Student Loan Repayment Plans in 2026: RAP, Tiered Standard, and What Replaced SAVE

If your first federal student loan is disbursed on or after July 1, 2026, you have two repayment plan options. Not six. Not four. Two. The SAVE plan is gone. The old Standard Repayment Plan is gone. PAYE and ICR are on their way out. The One Big Beautiful Bill Act, signed into law in July 2025, replaced the existing maze of repayment plans with a simplified system: the Tiered Standard Plan and the Repayment Assistance Plan (RAP). According to the Federal Student Aid office, borrowers who were enrolled in SAVE received a 90-day window starting July 1, 2026 to choose a new plan or be automatically moved to the Tiered Standard Plan. Use our Student Loan Payoff Calculator to model your payments under the new plans and compare total costs.

What Changed and Why

The Saving on a Valuable Education (SAVE) plan was introduced in 2023 as the most generous income-driven repayment plan ever offered. It lowered monthly payments for millions of borrowers and offered a faster path to forgiveness. Then it was challenged in court. Multiple states sued, arguing the plan exceeded the Department of Education's authority. On March 10, 2026, the Eastern District of Missouri vacated the SAVE regulation. No new borrowers could enroll. The more than 7 million borrowers already in SAVE were told to choose a different plan.

The One Big Beautiful Bill Act (also known as the Working Families Tax Cuts Act) then codified these changes into statute. ICR and PAYE will terminate on July 1, 2028. The old Standard Repayment Plan was replaced by the Tiered Standard Plan. And a new income-driven option called the Repayment Assistance Plan launched on July 1, 2026.

If you borrowed before July 1, 2026, you may still have access to some legacy plans (IBR, PAYE, ICR) depending on your loan disbursement dates. If you are borrowing for the first time on or after that date, your options are the two new plans.

The Two New Repayment Plans

The Tiered Standard Plan

This is a fixed-payment plan. Your monthly amount stays the same for the life of the loan. The repayment term depends on how much you borrowed:

There is no income calculation. No annual recertification. No forgiveness at the end. You pay a fixed amount each month until the loan is gone. You can always pay more than the minimum without penalty.

The Repayment Assistance Plan (RAP)

RAP is the new income-driven option. It replaces SAVE, PAYE, ICR, and eventually all previous IDR plans for new borrowers. Key features:

• Monthly payments are based on your adjusted gross income (AGI), not discretionary income
• The percentage scales with income: 1% of AGI for low earners up to 10% for those earning over $100,000
• The minimum payment is $10 per month (no $0 payment months)
• $50 per dependent is deducted from your monthly payment
• Unpaid interest is waived each month, so your balance cannot grow through negative amortization
• If your payment covers less than $50 of principal per month, the government applies up to an additional $50 toward your balance
• Any remaining balance is forgiven after 30 years (360 qualifying monthly payments)

RAP qualifies for Public Service Loan Forgiveness (PSLF) if all other eligibility criteria are met.

How to Calculate Your Payment Under Each Plan

Step-by-Step Example

A recent graduate has $34,200 in federal student loans at 6.53% interest (the 2025-2026 undergraduate Direct Loan rate). They earn $48,000 per year as a starting salary and have no dependents.

Tiered Standard Plan (15-year term, since borrowing is between $25,000 and $49,999):

Monthly payment = approximately $299. Total paid over 15 years = $53,820. Total interest paid = $19,620.

RAP at $48,000 AGI:

At $48,000 income, the RAP percentage is approximately 5% of AGI (the percentage scales from 1% to 10% across 11 income brackets). Annual payment = $2,400. Monthly payment = $200. However, since the minimum is $10 and the percentage-based amount exceeds that, the payment is $200 per month.

If $200 does not cover the monthly interest (which at 6.53% on $34,200 is approximately $186 per month), the government waives the unpaid interest. The $14 that would have been unpaid interest is waived, so the balance does not grow. Only about $14 per month goes toward principal initially.

As income grows over time, the payment increases. If salary rises to $65,000 after five years, the RAP percentage increases and the monthly payment rises to approximately $325. The loan may be paid off before the 30-year forgiveness mark, or a balance may remain for forgiveness.

Total cost under RAP depends entirely on income trajectory over 30 years. In the best case (rapid income growth), the loan is paid off in 12 to 15 years with total payments similar to the Tiered Standard Plan. In the worst case (low income throughout), payments stay low and the remaining balance is forgiven after 30 years, but you pay more total interest over the longer period.

What Do the Numbers Mean?

The choice between these plans comes down to three factors: current income, expected income growth, and risk tolerance.

RAP has no payment cap. Unlike IBR, which caps payments at the 10-year Standard amount, RAP payments can exceed what you would pay under the Tiered Standard Plan if your income is high enough. A borrower earning $120,000 per year with $34,200 in loans would pay roughly $1,000 per month under RAP (10% of AGI divided by 12, minus any dependent deductions), compared to $299 under the Tiered Standard Plan.

The Congressional Research Service published a detailed analysis of the new repayment plan structure that walks through the statutory changes and regulatory implementation.

Real-World Example

A dental school graduate has $187,400 in federal student loans at 7.54% interest (graduate Direct Loan rate). Their starting salary is $145,000 per year.

Tiered Standard Plan (25-year term, since borrowing exceeds $100,000):

Monthly payment = approximately $1,468. Total paid over 25 years = $440,400. Total interest paid = $253,000.

