Income-Driven Repayment Plans 2026: IDR, IBR, PAYE & RAP Explained

Income-driven repayment is not a single plan — it is a category of federal repayment options that calculate your monthly payment as a percentage of your income rather than your loan balance. That distinction matters enormously: a borrower with $300,000 in medical school debt earning $60,000 as a resident pays the same IDR amount as someone with $50,000 in debt at the same income. Loan size is nearly irrelevant; income and family size are everything.

This guide covers the current IDR landscape as of March 2026 — including the termination of SAVE, the status of existing plans, and the new Repayment Assistance Plan replacing most IDR options for future borrowers.

The IDR Landscape: What Is Still Available in 2026

The federal repayment system is mid-transformation. The SAVE plan — which enrolled 8 million borrowers — was struck down by courts and formally terminated in March 2026. Two more plans (PAYE and ICR) are being phased out by July 2028. The Repayment Assistance Plan launches July 1, 2026. Here is where each plan stands:

How IDR Payments Are Calculated

Understanding how IDR math works helps you predict your payment before enrolling. Every IDR plan starts with the same concept: discretionary income, which is your adjusted gross income minus a poverty line threshold.

For IBR and PAYE, the formula is: Discretionary Income = AGI − (150% × Federal Poverty Guideline)

For a single borrower in the continental U.S. in 2025, the 150% FPG threshold is $23,475. Everything you earn above that figure counts as "discretionary." Your monthly payment is then 10% (IBR new / PAYE) or 15% (IBR old) of that annual discretionary income, divided by 12.

The key insight from this table: the payment difference between Standard and IBR at a $40,000 income is $417 per month — over $5,000 annually. For borrowers in public service pursuing PSLF forgiveness, making the lower IBR payment for 10 years maximizes forgiveness. For borrowers not pursuing forgiveness, the lower payment comes at the cost of more total interest paid over time.

Use our student loan calculator to model your specific balance, interest rate, and income against each repayment plan.

IBR: Income-Based Repayment (The Current Go-To Plan)

IBR is the most widely available IDR plan and the most practical choice for most borrowers in 2026. Unlike PAYE, which was closed to new enrollees in 2024, IBR remains open to any Direct Loan borrower who demonstrates financial hardship — meaning your calculated IDR payment is less than the Standard 10-year payment.

IBR: New Borrowers (Loans After July 1, 2014)

• Payment: 10% of discretionary income (AGI minus 150% of federal poverty guideline)
• Forgiveness: After 20 years (240 qualifying payments)
• $0 payments: If income falls below 150% FPG (~$23,475 single)
• Eligibility: Must have financial hardship (most borrowers with federal loans qualify)
• PSLF eligible: Yes — IBR payments count toward PSLF

IBR: Old Borrowers (Loans Before July 1, 2014)

• Payment: 15% of discretionary income (higher than new IBR)
• Forgiveness: After 25 years (300 qualifying payments)
• $0 payments: Same income threshold as new IBR

According to the CFPB's 2023-2024 Borrower Survey, 21% of federal borrowers don't know what repayment plan they are on — a statistic that explains much of the delinquency spike that emerged after the COVID forbearance ended. If you do not know your plan, log in to StudentAid.gov to check.

PAYE: Pay As You Earn (Still Active, But Closing)

PAYE caps payments at 10% of discretionary income — identical to new IBR — but adds one important protection: your payment will never exceed what you would pay under the Standard 10-year plan. This cap protects borrowers whose incomes rise dramatically, ensuring they never pay more than the Standard amount.

The catch: PAYE was closed to new enrollees on July 1, 2024, and will be eliminated entirely by July 1, 2028. If you were already on PAYE before July 2024, you can stay on it through 2028. After that, you will need to switch to IBR or RAP.

PAYE was also restricted to borrowers who had no outstanding loan balance as of October 1, 2007, and received a disbursement after October 1, 2011 — requirements that excluded many older borrowers. This made IBR the de facto standard plan for most people even before PAYE closed.

ICR: Income-Contingent Repayment (The Highest Payments)

ICR calculates payments at 20% of discretionary income — or the amount you would pay on a 12-year fixed repayment plan, whichever is less. In practice, the 20% formula applies for most borrowers. This makes ICR significantly more expensive than IBR or PAYE.

ICR's main use case is for Parent PLUS loan borrowers. After consolidating Parent PLUS loans into a Direct Consolidation Loan, parents can access ICR — their only IDR option. Forgiveness comes after 25 years. ICR is being eliminated by July 1, 2028, after which consolidated Parent PLUS borrowers will be limited to the RAP plan or standard repayment.

The SAVE Plan: What Happened & What It Means for 8 Million Borrowers

SAVE (Saving on a Valuable Education) was the Biden administration's flagship IDR overhaul, designed to replace REPAYE with dramatically lower payments — as low as $20/month for some undergraduate borrowers. At its peak, 8 million borrowers were enrolled, and 60% of them had $0 monthly payments, according to Federal Student Aid data.

Federal courts blocked SAVE in July 2024, placing all enrolled borrowers in interest-free forbearance. The Trump administration negotiated a settlement with Missouri in December 2025, and the Eighth Circuit Court of Appeals issued its final ruling vacating SAVE entirely in March 2026. Interest began accruing again.

