SAVE Is Ending: Your 2026 Student Loan Repayment Playbook

When Marcus checked his student loan account in early June 2026, the payment still read $0. The balance did not look the same. The roughly $41,000 he'd graduated with had quietly grown to a little over $43,000, and he hadn't paid a dime or missed one.

His loans were in the SAVE plan, which has been parked in court-ordered forbearance since the summer of 2024. The payments were paused. The interest was not, at least not anymore.

That gap between "I'm not being billed" and "I don't owe more" is about to become a very expensive misunderstanding for almost 8 million people. The SAVE plan is over, a new repayment system arrives July 1, 2026, and the next few months decide what your monthly payment looks like for the next two or three decades.

Here's what's happening and what to actually do about it.

What happened to SAVE

The Saving on a Valuable Education plan, or SAVE, was the Biden administration's income-driven repayment plan. It launched in 2023, signed up roughly 7.7 million borrowers, and then got blocked by a federal court in the summer of 2024 before most of its benefits ever kicked in, according to the U.S. Department of Education.

Those borrowers were swept into an administrative forbearance. No payments due, and for a while, no interest either. That second part ended in August 2025, when interest started accruing again on SAVE balances even though borrowers still weren't being billed. That's the trap Marcus walked into. On a $41,000 balance at around 6%, interest runs about $2,400 a year, so a balance can swell by a couple thousand dollars during a "pause" that feels like nothing is happening.

SAVE is now formally ending. It stopped accepting new enrollments, and the Department has said servicers will begin sending notices around July 1, 2026 telling SAVE borrowers to pick a legal repayment plan within 90 days. Miss that window and you don't get to stay in limbo. You get dropped into the Standard Repayment Plan or a new Tiered Standard Plan, whichever the Department assigns, and those payments are based on your balance, not your income. For a lot of people that's a much bigger bill than they're expecting.

Meet RAP, the plan replacing almost everything

The One Big Beautiful Bill Act that President Trump signed on July 4, 2025 created a new income-driven plan called the Repayment Assistance Plan, or RAP. It becomes available July 1, 2026.

RAP matters for two reasons. First, if you take out any new federal Direct Loan on or after July 1, 2026, your only two repayment choices are RAP and the Tiered Standard Plan. The old menu of income-driven options is gone for new borrowers. Second, if you're an existing borrower, RAP is one of the plans you can choose as you exit SAVE.

How a RAP payment is calculated

RAP throws out the old "discretionary income" math that earlier plans used and replaces it with a flat sliding scale tied to your adjusted gross income. The percentage climbs one point for every $10,000 you earn:

• AGI of $10,000 or less: a flat $10 a month
• $10,001 to $20,000: 1% of AGI
• $20,001 to $30,000: 2%
• $30,001 to $40,000: 3%
• $40,001 to $50,000: 4%
• $50,001 to $60,000: 5%
• $60,001 to $70,000: 6%
• $70,001 to $80,000: 7%
• $80,001 to $90,000: 8%
• $90,001 to $100,000: 9%
• Above $100,000: 10% of AGI

Take that percentage, divide by 12, and subtract $50 for each dependent you claim, with a floor of $10 a month.

A single borrower earning $55,000 with no kids lands in the 5% band, so $55,000 times 5% is $2,750 a year, or about $229 a month. A borrower making $75,000 with two dependents falls in the 7% band: $75,000 times 7% is $5,250, divided by 12 is about $438, minus $100 for the two kids brings it to roughly $338 a month.

Here's the part that gets less attention. RAP has no poverty-line protection. The older income-driven plans shielded a chunk of your income, usually 150% to 225% of the federal poverty guideline, before charging you anything on the rest. RAP charges a percentage of your whole AGI from close to the first dollar. For a higher earner, RAP can actually be cheaper than the old plans. For a lower earner with a modest balance, it can cost more. That reversal surprises people who assume "income-driven" always means "easier on low incomes."

The two features that make RAP genuinely different

RAP comes with two borrower-friendly mechanics the old plans lacked.

The first is an interest waiver. In any month your full, on-time payment doesn't cover the interest that accrued, the government eats the difference. Your balance won't grow as long as you pay on time and in full. No more watching a $40,000 loan balloon to $55,000 because your income-based payment never touched the interest.

The second is a matching principal payment. If your required payment knocks less than $50 off your principal in a month, the Department of Education tops it up so at least $50 comes off the balance. For someone making a $10 minimum payment, that's real movement instead of treading water.

Now the catch, because there's always one. Both of those benefits only apply to your scheduled payment. Pay extra, and the surplus goes to accrued interest first, then principal, which can wipe out the interest waiver and the matching payment for that month. The instinct to throw an extra $100 at the loan, which is the right move on almost every other kind of debt, can quietly cost you free money under RAP. If your real goal is to clear the loan fast, a standard amortizing plan usually serves you better than RAP plus extra payments.

What happens to IBR, PAYE, and ICR

If you already have loans and you're being pushed off SAVE, you have more than just RAP to consider.

PAYE and ICR are closing to new enrollment on July 1, 2026 and sunset entirely by July 2028. Income-Based Repayment, or IBR, is the one legacy income-driven plan that survives long term. That makes the real choice for most existing borrowers RAP versus IBR.

The headline difference is the finish line. RAP forgives any remaining balance after 360 qualifying payments, which is 30 years. IBR forgives after 20 or 25 years depending on when you borrowed. If you're chasing forgiveness, five to ten fewer years on IBR is a meaningful edge. The good news is that payments you already made under SAVE, PAYE, ICR, or IBR generally count toward RAP's 360-payment total, so switching to RAP doesn't reset your clock to zero. It does not work in reverse, though. Months you spend in RAP don't count toward IBR's shorter forgiveness timeline if you switch back later.

One more wrinkle worth knowing: RAP isn't open to Parent PLUS loans. If you borrowed to put a kid through school, your path runs through the Tiered Standard Plan or a consolidation route, not RAP.

The tax bomb is back

There's a quiet cost attached to forgiveness that's easy to forget when the finish line is 30 years away. The federal rule that made forgiven student debt tax-free expired at the end of 2025. So a balance forgiven under RAP or IBR can once again count as taxable income the year it's wiped out, the so-called student loan tax bomb. Forgive $30,000 in year 30 and you could owe income tax on that $30,000 the following April. It's not a reason to avoid these plans, but it is a reason to keep saving alongside them rather than assuming forgiveness is fully free.

Bottom Line

The shift off SAVE isn't optional, and the 90-day clock is real. Here's what to do this week:

1. Log into StudentAid.gov and find out which plan you're actually in. A lot of borrowers think they're "on SAVE" when they've already been moved. Confirm your status and your current balance, including any interest that piled up since August 2025.

2. Watch for your servicer's notice and mark the 90-day deadline. Once it lands, you have about three months to choose a legal plan. Don't let it default you into the Standard Plan by accident, because that payment is based on your balance and is often the most expensive option.

3. Run your number under RAP and IBR before you pick. Use the percentage table above for a RAP estimate, then compare it to IBR. If you're going for forgiveness, IBR's shorter 20 or 25-year clock may beat RAP's 30 years even at a similar monthly payment.

4. If you're staying enrolled in RAP, resist paying extra. The interest waiver and matching principal only work on your scheduled payment. If you have spare cash and want to attack debt aggressively, a standard amortizing plan is the cleaner tool for that job.