Federal student loan repayment is changing, and the decisions borrowers make in the next two years could affect their monthly payments and their path to forgiveness for a long time.
Here's what matters most.
SAVE Is Ending — Don't Wait for the Notice
Around 7.5 million borrowers are still enrolled in the SAVE Plan, which has been in administrative forbearance since courts struck it down. Starting July 1, 2026, loan servicers will begin sending official notices giving borrowers 90 days to choose a new repayment plan.¹
If you don't act within that 90-day window, your servicer will move you automatically into either the Standard Repayment Plan or the new Tiered Standard Plan — neither of which is income-driven, and neither of which qualifies for PSLF.¹ ⁴
Don't assume that doing nothing will land you in RAP or IBR. It likely won't.
Can You Still Stay in PAYE?
For some borrowers, yes — but the window is closing.
Under the Department of Education's 2026 final rule, PAYE remains available through June 30, 2028, but only if you meet certain requirements: your loans must be eligible, you must have been repaying under PAYE as of July 1, 2024, and you must not have received a new Direct Loan on or after July 1, 2026.²
There's a catch: if you leave PAYE and later want to come back, you generally can't. The final rule states that a borrower who leaves PAYE may not re-enroll.² That makes any plan switch a potentially permanent decision.
When does staying in PAYE make sense? If you're close to PSLF, close to IDR forgiveness, or your PAYE payment is lower than what you'd owe under RAP or IBR, holding onto PAYE may be worth it — at least for now. But PAYE sunsets permanently on July 1, 2028, so it's a temporary solution, not a long-term one.³
What Is RAP, and How Does Forgiveness Work?
The Repayment Assistance Plan (RAP) is the new income-driven repayment option created by the One Big Beautiful Bill Act. It becomes available July 1, 2026, and will eventually be the primary IDR option for most borrowers.¹
RAP's forgiveness threshold is 360 qualifying monthly payments — a 30-year timeline.⁷ That's longer than new IBR (20 years) or old IBR (25 years), which matters if you're comparing long-term forgiveness outcomes.
Do Prior IDR Payments Count Toward RAP Forgiveness?
Generally, yes — but not automatically.
Prior qualifying payments made under PAYE, ICR, IBR, and certain other plans can count toward RAP's 360-payment requirement, provided those payments meet RAP's counting rules.⁷ This means your repayment history doesn't necessarily start over when you switch to RAP.
However, the reverse is not true. RAP payments do not count toward forgiveness under IBR, PAYE, or ICR. The Department's final rule specifically excludes RAP from the payment-counting rules for those plans.⁸
The practical implication: you can bring prior payment history into RAP, but you can't take RAP months back out into IBR.
What Happens in 2028 If You're Still in PAYE or ICR?
Both PAYE and ICR sunset permanently on July 1, 2028.³ You will need to choose a new plan — IBR or RAP — before that deadline.
The default placement for borrowers who don't act by the 2028 deadline is less certain than the 2026 SAVE transition. The statute says eligible loans should move to RAP, with non-eligible loans going to IBR.⁶ However, draft implementing regulations suggest some borrowers who don't act may be placed into Standard Repayment instead. Don't rely on automatic placement — choose your plan before the deadline.
The Key Questions to Answer Before You Switch
Before changing repayment plans, work through these:
Bottom Line
SAVE borrowers need to act before their 90-day window closes — the default placement is standard repayment, not an income-driven plan.¹
PAYE borrowers who qualify can stay put through mid-2028, but leaving PAYE is likely irreversible, so don't switch casually.² ³
RAP will accept prior qualifying IDR payment history toward its 360-payment forgiveness count, but RAP payments don't count back toward IBR or legacy plan forgiveness.⁷ ⁸
The lowest monthly payment isn't always the right answer. Confirm your official payment count with your servicer and Federal Student Aid account before making any changes.
References
¹ U.S. Department of Education, "U.S. Department of Education Announces Next Steps for Borrowers Enrolled in the Unlawful SAVE Plan," March 27, 2026. Servicer notices begin July 1, 2026; borrowers have at least 90 days to enroll in a legal repayment plan; borrowers who do not act will be automatically enrolled into either the Standard Repayment Plan or the new Tiered Standard Plan.
² U.S. Department of Education, Final Rule, Reimagining and Improving Student Education — Federal Student Loan Program Final Regulations, 91 Fed. Reg. 23768, May 1, 2026, codified in relevant part at 34 C.F.R. § 685.209(c). Provides PAYE grandfathering requirements through June 30, 2028 and states that a borrower who was repaying under PAYE on or after July 1, 2024 and changes to a different plan may not re-enroll.
³ U.S. Department of Education, Final Rule, May 1, 2026. Income-contingent repayment plans sunset and will no longer be available after July 1, 2028.
⁴ U.S. Department of Education, Final Rule, May 1, 2026. Tiered Standard repayment is not among the qualifying repayment plans for PSLF; RAP is added as a qualifying repayment plan for PSLF.
⁵ Public Law 119-21, § 82001, "Loan Repayment." Addresses borrowers with loans in repayment status under, or in administrative forbearance associated with, an income-contingent repayment plan authorized under section 455(e) of the Higher Education Act.
⁶ Public Law 119-21, § 82001(a)(3). If a borrower covered by the 2028 income-contingent repayment transition fails to select a repayment plan, the Secretary must enroll eligible loans into RAP and loans not eligible for RAP into IBR, with repayment beginning July 1, 2028.
⁷ Public Law 119-21, § 82001(d), adding HEA § 455(q), and the Department's implementing final rule. RAP cancellation requires participation in RAP, the most recent payment before cancellation to be under RAP, and 360 qualifying monthly payments. Qualifying payments include certain IBR payments and certain pre-July 1, 2028 payments under income-contingent repayment plans.
⁸ U.S. Department of Education, Final Rule, May 1, 2026. RAP is not creditable toward forgiveness for IBR or income-contingent repayment plans; PAYE, ICR, and IBR forgiveness credit is earned by making a payment under an IDR plan except RAP, or by having a $0 monthly payment obligation.
⁹ U.S. Department of Education, Final Rule, May 1, 2026, 34 C.F.R. § 685.210. For Direct Loans made before July 1, 2026, borrowers may generally change to another eligible repayment plan. For Direct Loans made on or after July 1, 2026, borrowers may select Tiered Standard or RAP only, and may later switch between those two plans.
This article is provided by Modoo Strategy LLC for general educational purposes only. It is not legal, tax, or financial advice, and it should not be relied on as a substitute for guidance from a qualified professional or official information from the U.S. Department of Education, Federal Student Aid, or your loan servicer. Federal student loan rules are changing rapidly — verify your repayment options and payment counts directly with your servicer before making decisions.