Income-driven repayment plans explained

Income-driven repayment (IDR) plans cap your federal student loan payment as a share of your income rather than a fixed amount tied to your balance, and forgive any remaining balance after a set number of years of qualifying payments.^[1] Which plan is available to you, how your payment is calculated, and how long you pay before forgiveness now depend heavily on when you borrowed and which plan you choose — the IDR landscape changed substantially in 2026. This guide covers the plans that exist today, how each payment formula works, how forgiveness and PSLF interact, and how to choose the right plan for your situation.

Last verified: July 2026. Federal repayment rules are actively changing — always confirm current plan availability and terms directly at StudentAid.gov before selecting a plan.

Critical update: the SAVE plan has ended

The Saving on a Valuable Education (SAVE) plan is no longer available to borrowers. A court-approved settlement, combined with the elimination of SAVE in the 2025 budget reconciliation law, ended the plan and directed the Department of Education to move every remaining SAVE borrower onto a different repayment plan.^[4] If you are currently in SAVE forbearance, do not wait passively and do not attempt to newly enroll in SAVE — it is not an option going forward.

Loan servicers are sending exit notices to SAVE borrowers in staggered waves from July 2026 through roughly March 2027. Once you receive your notice, you have about 90 days to select a new plan.^[1] This part matters: if you take no action within your window, you are not automatically moved to an income-driven plan. You are defaulted onto the Standard Repayment Plan or the new Tiered Standard Repayment Plan — fixed payments based on your balance, with no income adjustment. If you want a payment based on your income, you must actively apply for IBR or the new Repayment Assistance Plan (RAP) described below. Do not assume the system will do this for you.

The IDR plans available in mid-2026

As of this writing, borrowers with loans from before July 1, 2026 generally have access to IBR, PAYE, ICR, and RAP, along with the Standard and Tiered Standard plans, depending on loan type and enrollment history. Anyone taking out a new federal loan on or after July 1, 2026 — including through a new consolidation — is limited to RAP and the Tiered Standard plan only; the older IDR plans are not available for new borrowing going forward.^[1]

IBR (Income-Based Repayment)

IBR remains the most broadly available legacy IDR plan and is not scheduled to sunset. It caps payments at 10% of discretionary income for newer borrowers (loans first disbursed on or after July 1, 2014) or 15% for older borrowers, with forgiveness after 20 years (newer borrowers) or 25 years (older borrowers).^[1]

Discretionary income under IBR is your adjusted gross income (AGI) minus 150% of the federal poverty guideline for your family size and state.^[3] Worked example for a single borrower with no dependents and $50,000 AGI: the 2026 federal poverty guideline for a one-person household in the 48 contiguous states is $15,960, so 150% of that guideline is $23,940. Discretionary income is $50,000 − $23,940 = $26,060. At the 10% IBR rate, the annual payment is about $2,606, or roughly $217/month. Confirm the current-year poverty guideline for your household size and state at StudentAid.gov or HHS before relying on any estimate, since the figure updates annually and Alaska and Hawaii use different guidelines.

PAYE (Pay As You Earn)

PAYE caps payments at 10% of discretionary income with forgiveness after 20 years, and has historically required demonstrating financial hardship and being a newer borrower. Existing PAYE borrowers can generally remain in the plan, but PAYE (along with ICR) is scheduled to sunset for new enrollment around July 1, 2028 under current law. If you are not already enrolled in PAYE, do not count on being able to newly enroll — verify current eligibility at StudentAid.gov before planning around it.^[1]

ICR (Income-Contingent Repayment)

ICR is the oldest IDR plan and generally the least favorable of the legacy options: payments equal the lesser of 20% of discretionary income or a fixed 12-year payment schedule, with forgiveness after 25 years. Like PAYE, ICR is scheduled to sunset for new enrollment around July 1, 2028. ICR’s most important remaining role is as the only income-driven option for Parent PLUS Loans, and only after those loans are consolidated into a Direct Consolidation Loan — Parent PLUS borrowers cannot access IBR, PAYE, or RAP directly.^[1]

RAP (Repayment Assistance Plan) — new for 2026

RAP launched July 1, 2026 under the 2025 reconciliation law and is the only IDR plan available to anyone borrowing a new federal loan (or completing a new consolidation) on or after that date. RAP is structurally different from the older plans: instead of discretionary income, it uses a sliding-scale percentage of your full AGI, ranging from 1% for lower incomes up to 10% for AGI above $100,000, divided by 12 for a monthly amount. Borrowers with AGI of $10,000 or less pay a flat $10/month. The plan then subtracts $50 per month for each dependent claimed on your tax return, with a hard $10/month minimum payment regardless of income or dependents.^[1]

RAP forgives any remaining balance after 360 qualifying monthly payments — 30 years, longer than the 20–25 year timelines under IBR, PAYE, or ICR. In exchange, RAP waives any unpaid monthly interest so your balance does not grow through negative amortization, and adds a government-funded “matching” principal contribution of up to $50/month when your own payment does not reduce principal by that much. RAP counts toward PSLF, but time spent in RAP does not count toward forgiveness under IBR or the other legacy plans if you later switch — and the reverse is not fully symmetric either, so switching between RAP and other IDR plans can affect your forgiveness timeline. Review the specific transfer rules at StudentAid.gov before switching plans mid-stream.