If You Were in SAVE Forbearance: Your Options Now

The Repayment Assistance Plan (RAP): The Future of IDR

Created by the One Big Beautiful Bill Act signed in July 2025, RAP is a fundamentally different IDR structure. Rather than using discretionary income (AGI minus a poverty threshold), RAP calculates payments directly as a percentage of total AGI:

• Under $10,000/year income: $10/month minimum
• $10,000–$20,000: 1% of AGI/year ÷ 12
• $20,000–$30,000: 2% of AGI
• Scaling up through income brackets to 10% at $100,000+
• $50/month credit per dependent (reduces the calculated payment)
• Forgiveness: After 30 years (20 years for public service under PSLF)

For loans made before July 1, 2026, RAP is optional and available alongside IBR. For loans made on or after July 1, 2026, RAP is the only IDR option — existing IBR remains for pre-2026 borrowers only, and PAYE and ICR end in 2028 for everyone.

One notable RAP limitation: Parent PLUS loans originated after July 1, 2026, are ineligible for RAP entirely. They will have access only to standard repayment plans.

IDR and Public Service Loan Forgiveness: The Optimal Strategy

For borrowers in qualifying public service jobs — government, 501(c)(3) nonprofits, certain healthcare and education roles — IDR is not just a payment reduction tool. It is the vehicle for maximizing PSLF forgiveness. Here is why:

PSLF forgives the remaining balance after 120 qualifying payments (10 years) on a qualifying plan. Qualifying plans include IBR, PAYE, ICR, and RAP. The lower your payments during those 10 years, the larger the balance remaining to forgive.

Per U.S. Department of Education data, more than 1 million borrowers have received PSLF forgiveness since the program expanded in 2021, with an average forgiveness of $73,400 per borrower — and that forgiveness is permanently tax-free under current law, unlike standard IDR forgiveness.

A public school teacher with $90,000 in graduate school loans earning $52,000 who enrolls in new IBR will pay roughly $238/month. Over 10 years, that is approximately $28,560 paid — with the remaining balance (potentially $80,000+ after accumulated interest) forgiven tax-free. The same borrower refinancing to a private loan at 5% would pay $954/month over 10 years — over $114,000 total. The PSLF path saves roughly $85,000 in that scenario.

If you are considering public service careers, our degree ROI calculator can help model whether a graduate degree makes financial sense given your likely salary and PSLF timeline.

Annual Recertification: The Rule Most Borrowers Forget

Every IDR plan requires annual recertification of your income and family size. Miss this deadline and your servicer will recalculate your payment based on your outstanding loan balance — not your income — which can spike your monthly bill dramatically.

The recertification window is typically 120 days before your anniversary date. Servicers should send reminders, but given the well-documented servicer communication failures (documented in CFPB complaint data), set your own calendar reminder. You can recertify through your servicer's website or at StudentAid.gov.

Recertification is also your opportunity to update your family size. Adding a dependent — a child, or even a qualifying parent — reduces your discretionary income calculation, which directly lowers your monthly payment. Report changes proactively; do not wait for the annual deadline.

When IDR Is NOT the Right Choice

Income-driven repayment is not universally optimal. Here are the scenarios where Standard or Graduated repayment wins:

IDR Forgiveness: The Tax Bomb You Need to Plan For

Before 2026, IDR forgiveness was federally tax-free under the American Rescue Plan Act. That provision expired on December 31, 2025. Starting January 1, 2026, any balance forgiven through IDR (not PSLF — which remains tax-free) is treated as ordinary income in the year of forgiveness.

The implications are significant. A borrower forgiven $80,000 after 20 years of IBR payments could face a federal tax bill of $17,600–$29,600 (depending on their tax bracket in the forgiveness year). Some financial planners call this the "forgiveness tax bomb."

Per Federal Student Aid data, the IDR account adjustment completed in January 2025 resulted in $14.1 billion in automatic forgiveness for borrowers who had reached the 20- or 25-year milestone — a preview of what borrowers currently on IDR will eventually face. Many of those borrowers were surprised by the tax liability.

The practical implication: if you are on a 20-year IDR track, start building a dedicated savings account now to cover the eventual tax bill. A financial advisor can help you model the projected forgiveness amount and appropriate annual savings target.

For more context on how your loan choice affects total college cost, see our guide to federal vs. private student loans.

How to Enroll in an IDR Plan

Enrollment is free and can be completed in about 20 minutes. Here is the process:

1. 1. Verify your loans are eligible. Direct Loans (Subsidized, Unsubsidized, PLUS, Consolidation) qualify. FFELP loans must be consolidated first. Private loans are ineligible.
2. 2. Gather your AGI. This comes from your most recent federal tax return. If your income has changed significantly since last year, you can request a recalculation using current income.
3. 3. Apply at StudentAid.gov — the official Federal Student Aid website — or through your loan servicer. The Loan Simulator at StudentAid.gov lets you preview payment amounts before committing.
4. 4. Submit income documentation if required. For most borrowers, linking to the IRS Data Retrieval Tool during the application pulls your AGI automatically.
5. 5. Confirm enrollment. Your servicer will process the request and confirm your new payment amount. Processing typically takes 30–60 days.

Comparing IDR Plans to the Standard Repayment: Full Scenario

To illustrate the full-cost trade-off, here is a comprehensive comparison for a borrower with a typical federal loan load:

Note: IBR 20-year calculation assumes steady income and does not account for income growth. PSLF scenario assumes qualifying employer throughout. Calculations are illustrative; use the FSA Loan Simulator for your specific numbers.

For a deeper dive into PSLF and other forgiveness pathways, see our student loan forgiveness guide.

Frequently Asked Questions