Repayment after the 2025 law · guide
Income-driven repayment after the 2025 law
Income-driven repayment, the family of plans that set your federal loan payment from your income instead of your balance, has been rebuilt. Two plans are open to new enrollment in 2026: the Repayment Assistance Plan, which started on July 1, 2026 and charges 1% to 10% of adjusted gross income minus $50 per dependent, and Income-Based Repayment, which charges 10% or 15% of income above 150% of the poverty guideline but only for loans made before that date. Two older plans, Pay As You Earn and Income-Contingent Repayment, keep their current borrowers until June 30, 2028 and then disappear. SAVE, the plan that offered the lowest payments in 2023 and 2024, was closed by a court-approved settlement and its borrowers are being moved. A household of two with $38,000 of income would pay $45 a month on RAP, $46 on IBR, and would have paid $0 under the SAVE formula. The calculators on this site compute the two plans that remain.
Three income-driven formulas, one income
Lowest open plan
$45
| RAP (others counted as dependents) | $45 |
| IBR, borrower since July 2014 | $46 |
| Former SAVE formula, closed | $0 |
IBR before its cap; SAVE no longer takes payments under its formula.
Five plans were on the books in 2025. Here is what each one is now, and which ones you can actually enter.
Checked by Radif Partners · Editorial policy · How we calculate
The five plans and their status
| Plan | Formula | Open to new enrollment? | Ends |
|---|---|---|---|
| Repayment Assistance Plan (RAP) | 1% to 10% of AGI, minus $50 per dependent, minimum $10 | Yes, since July 1, 2026 | Permanent |
| Income-Based Repayment (IBR) | 10% or 15% of AGI above 150% of poverty, capped at the 10-year payment | Yes, for loans made before July 1, 2026 | Permanent for those loans |
| Pay As You Earn (PAYE) | 10% of income above 150% of poverty | No | June 30, 2028 |
| Income-Contingent Repayment (ICR) | 20% of income above 100% of poverty, or a 12-year schedule adjusted for income | No, except some consolidations that repaid parent PLUS | June 30, 2028 |
| SAVE (REPAYE) | 5% or 10% above 225% of poverty | No, closed | Closed by settlement in 2026 |
Why the system was rebuilt
Before 2025, a borrower could face four income-driven plans with different formulas, different forgiveness dates and different eligibility rules, plus a handful of fixed plans. The 2025 budget law, which the Department now calls the Working Families Tax Cuts Act, cut that down for future borrowers to one fixed plan and one income-driven plan. Borrowers who took a Direct Loan on or after July 1, 2026 have exactly that choice, RAP or the Tiered Standard plan, for all their Direct Loans (HEA section 455(d)(7)). Borrowers with only older loans keep IBR as well, and the people already on PAYE or ICR get a transition period of two years. The rebuild also changed the way interest behaves on the new plan: RAP waives the unpaid interest of each on-time month, while IBR still lets it accrue.
Same income, different payment
The formulas measure ability to pay in opposite ways. IBR sets aside a protected amount, 150% of the HHS poverty guideline for the household, $32,460 for two people in 2026, and charges a flat rate on what is left. RAP protects nothing but lowers the rate for lower incomes and gives a fixed credit per dependent. As a result, IBR tends to be cheaper at low incomes and RAP in the middle range. A household of two at $38,000 pays $45 on RAP if the second person is a dependent child and $46 on IBR. Raise income to $70,000 and the figures become $300 and $313. The detailed comparison is on RAP vs IBR.
Forgiveness at the end of each plan
Each income-driven plan forgives what remains after a number of qualifying payments: 240 on IBR for a borrower with no balance before July 1, 2014, 300 for earlier borrowers, and 360 on RAP. Payments under one plan can count toward another in defined cases; for example IBR payments and, before July 1, 2028, ICR payments count toward RAP's total. Since January 1, 2026 that forgiveness may be taxable at the federal level, a change explained on taxes on forgiveness. Public Service Loan Forgiveness works differently: it forgives after 120 payments on any of these plans for borrowers in qualifying jobs.
Which loans each plan accepts
RAP and IBR both take Direct Subsidized and Unsubsidized Loans, graduate PLUS loans and Direct Consolidation Loans that did not repay a parent PLUS loan. Neither takes a parent PLUS loan directly. FFEL loans held by private lenders can use IBR under the FFEL rules but need consolidation into a Direct Loan for RAP. Defaulted loans can be repaid under IBR and RAP, which offers a path out of default together with rehabilitation; see default and rehabilitation.
What each plan does with unpaid interest
An income-driven payment can be smaller than the interest that accrues in a month. The plans part ways on what happens next. On IBR the unpaid amount stays on the account; for the first three consecutive years on the plan the Department does not charge the unpaid interest on subsidized loans, but after that it builds up, and it is added to principal if you leave the plan or your payment reaches the 10-year cap. On PAYE and ICR it also accrues. On RAP, an on-time payment that falls short of the interest wipes the difference, and the Department adds a principal reduction of up to $50 when your payment did not cut principal by that much. SAVE had its own interest subsidy, which is one reason its payments looked so attractive before the courts stopped it. For a borrower with a large balance and a modest income, this difference can matter more over twenty years than a gap of a few dollars in the monthly payment.
Moving between plans
A borrower on an income-driven plan can change to any other plan for which their loans are eligible, at any time. The limits come from the plans themselves: nobody can enter SAVE, PAYE or ICR anymore except in the consolidation case above, and IBR is unavailable once you hold a loan made from July 1, 2026. A borrower who made 60 or more qualifying payments under REPAYE or SAVE since July 1, 2024 cannot enroll in IBR at all. Borrowers limited to the two new plans can move between RAP and Tiered Standard whenever they want, which makes RAP a safety net for anyone on the fixed plan whose income drops.
Spouses, dependents and household size
The plans count people differently. IBR uses family size: you, a spouse on a joint return, children you support and other dependents living with you. RAP uses dependents claimed on your tax return and does not count a spouse as a dependent. On both, a spouse's income enters only when you file jointly, and if both spouses have eligible federal loans the payment is divided between them in proportion to their balances. Filing separately can therefore lower an income-driven payment, at the cost of tax benefits such as the student loan interest deduction, which a married person filing separately cannot claim. The arithmetic is laid out on student loans and married filing separately.
Choosing in practice
Start with your loan dates. If any Direct Loan was disbursed on or after July 1, 2026, compare RAP with the Tiered Standard plan. If not, compare RAP, IBR and the fixed plans. Then look at your horizon: repayment in full, forgiveness after decades, or PSLF after ten years. The plan comparator runs all of it with your balance, rate, income, dependents and expected raises, and the regulations behind each formula are in 34 CFR 685.209.