RAP at $145,000 AGI:

At $145,000 income, the RAP percentage is 10% of AGI. Annual payment = $14,500. Monthly payment = $1,208 (before any dependent deductions). With one dependent, subtract $50: monthly payment = $1,158.

RAP actually costs less per month than the Tiered Standard Plan at this income level, which seems counterintuitive. But the interest subsidy adds value: if the monthly payment does not cover all accrued interest (which at 7.54% on $187,400 is approximately $1,180 per month), the government waives the difference. In this case, the $1,158 payment does not quite cover the $1,180 in interest, so $22 per month is waived.

However, because RAP has no payment cap, if the dentist's income rises to $200,000, the RAP payment increases to $1,667 per month, well above the Tiered Standard Plan's fixed $1,468. Over 25 years, the dentist would likely pay off the loan faster under RAP due to higher payments as income grows, but total cost depends on the income trajectory.

For this borrower, the Tiered Standard Plan provides predictability. RAP provides flexibility if income drops or during years when income is lower. Many high-earning professionals choose the fixed plan once their income stabilizes.

To model different income scenarios, use the Student Loan Income-Driven Repayment Estimator which supports the new RAP calculation alongside legacy IDR plans.

Common Mistakes to Avoid

Defaulting into the Tiered Standard Plan by not acting. If you were on SAVE and do not choose a new plan within the 90-day window, your servicer automatically moves you to the Tiered Standard Plan. This can result in a payment shock if your income is low and the fixed payment is significantly higher than what you were paying under SAVE.

Assuming RAP is always cheaper because it is income-driven. RAP has no payment cap. At higher income levels, your RAP payment can exceed what you would pay under the Tiered Standard Plan. Run the numbers for your actual income, not just your starting salary.

Forgetting annual RAP recertification. If you do not recertify your income and family size annually, your RAP payment defaults to the Tiered Standard Plan amount. Set a calendar reminder. Missing recertification can cause a temporary payment spike.

Ignoring the interest subsidy value. RAP waives unpaid interest each month. This is a significant benefit that prevents your loan balance from growing when your payment does not cover accrued interest. The Tiered Standard Plan does not offer this protection. If you expect periods of lower income, the interest subsidy alone can save thousands.

Related Tools on ProfessionCalculators.com

• Student Loan Income-Driven Repayment Estimator: Estimate monthly payments and forgiveness timelines under RAP, IBR, and other IDR plans
• College Cost Calculator: Calculate the 4-year total cost of attendance by school type with tuition inflation and financial aid
• GPA Calculator: Track your semester and cumulative GPA to maintain scholarship eligibility and reduce borrowing needs

Frequently Asked Questions

What replaced the SAVE plan?

The Repayment Assistance Plan (RAP) replaced SAVE as the primary income-driven repayment option for new borrowers starting July 1, 2026. RAP calculates payments as a percentage of your total AGI (1% to 10% depending on income bracket), rather than discretionary income. It waives unpaid interest monthly and offers forgiveness after 30 years. Existing borrowers who were on SAVE have a 90-day window to choose a new plan or be automatically enrolled in the Tiered Standard Plan.

What is the Tiered Standard Plan?

The Tiered Standard Plan is a fixed-payment repayment plan that replaced the old Standard Repayment Plan. Your repayment term depends on how much you borrowed: 10 years for loans up to $24,999, 15 years for $25,000 to $49,999, 20 years for $50,000 to $99,999, and 25 years for $100,000 or more. There is no income calculation and no forgiveness at the end. You pay a fixed monthly amount until the loan is paid off.

Can I still use IBR if I borrowed before July 1, 2026?

Yes. Income-Based Repayment (IBR) is the only legacy IDR plan that survives permanently. If you had loans before July 1, 2026, you can choose IBR. New IBR payments are 10% of discretionary income with forgiveness after 20 years. Old IBR (for borrowers with loans before July 1, 2014) uses 15% of discretionary income with 25-year forgiveness. The OBBBA removed the partial financial hardship requirement, so IBR is now open to any borrower with eligible Direct Loans.

Does RAP qualify for Public Service Loan Forgiveness?

Yes. Repaying under RAP qualifies for PSLF if you meet all other eligibility criteria: full-time employment with a qualifying employer (government or nonprofit) and 120 qualifying monthly payments. The interest subsidy and principal assistance under RAP do not affect PSLF eligibility.

How are RAP payments calculated?

RAP places your AGI into one of 11 income brackets and applies a corresponding percentage (1% to 10%) to your total AGI. The annual amount is divided by 12 for your monthly payment. A $50 deduction applies for each dependent claimed on your tax return. The minimum payment is $10 per month. There is no discretionary income calculation and no poverty guideline floor. Your payment is based purely on AGI and dependent count.

Conclusion

The student loan repayment landscape is simpler in 2026 than it has been in years, but the choice still matters. The Tiered Standard Plan gives you predictability: a fixed payment, a known end date, and no recertification. RAP gives you flexibility: payments that scale with income, interest subsidies that prevent balance growth, and forgiveness after 30 years. The right choice depends on your income trajectory, job stability, and whether you qualify for PSLF.

Run the numbers for your actual loan balance and income. Do not default into a plan by missing the 90-day window if you were on SAVE. And if your income is variable or uncertain, the RAP interest subsidy provides protection that the fixed plan cannot match.

Our Student Loan Payoff Calculator models payments under both new plans with your actual loan details. For income-driven scenarios, the Student Loan Income-Driven Repayment Estimator compares RAP against legacy IDR plans. If you are still in school and planning borrowing, the College Cost Calculator estimates total attendance costs by school type so you can borrow less upfront.