The Saving on a Valuable Education (SAVE) plan was created in 2023 as the most generous income-driven repayment option ever offered. It is now being dismantled. On March 10, 2026, the U.S. Court of Appeals for the 8th Circuit vacated the rule that created SAVE, finding that the Department of Education had exceeded its statutory authority. On March 27, 2026, the Department issued a public policy announcement describing how the transition will work for the roughly 7.5 million affected borrowers (Department of Education press release: “U.S. Department of Education Announces Next Steps for Borrowers Enrolled in the Unlawful SAVE Plan”). Borrower-specific transition notices from individual loan servicers are scheduled to begin going out July 1, 2026, that is when each borrower’s 90-day clock starts, not the March 27 announcement date.
If you were enrolled in SAVE, your loans are still in administrative forbearance, but interest has been accruing since August 1, 2025. That accrual is not retroactive, interest charged covers August 2025 forward, not the prior forbearance period. Confirm your specific account status at studentaid.gov/announcements-events/idr-court-actions before assuming a balance figure.
What you need to do: and when
Starting July 1, 2026, federal loan servicers begin issuing transition notices to SAVE borrowers (per the Department of Education March 27, 2026 announcement). From the date you receive your notice, the announcement guarantees at least 90 days to select a new repayment plan. The exact deadline will be in the notice itself.
If you do nothing, your servicer will automatically enroll you in the Standard Repayment Plan or the new Tiered Standard Plan, per the Department of Education’s March 27, 2026 announcement. Auto-enrollment is rarely the best option, your payment is set by formula rather than your income or strategy.
The reconciliation law signed July 4, 2025 (P.L. 119-21, sometimes called the One Big Beautiful Bill Act) also requires that SAVE be eliminated entirely by July 1, 2028. Anyone still enrolled on that date is automatically moved to a different plan.
Your alternatives
After July 1, 2026, the available plans depend on your loan disbursement dates. Most borrowers will see five primary options. The right choice depends on your income, balance, and whether you’re pursuing Public Service Loan Forgiveness (PSLF).
| Plan | Payment formula | Term | Forgiveness |
|---|---|---|---|
| Repayment Assistance Plan (RAP) | 1–10% of AGI, $10 minimum, $50 reduction per dependent | 30 years | Yes, after 360 qualifying payments |
| Tiered Standard Plan | Fixed monthly payment based on balance, $50 minimum | 10–25 years | None |
| Standard Repayment Plan | Fixed monthly payment | 10 years | None |
| Income-Based Repayment (IBR) | 10–15% of discretionary income | 20 or 25 years | Yes |
| Income-Contingent Repayment (ICR) | Lesser of 20% of discretionary income or a 12-year fixed-rate equivalent adjusted for income | 25 years | Yes |
PAYE remains available for some borrowers depending on disbursement date and prior plan history. Plan availability for any specific borrower is shown in the studentaid.gov dashboard. The mechanics summarized in this table draw on Federal Student Aid plan documentation and Congressional Research Service paper IF13075 on RAP.
How RAP works
The Repayment Assistance Plan is the new income-driven plan that takes the place of SAVE for borrowers who want an IDR option after July 1, 2026. Per Congressional Research Service paper IF13075 on RAP, two structural changes matter:
- Total AGI replaces discretionary income. Older IDR plans calculated payments as a percentage of discretionary income, your AGI minus a poverty-line buffer. RAP uses your full AGI and applies a sliding 1–10% rate based on income brackets, with a minimum $10 monthly payment.
- Forgiveness moves from 20–25 years to 30 years. RAP requires 360 qualifying payments before any remaining balance is forgiven.
RAP includes an interest subsidy: if your monthly payment is less than the interest accruing on your loan, the unpaid interest is not added to your balance. This prevents the negative amortization that crushed many older IDR enrollees. Each eligible dependent reduces your monthly payment by $50.
For PSLF borrowers, RAP payments count toward the 120-payment PSLF threshold. The Department of Education revised the PSLF buyback formula on March 31, 2026 for non-qualifying months on or after July 1, 2024, the practical effect for many borrowers buying back months spent in SAVE administrative forbearance is a higher buyback cost than under the previous formula. Run the specific numbers with your servicer before relying on a buyback estimate.
How the Tiered Standard Plan works
The Tiered Standard Plan is fixed-payment, not income-driven. Your loan balance sets the term:
| Outstanding balance | Term |
|---|---|
| Under $25,000 | 10 years |
| $25,000–$49,999 | 15 years |
| $50,000–$99,999 | 20 years |
| $100,000 and above | 25 years |
There is no income recertification, no payment cap based on earnings, and no forgiveness at the end. Higher balances get longer terms and lower monthly payments, but more total interest.
Choosing between RAP, Tiered Standard, IBR, and the original Standard
Some rules of thumb based on the new structure:
- Pursuing PSLF? RAP, IBR, and ICR are all qualifying IDR plans. RAP applies to all federal Direct Loans and is the only IDR plan available for new loans first disbursed on or after July 1, 2026. IBR may produce a lower payment than RAP for some borrowers, compare both before choosing.
- High income, manageable balance? The original 10-year Standard Repayment Plan still costs the least in total interest. If your payment is affordable, this is the fastest path to zero.
- