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Key Changes in Federal Student Loan Repayment: Coming July 2026

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Key Changes in Federal Student Loan Repayment: Coming July 2026

Several changes to federal student loan repayment, including the end of the Saving on a Valuable Education (SAVE) Plan and the new Repayment Assistance Plan (RAP), go into effect July 1, 2026. Here’s what borrowers should know.

DCWP urges New Yorkers with questions or concerns about their federal student loans to make a FREE appointment at an NYC Financial Empowerment Center. Our professional financial counselors offer free, confidential, personalized guidance to deal with debt including student loans.

End of the Saving on a Valuable Education (SAVE) Plan

The SAVE Plan is no longer available. Starting July 1, 2026, borrowers currently enrolled in the SAVE Plan will begin to receive notifications from their student loan servicer, and will be given 90 days to determine which plan is most affordable for them and switch to a different repayment plan. Borrowers who do not enroll within this 90-day window will be automatically placed into the Standard Plan or the new Tiered Standard Repayment Plan, which generally have higher payments than IDR plans.

Next Steps for SAVE Plan Borrowers:

  • Borrowers should log into their FSA account to check if their current repayment plan is the SAVE Plan.
  • If enrolled in the SAVE Plan, borrowers can use the nonprofit EDCAP’s calculator to estimate their monthly payment under different repayment plans. Many borrowers have had accuracy issues with the Federal Student Aid Loan Simulator.
  • Borrowers should submit an IDR plan application by going to StudentAid.gov/idr and logging in with their FSA ID.

    **Note: Current SAVE borrowers working toward Public Service Loan Forgiveness (PSLF) must switch to another IDR plan to remain eligible for forgiveness.

Major Changes to Repayment Plans

The U.S. Department of Education is introducing a new IDR plan called the Repayment Assistance Plan (RAP), which will be available by July 1, 2026. If you receive a new federal student loan any time starting on this date, the only repayment plans to which you will have access for all of your loans will be the RAP and a new Tiered Standard plan, including loans from before July 1, 2026. Borrowers who do not take out new loans will be able to choose these new plans, but will not be required to use them.

How RAP Works:

  • RAP calculates monthly payments as a percentage of a borrower’s adjusted gross income (AGI), starting at a minimum monthly payment of $10 and rising gradually up to 10% of AGI for higher‑income borrowers, minus $50 per month per dependent.
  • RAP is likely to be the most expensive IDR plan for many borrowers.
  • RAP will only provide cancellation after 30 years of qualifying payments, unlike other IDR plans with shorter repayment periods.
  • RAP will become the only IDR plan available for new federal student loans borrowed on or after July 1, 2026, including new loan consolidations.

Additionally, on July 1, 2028, the Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE) plans will end. Borrowers who do not take out new loans after the July 1, 2026, date discussed above will retain access to ICR and PAYE until July 2028, at which point the Income-Based Repayment (IBR) plan will be the only “old” IDR plan available. These borrowers can also continue to select the original Standard, Graduated, and Extended plans. Borrowers enrolled in ICR or PAYE will be notified in 2028 when they need to select another plan.

Next Steps for Borrowers:

  • Borrowers should log into their FSA account to review their current repayment plan to determine which of the available options is best for them.
  • Starting July 2026, borrowers can use the nonprofit EDCAP’s calculator to estimate their monthly payment under different repayment plans. Many borrowers have had accuracy issues with the Federal Student Aid Loan Simulator.
  • Borrowers should monitor communications from their loan servicer.
  • Borrowers taking out new loans after July 1, 2026, including consolidations of existing loans, should be prepared to actively opt into RAP if they do not want to default into the new Tiered Standard Repayment Plan.

City of New York Resources for Borrowers

Through our NYC Financial Empowerment Centers, you can work with a financial counselor to manage your student loans along with your other expenses and debts. To be eligible, you must be at least 18 and live or work in NYC. Income and immigration status do not matter.

Book an appointment with an NYC Financial Empowerment counselor.

Other Resources for Borrowers

Beware of Student Loan Scams

You NEVER have to pay for free federal and state programs, including loan forgiveness. If you are a victim of a scam, file a complaint online.



06/03/2026