Tiered Standard Plan (not income-driven)

The new Tiered Standard Repayment Plan, also effective July 1, 2026, replaces the old Standard Plan for new borrowers and sets a fixed term (roughly 10 to 25 years, based on loan balance) with payments that do not adjust for income. It is important mainly because it is one of the two plans borrowers are auto-enrolled into if they miss their window to actively choose an IDR plan — it is not itself an income-driven option and does not use the discretionary income or AGI-percentage formulas above.

PSLF and how it interacts with your IDR choice

Public Service Loan Forgiveness (PSLF) forgives your remaining federal Direct Loan balance after 120 qualifying monthly payments (10 years) while working full-time for a qualifying government or nonprofit employer.^[2] Any of the IDR plans covered above — IBR, PAYE, ICR, and RAP — count as qualifying repayment plans for PSLF, as does the standard 10-year plan.

Because PSLF forgiveness happens at 10 years regardless of your remaining balance, the plan that minimizes your monthly payment while you work toward PSLF is usually the right choice — you are not trying to pay down the loan faster, since anything forgiven under PSLF is federally tax-free. IBR is a common default for PSLF-track borrowers because of its broad availability and lower payment relative to Standard, but the AGI-based RAP formula with its $50/dependent reduction can produce a lower payment for borrowers with children. Model both if you are eligible for more than one plan, and use the PSLF Help Tool at StudentAid.gov to confirm your employer qualifies before you commit to a strategy.

The tax bomb: forgiveness outside of PSLF is currently taxable

This is the single most consequential caveat for anyone counting on IDR forgiveness rather than PSLF. When a balance is forgiven after reaching the end of an IDR term (20, 25, or 30 years, depending on plan) rather than through PSLF, that forgiven amount is generally treated as taxable income in the year it is forgiven under current federal law. The American Rescue Plan Act’s temporary federal income-tax exemption for discharged student loan debt expired after December 31, 2025, so — absent a further change in the law — forgiveness that occurs in 2026 or later is generally treated as taxable cancellation-of-debt income and can generate a real tax bill, sometimes called a “tax bomb,” exactly when the borrower has just stopped making payments and has no fresh cash set aside for it.^[5] Borrowers may receive a Form 1099-C reporting the forgiven amount, and may be able to reduce or eliminate the resulting tax through the insolvency exclusion (IRS Form 982) if their total liabilities exceed their assets. Some states also tax forgiven debt independently of federal treatment. Because tax law in this area has changed multiple times in recent years, confirm the current-year rule with a tax professional or the IRS well before your projected forgiveness date, and budget for the possibility that the exemption does not return.

How to enroll and recertify

You apply for any IDR plan, including RAP, directly at StudentAid.gov — the application pulls your tax information electronically with your consent, which is faster and less error-prone than submitting paper income documentation. Once enrolled, every IDR plan (including RAP) requires you to recertify your income and family size annually. Missing your recertification deadline typically causes your payment to reset to what you would owe on the Standard Plan, and can capitalize accrued unpaid interest onto your principal balance — permanently increasing the amount you owe interest on. Set a recurring calendar reminder well ahead of your recertification date; servicers send notices, but relying solely on mail or email that could be missed is a common, costly mistake.

Choosing the right plan for your situation

Pursuing PSLF: pick whichever qualifying plan (IBR or RAP, typically) produces the lowest payment for your income and family size — paying extra provides no benefit since the remaining balance is forgiven tax-free at 10 years.

Not pursuing PSLF, income is high relative to balance: the Standard or Tiered Standard Plan, or an accelerated payoff, usually minimizes total interest paid — IDR plans exist to lower payments, not to minimize total cost for borrowers who can afford faster payoff. Model the tradeoff with the student loan calculator.

Not pursuing PSLF, income is low relative to balance: IBR or RAP can meaningfully lower your monthly payment, but weigh the tax bomb risk on any balance ultimately forgiven at the end of the term — a lower payment today can mean a real tax liability decades from now if current law does not change.

Parent PLUS borrowers: consolidate first, then enroll in ICR — it remains the only IDR path for Parent PLUS debt.

Currently in SAVE forbearance: do not wait for your exit notice to act. Log into StudentAid.gov, compare IBR and RAP using your real income and family size, and proactively select a plan — the default outcome (Standard or Tiered Standard) is very likely the most expensive path for a lower-income borrower.

For a full comparison across every federal plan — Standard, Graduated, Extended, and every IDR option — including how each affects total interest and payoff timeline, see student loan repayment plans explained, run the numbers with the repayment plan comparison calculator on the student loans hub, or get a single fixed-plan estimate with the student loan calculator.

Frequently asked questions