As of July 1, 2026, most federal student loan borrowers can no longer enroll in the SAVE, PAYE, or ICR repayment plans. Anyone taking out a new federal loan now chooses between two options: the Repayment Assistance Plan (RAP), a new income-driven plan, and the Tiered Standard Plan, a fixed-term plan sized to your balance. If you're already repaying under one of the older plans, nothing changes immediately, but you have a deadline to transition.
The short version: RAP charges 1–10% of your income depending on how much you earn, knocks $50 off your monthly payment per dependent, and won't let unpaid interest balloon your balance as long as you pay on time. The Tiered Standard Plan is a fixed monthly payment over 10, 15, 20, or 25 years depending on how much you owe — no income calculation involved. Existing borrowers on SAVE, PAYE, or ICR have until July 1, 2028 to move to RAP, Tiered Standard, or another still-available plan.
What actually changed on July 1, 2026
Before this year, federal borrowers could choose from more than 40 combinations of repayment and discharge options across several income-driven plans — a menu large enough that most borrowers surveyed said they found it overwhelming rather than helpful. The July 1, 2026 overhaul narrows that down substantially for anyone taking out a new loan: SAVE, PAYE, and ICR stop accepting new enrollments, and RAP plus the Tiered Standard Plan become the two paths forward.
The cutoff matters more than the calendar date suggests. Loans disbursed on or after July 1, 2026 are limited to RAP and Tiered Standard from day one. Loans from before that date aren't forced to switch immediately — but the older plans they're enrolled in are being wound down on a separate timeline described below.
How the Repayment Assistance Plan (RAP) works
RAP is the new income-driven option, and it calculates your monthly payment as a percentage of your income — between 1% and 10%, scaled to how much you earn. A few features make it different from the income-driven plans it replaces:
- Dependent discount: your required payment drops by $50 a month for each dependent you claim.
- Interest protection: if you make your payment on time, any interest that payment doesn't cover is waived rather than added to your balance — the mechanism that let old income-driven balances grow even while paying on time is specifically addressed here.
- Principal-matching: if your payment doesn't reduce your principal by at least $50, the plan can match up to $50 toward principal reduction, so low-income borrowers still see their balance move in the right direction.
- Discharge after 360 qualifying payments: that's 30 years of on-time payments, in specific qualifying scenarios — longer than several of the 20-to-25-year forgiveness windows under the old plans, which is the main tradeoff for RAP's lower, steadier payments.
How the Tiered Standard Plan works
The Tiered Standard Plan skips income entirely — your payment is a fixed amount based on your total balance, spread over a term of 10, 15, 20, or 25 years depending on how much you owe. A larger balance gets a longer term (and a lower monthly payment) automatically; there's no application or income documentation involved, just a fixed schedule.
As an example of how much term length changes the payment: a $30,000 balance runs about $341 a month on a 10-year term, or about $262 a month stretched to 15 years — a meaningfully lower payment in exchange for more months (and more total interest) before it's paid off.
A worked example under RAP
Take an unmarried borrower earning $45,000 a year with $35,000 in federal student loan debt. Under RAP:
| What RAP calculates | Amount |
|---|---|
| Required monthly payment (before this borrower's situation) | $176 |
| Actual payment under RAP for this income | $150 |
| Monthly interest waived (on-time payment protection) | up to $40 |
| Principal-matching benefit | up to $50 |
The exact numbers shift with income, dependents, and balance, which is why this is worth running with your own figures rather than assuming this example applies directly to you.
What if you're already repaying under SAVE, PAYE, or ICR?
Nothing forces an immediate switch. If you have no new loans disbursed on or after July 1, 2026, you can continue on the Standard, Graduated, or Extended plans, and on IBR if your loans predate July 2026. You can also voluntarily opt into RAP if it works out cheaper for your situation.
The deadline that does matter: borrowers in a plan being phased out (SAVE, PAYE, ICR) have until July 1, 2028 to transition to RAP, Tiered Standard, or IBR (if eligible). PAYE and ICR are scheduled to sunset entirely by that date. Waiting until the deadline isn't necessarily the best move — running the numbers now avoids a rushed decision later.
Which plan should you choose?
- Lower or variable income, or several dependents: RAP's percentage-of-income structure and per-dependent discount usually comes out cheaper month to month.
- Stable, higher income and you want a fixed end date: Tiered Standard gives you a predictable payoff schedule without income recertification paperwork every year.
- Not sure which is cheaper for your numbers: that's exactly what to run through a calculator before picking, since the "right" choice depends entirely on your specific income, balance, and family size.