Repayment after the 2025 law · guide
The July 1, 2028 deadline for PAYE and ICR borrowers
Pay As You Earn and Income-Contingent Repayment end on June 30, 2028. Every borrower repaying under one of them, or sitting in an administrative forbearance tied to them, must elect another plan before July 1, 2028: the Repayment Assistance Plan, Income-Based Repayment, or one of the fixed plans still available for older loans. The new plan starts on July 1, 2028, or earlier if the borrower asks. Anyone who does nothing is placed by the Department on RAP for the loans RAP can repay, and on IBR for the rest, such as a consolidation loan that repaid a parent PLUS loan. That rule comes straight from section 82001(a) of the 2025 law and is repeated in the regulations of May 1, 2026. The default is not necessarily bad, but it is not chosen for you: a borrower with $62,000 of income and one child would land on RAP at $260 a month, while IBR would cost $246 for someone who first borrowed after June 2014 and $369 for an earlier borrower. Comparing before the deadline takes minutes.
PAYE or ICR borrower: your options before July 1, 2028
Default placement: RAP
$260
| RAP | $260 |
| IBR at 10% (new borrower) | $246 |
| IBR at 15% | $369 |
IBR shown before its 10-year cap.
Two income-driven plans are being phased out. If your loans are on one of them, a choice is coming whether you make it or not.
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Who is affected
The transition rule covers loans in repayment under an income contingent repayment plan authorized by section 455(e) of the Higher Education Act, the legal family that includes ICR, PAYE and the former REPAYE, renamed SAVE. Former SAVE borrowers already face an earlier deadline set by their servicer's 90-day notice; this page is about PAYE and ICR. The Department's fact sheet of June 2026 puts it simply: certain borrowers enrolled in phased-out plans with loans made before July 1, 2026 have until July 1, 2028 to decide between RAP, the Tiered Standard plan or IBR (Department of Education, June 9, 2026). The regulation lists the fixed plans of the old menu too: the 10-year standard, graduated and extended plans.
The options, and what each one means
| Plan | Payment based on | Forgiveness | Watch out for |
|---|---|---|---|
| Repayment Assistance Plan | 1% to 10% of AGI, minus $50 per dependent | After 360 payments | Not open to parent PLUS consolidations |
| Income-Based Repayment | 10% or 15% of AGI above 150% of poverty | After 240 or 300 payments | Closed if you take a loan after June 2026; barred after 60+ SAVE payments since July 2024 |
| 10-year standard and other fixed plans | Balance and rate | None | Fixed payment, no income protection |
PAYE borrowers
PAYE charged 10% of income above 150% of the poverty guideline, the same formula as IBR for a new borrower, with forgiveness after 20 years. A PAYE borrower who meets the IBR new-borrower definition will usually see the same payment on IBR, and the IBR count picks up the PAYE payments made on or before June 30, 2028. That makes IBR the closest replacement. RAP is worth checking for borrowers with dependents, since each one takes $50 off the monthly payment, and for those whose balance keeps growing on PAYE, because RAP waives the interest an on-time payment does not cover. A PAYE borrower who expects to repay in full may also prefer RAP's falling balance to IBR's accumulating interest.
ICR borrowers
ICR charged the lesser of 20% of income above the poverty guideline or a 12-year schedule adjusted for income, the most expensive of the income-driven formulas for most people. For a typical ICR borrower, both RAP and IBR will ask less. The common exception is the parent who consolidated parent PLUS loans to reach ICR. For that borrower RAP is closed and the realistic choices are IBR, if the consolidation qualifies as described below, or a fixed plan. The parent PLUS repayment page details the rules.
The parent PLUS route before the door closes
The regulation defines an excepted consolidation loan, one that repaid a parent PLUS loan, as ineligible for IBR, then makes an exception: it stays eligible if it was repaid under ICR, PAYE or IBR on any date from July 4, 2025 through June 30, 2028, meaning at least one payment was made under one of those plans (34 CFR 685.209(b)(6)(ii)). A parent with older parent PLUS loans who wants an income-driven option in the long run therefore has a window that closes on June 30, 2028. After that date, a consolidation of parent PLUS loans that never made such a payment has no income-driven plan at all.
What the default placement does
On July 1, 2028, the Secretary must enroll loans eligible for RAP in RAP, and loans not eligible for RAP in IBR, and require payments under those plans from that day (Public Law 119-21, section 82001(a)(3)). The placement is reasonable for many borrowers but not tailored. Someone with no dependents and a low income would often pay less on IBR; someone on the edge of a RAP bracket might prefer a fixed plan if they intend to repay quickly. Because a borrower can change from an income-driven plan to any other plan for which they are eligible, the default is not permanent, but each month spent on the wrong plan costs money and possibly progress toward forgiveness.
Timing your switch
There is no penalty for moving early and no reward for waiting. The only reason to stay on PAYE or ICR until the last months is a payment that is lower there than on any replacement. For PAYE borrowers that can happen when the 10-year cap of PAYE, computed on the balance when they entered the plan, is below what IBR or RAP would ask on today's income. For ICR borrowers it is rare. Everyone else gains by moving as soon as the comparison is done, because the new plan's terms, including RAP's interest waiver, start working only from the switch.
Recertification dates matter too. If your PAYE or ICR payment is due to be recalculated soon on a higher income, switching before that date to a plan where the new income produces a lower payment avoids a few months at the higher amount. If your income has dropped, ask for a recalculation with current documentation at the same time as you change plans. Either way, keep a copy of the confirmation from your servicer showing the new plan and its start date; it is the simplest proof if the default placement is applied by mistake in 2028.
A short checklist
First, find your plan name and loan types in your StudentAid.gov account. Second, check whether any of your Direct Loans was disbursed on or after July 1, 2026; if one was, IBR is no longer an option. Third, count how many qualifying payments you have toward IBR, RAP and, if relevant, PSLF, since all three counts carry PAYE and ICR payments in defined ways. Fourth, run the plan comparator with your current income and a realistic raise. Fifth, elect the plan, ideally with consent for the Department to obtain your tax data so that recertification is automatic. Doing it in 2026 or 2027 also protects you from the rush of applications that a single nationwide deadline tends to create.