If you have federal student loans, the rules you learned when you borrowed may no longer be the rules you repay under. A set of changes that took effect on July 1, 2026 rewrote the menu of repayment options, retired the SAVE plan, and introduced a new income-driven plan called the Repayment Assistance Plan — RAP for short. The changes are significant enough that a lot of borrowers are going to open a servicer notice this fall and not recognize the plan name attached to their account.
This is a plain-English walkthrough of what actually changed, how the math works, and how to think about which track you’re on. It isn’t advice about what to choose — that depends on your income, your family size, and your career plans in ways no article can know.
The Big Structural Change: Two Tracks Instead of One Menu
The most important thing to understand is that federal borrowers are now sorted into two groups based on a single date.
If all of your loans were disbursed before July 1, 2026, and you haven’t consolidated since then, you’re on the legacy track. You keep most of the repayment plans that existed before — standard, graduated, extended, and the older income-driven plans like IBR — and you gain RAP as an additional option. Your existing plan doesn’t automatically disappear.
If you took out a new federal loan or consolidated on or after July 1, 2026, you’re on the new track, and your menu is much shorter. There are two options: a new Tiered Standard Repayment Plan, where the length of your term scales with how much you borrowed, and RAP as the only income-driven option. The older fixed and income-driven plans aren’t available to you.
That date is a real dividing line. Consolidating loans is normally a routine administrative move, but for a legacy borrower it now carries a consequence: consolidation after July 1, 2026 can move you onto the new track and cost you access to the older plans. The Federal Student Aid site is the authoritative place to confirm which loans you hold and when they were disbursed before making that decision.
The SAVE Plan Is Being Wound Down
SAVE, the income-driven plan introduced in 2023, is being eliminated. Borrowers enrolled in it were given a 90-day window starting July 1, 2026 to move to a different plan. If you were in SAVE and haven’t acted, this is the item on your list that has a clock attached to it. Borrowers who don’t choose are generally moved by their servicer, and the plan you land in by default may not be the cheapest one available to you.
For anyone who spent the last few years in SAVE-related forbearance while the plan was tied up in litigation, it’s worth checking how those months were treated for forgiveness purposes. The treatment of that period has varied, and the answer affects how many qualifying payments you’re actually credited with.
How RAP Actually Calculates Your Payment
RAP is an income-driven plan, but its formula works differently from the plans that came before it. Older income-driven plans calculated payments as a percentage of discretionary income — your income minus some multiple of the federal poverty guideline. RAP skips the poverty-line subtraction and takes a percentage of your total adjusted gross income instead.
That percentage slides from 1 percent to 10 percent depending on income. Borrowers earning $10,000 or less pay a flat $10 a month. Above that, the rate steps up by one percentage point for roughly each additional $10,000 of AGI, topping out at 10 percent for high earners. So a borrower with an AGI around $45,000 would land in a bracket in the neighborhood of 4 to 5 percent, producing a monthly payment in the range of $150 to $190 before adjustments.
There are two adjustments that matter. The first is a dependent deduction: your calculated monthly payment drops by $50 for each dependent you claim on your federal return, though the payment can never fall below $10. A borrower with two children gets $100 a month off the calculated figure. The second is a pair of protections against your balance growing. If your monthly payment doesn’t cover the interest that accrued, the unpaid interest is waived rather than added to your balance. And if your payment reduces your principal by less than $50 in a month, the government contributes enough to bring the principal reduction up to $50.
That second feature is a meaningful departure from how income-driven repayment has historically worked. Under older plans, a low-income borrower could make every required payment for years and watch the balance climb. Under RAP, the balance moves down by at least $50 a month regardless.
The trade-off is on the back end. Forgiveness under RAP comes after 360 qualifying monthly payments — 30 years — which is longer than the 20 or 25 years typical of older income-driven plans. Public Service Loan Forgiveness still operates on its own 10-year timeline, and RAP payments count toward it, so borrowers in qualifying public-sector jobs are affected less by the longer horizon.
Parent PLUS Borrowers Have the Narrowest Path
Parents who take out federal PLUS loans on or after July 1, 2026 are not eligible for RAP at all. Their only option is the new tiered standard plan. This is worth knowing before signing for a PLUS loan rather than after, because it removes the income-based safety valve that made PLUS borrowing feel less risky. If you’re a parent weighing how to cover a funding gap, the absence of an income-driven option should factor into how much you’re willing to borrow.
What This Means for Your Monthly Budget
Whatever plan you end up in, the practical effect is that your student loan payment is a fixed obligation that will be recalculated annually based on your tax return. Two habits make that easier to absorb.
The first is knowing your number before it changes. Because RAP keys off adjusted gross income, anything that lowers your AGI — traditional 401(k) contributions, HSA contributions, deductible student loan interest — also lowers your calculated payment. That interaction is genuinely useful and worth modeling before you file.
The second is having a buffer. Payments recalculate once a year and can jump if your income rose. Keeping two or three months of your loan payment parked in a separate savings account means a recalculation is an annoyance rather than a crisis. The Consumer Financial Protection Bureau maintains free tools for borrowers who are struggling or think their servicer has made an error, and filing a complaint there is a legitimate escalation path when a servicer isn’t responsive.
The One Thing to Do This Month
Log into your servicer account and confirm three facts: which plan you’re currently in, the disbursement dates on every loan you hold, and how many qualifying payments you’ve been credited with. Everything else in this article follows from those three numbers. Servicer records have been imperfect through several years of policy churn, and errors that go uncorrected quietly cost people years of forgiveness credit.
Understanding the system is the part you control. The rules changed; the arithmetic behind them is still learnable.