiered Standard | Fixed-payment plans, set by balance and term | Fixed or rising payments, not based on income | Paid off by the end of the term |
The fixed plans and their terms, including the Tiered Standard Plan's 10 to 25 years by balance, are worked out with real payments in the student loan calculator. The rest of this page is about the income-driven plans, where the payment follows your income instead of your balance.
How RAP sets the payment
RAP uses your adjusted gross income, the AGI on your federal tax return. Married borrowers who file jointly are generally assessed on combined income, reduced if the spouse also has federal student loans; filing separately counts only your own income and dependents. The steps, from StudentAid.gov:
- Find your AGI band. Up to $10,000 the base payment is $120 a year. Above that it is 1% of AGI for $10,001 to $20,000, 2% for $20,001 to $30,000, and so on up to 10% above $100,000.
- Apply the percentage to the whole AGI, not just the part in the band, and divide by 12.
- Subtract $50 for each dependent you claim on your federal return.
- If the result is below $10, pay $10.
| AGI | Dependents | Rate | Monthly RAP payment |
|---|---|---|---|
| $15,000 | 1 | 1% | $10.00 |
| $28,000 | 0 | 2% | $46.67 |
| $45,000 | 0 | 4% | $150.00 |
| $45,000 | 2 | 4% | $50.00 |
| $60,000 | 1 | 5% | $200.00 |
| $85,000 | 2 | 8% | $466.67 |
| $120,000 | 0 | 10% | $1,000.00 |
Because the percentage applies to the whole income, the bands have edges. At an AGI of $50,000 the payment is $166.67 a month; at $50,001 it is $208.34, $41.67 more for one extra dollar of income. A pre-tax retirement contribution that lowers AGI below an edge lowers the payment for the whole year. Unlike IBR and PAYE, RAP has no cap: StudentAid.gov notes the payment can be higher than the Standard or Tiered Standard payment.
RAP's interest subsidy and principal match
Two features keep a RAP balance from growing when the payment is small:
- Interest subsidy. If a full, on-time payment is less than the interest that accrued since the last due date, the unpaid interest for that month is covered. StudentAid.gov says that with every payment on time and no breaks such as deferment or forbearance, the balance never rises above what it was when you entered RAP.
- Matching principal payment. If an on-time payment cuts principal by less than $50, the Department adds a payment so principal falls by $50 that month. If your scheduled payment is under $50, the match brings the principal reduction up to the amount you paid.
Both depend on paying the billed amount on time and in full. StudentAid.gov says it will publish more about how the subsidy and the match work when you pay more than is due, so those details were still being implemented when this page was checked.
IBR, PAYE and ICR for earlier borrowers
IBR got wider when the law passed. Before, you needed a partial financial hardship, meaning the IBR payment had to be lower than the 10-year Standard payment. Federal Student Aid's Dear Colleague letter of July 18, 2025 says the law removed that requirement from enactment, so borrowers with loans made from July 1, 2014 who were shut out before can now use IBR. IBR and PAYE payments never exceed the 10-year Standard amount, which RAP's do. StudentAid.gov also says that from spring 2027, IBR and PAYE payments must be on time and in full to receive their interest subsidy.
PAYE and ICR are being phased out no later than July 1, 2028, and StudentAid.gov says a transition plan is still being worked out. Switching has a cost to weigh: progress toward discharge earned while on RAP does not count toward discharge under IBR, ICR or PAYE if you move back, although progress earned earlier under other income-driven plans counts toward RAP's 360 payments. For public service workers, RAP payments generally qualify for PSLF; the rules for the 120 payments are in Public Service Loan Forgiveness: the 120 payment rules.
Questions to settle before you pick
- Was any of your loans first disbursed on or after July 1, 2026? If so, the choice is RAP or Tiered Standard.
- Is your income-based payment lower than the fixed payment? Run your balance through the student loan calculator and compare it with the RAP table above.
