Student Loan Repayment Strategies for 2026

Federal student loan repayment changed a lot in 2026. The SAVE plan is gone, a new income-driven plan called the Repayment Assistance Plan (RAP) opened on July 1, 2026, and the plans you can use now depend on when your loans were made. This guide covers the new rules and how to pick a plan.

What changed in 2026

• SAVE ended. A court order ended the Saving on a Valuable Education (SAVE) plan on March 10, 2026. Starting July 1, servicers began notifying SAVE borrowers that they have 90 days to choose a new plan. If you don’t choose, your servicer will move you to the Standard plan or the new Tiered Standard plan, per the Department of Education.
• Two new plans. The 2025 tax and spending law created RAP and a Tiered Standard plan, both available from July 1, 2026.
• New loans get fewer choices. If you take out a new loan or consolidate on or after July 1, 2026, you’ll repay under RAP or Tiered Standard.
• Older loans have until 2028. If your loans were made before July 1, 2026 and you’re in a plan being phased out, you have until July 1, 2028 to choose RAP, Tiered Standard, or Income-Based Repayment (IBR).

The Repayment Assistance Plan (RAP)

RAP sets your payment from your income and number of dependents, according to Edfinancial, a federal loan servicer:

• Your payment is 1% to 10% of your adjusted gross income, divided by 12. The rate goes up 1 point for each $10,000 of income, and it reaches 10% above $100,000.
• The payment drops by $50 a month for each dependent.
• The minimum payment is $10 a month.
• If your on-time payment doesn’t cover the month’s interest, the unpaid interest is waived, so your balance doesn’t grow.
• If your on-time payment reduces principal by less than $50, the government adds up to $50 toward your principal.
• Any balance left after 30 years of qualifying payments is forgiven. Forgiven amounts may count as taxable income.

RAP is for Direct Loans, including Direct PLUS loans for graduate students. Parent PLUS loans, and consolidation loans that include them, can’t be repaid under RAP.

Tiered Standard

This plan has a fixed payment over 10, 15, 20, or 25 years, depending on how much you owe. Your payment doesn’t change with your income, and it usually costs less in total interest than an income-driven plan.

Income-Based Repayment (IBR)

IBR stays open for loans made before July 1, 2026. The 2025 law removed the “partial financial hardship” requirement, so more borrowers can now enroll.

Public Service Loan Forgiveness (PSLF)

If you work full time for a government agency or a qualifying nonprofit, PSLF forgives your remaining Direct Loan balance after 120 qualifying monthly payments, about 10 years. Payments under RAP count toward PSLF if you meet the other requirements. Certify your employment each year on StudentAid.gov.

How to choose a student loan repayment plan

1. Look up your loans on StudentAid.gov to see their types and when they were made.
2. Use the Loan Simulator on StudentAid.gov to compare monthly payments and total cost under each plan you qualify for.
3. Choose based on your goal. For the lowest monthly payment, look at RAP or IBR. For PSLF, choose a plan that counts, such as RAP, and certify your employment. To pay the least overall, look at Tiered Standard or pay extra.
4. If you were in SAVE, respond to your servicer’s notice within the 90 days, or you’ll be placed in a plan you didn’t choose.

Autopay

Federal servicers give you an interest rate discount for autopay. Borrowers enrolled by September 30, 2026 get a larger 1% discount through June 30, 2028, per Edfinancial. Autopay also keeps you from missing a payment. Check with your servicer about the current discount.

If you can’t make a payment

Contact your servicer before you miss a payment. If your income dropped, recertify it so an income-driven payment can be recalculated. Deferment and forbearance can pause payments for a while, but interest usually keeps building during forbearance and gets added to your balance.

Missed payments have real costs. After 90 days, your servicer reports the delinquency to the credit bureaus. After about 270 days, a federal loan goes into default. Collections on a defaulted federal loan can include seized tax refunds and wage garnishment, and the Department of Education restarted collections in May 2025. If you’re already in default, loan rehabilitation or consolidation can bring your loans back into good standing.

Refinancing with a private lender

A private refinance can lower your rate if you have strong credit and steady income. But once you refinance federal loans, you lose federal benefits for good: RAP, IBR, PSLF, deferment, and forbearance. It usually makes sense only if you have a secure job, an emergency fund, and no plans to use those programs.

Employer help

Employers can pay up to $5,250 a year toward your student loans tax-free through an educational assistance program. The 2025 law made this permanent, and the limit will rise with inflation after 2026, according to the IRS. Ask HR whether your employer offers it.

Paying extra

Federal student loans have no prepayment penalty. If you’re not going for forgiveness, extra payments cut the interest you pay. Our guide on paying off a loan early weighs the tradeoffs.

Watch out for scams

Your servicer helps you for free. A company that charges an up-front fee to enroll you in a plan or promises quick forgiveness is likely a scam. See how to avoid predatory lending practices.

Student loan repayment rules are still changing, so check StudentAid.gov and your servicer before you decide.

Revised: September 2026

Sources

• U.S. Department of Education: Next steps for borrowers enrolled in the SAVE plan
• U.S. Department of Education: Fact sheet: simplifying student loan repayment
• Edfinancial (Federal Student Aid servicer): Repayment Assistance Plan (RAP)
• Federal Student Aid: Top FAQs about income-driven repayment plans
• Federal Student Aid: Getting out of default
• Federal Student Aid: Public Service Loan Forgiveness
• IRS: Section 127 educational assistance programs FAQs

This article is general education, not financial, legal, or tax advice. Your situation may differ, so check the details with the lender, agency, or a qualified professional before you act. How we research and review articles.