- Do you work for a government or nonprofit employer? Then a plan that counts for PSLF matters more than the 20, 25 or 30 year discharge.
- Were you on SAVE? Watch for your servicer's email and choose a plan by the deadline it gives.
- Do you pay interest you could deduct? See the student loan interest deduction.
StudentAid.gov's own repayment calculator uses your actual loans and is the final word on your numbers. This page reflects the rules as published in October 2026, with several RAP details still marked as coming.
Frequently asked questions
What is the Repayment Assistance Plan?
RAP is the income-driven plan created by the One Big Beautiful Bill Act. The monthly payment is 1% to 10% of your adjusted gross income divided by 12, minus $50 for each dependent, and never less than $10. Any remaining balance may be discharged after 360 qualifying monthly payments over at least 30 years.
Which plans can I use if I borrow after July 1, 2026?
If you have even one loan first disbursed on or after July 1, 2026, StudentAid.gov says you must repay all of your eligible Direct Loans under RAP or the Tiered Standard Plan. The older plans, including IBR, are no longer open for those loans.
What happened to the SAVE plan?
A federal court order ended the SAVE plan, and StudentAid.gov says it is no longer available. Borrowers who were enrolled in SAVE, or had a pending SAVE application, must choose a new plan; their servicer sends an email with the deadline.
Are PAYE and ICR still available?
For now, for borrowers whose loans were all disbursed before July 1, 2026. StudentAid.gov says the law eliminates both plans no later than July 1, 2028, and that the Department is working on a transition plan for borrowers enrolled in them.
Does RAP count for Public Service Loan Forgiveness?
Generally yes. StudentAid.gov says RAP payments are eligible for PSLF as long as each payment is made on time and in full. Payments under the Tiered Standard Plan do not count for PSLF.
Is the forgiven balance taxable?
It can be. StudentAid.gov says that, except for PSLF, you might have to pay federal or state income tax on an amount discharged at the end of an income-driven plan. Check the rules for the year the discharge happens.
Sources
- StudentAid.gov: Income-Driven Repayment Plans, updated for the OBBBA (RAP, IBR, ICR and PAYE; the payment formulas and repayment periods of 20, 25 and 30 years; PAYE and IBR capped at the 10-year Standard amount, ICR and RAP not capped; PAYE new-borrower rule; eligible loan types; ICR and PAYE eliminated no later than July 1, 2028; discharged amounts may be taxable)
- StudentAid.gov: One Big Beautiful Bill Act, important definitions, last updated August 24, 2026 (RAP eligibility and the base payment percentage table; $50 per dependent and $10 minimum; spouse income; interest subsidy; matching principal payment; discharge after 360 qualifying payments over at least 30 years; RAP payments and PSLF; IBR and PAYE interest subsidy requires full, on-time payments from spring 2027; Tiered Standard terms and PSLF)
- StudentAid.gov: One Big Beautiful Bill Act Updates, last updated August 24, 2026 (borrowers with a loan first disbursed on or after July 1, 2026 must use RAP or the Tiered Standard Plan; plans open to earlier borrowers; PAYE and ICR through July 1, 2028; RAP progress and IBR, ICR, PAYE discharge)
- StudentAid.gov: Top FAQs About Income-Driven Repayment Plans, August 2026 (a federal court order ended the SAVE plan; SAVE borrowers must choose a new plan by the deadline their servicer sends)
- Federal Student Aid, Dear Colleague letter GEN-25-04, July 18, 2025 (the OBBBA, signed July 4, 2025, removed the partial financial hardship requirement for IBR; RAP in effect no later than July 1, 2026)
- Edfinancial (StudentAid.gov): Repayment Assistance Plan (apply online at StudentAid.gov beginning July 1, 2026)
- Edfinancial (StudentAid.gov): Repayment plan comparison (the SAVE plan ended by court order on March 10, 2026; ICR payment is the lesser of 20% of discretionary income or a 12-year fixed payment adjusted for income)
General information based on the sources above, not tax, legal or financial advice.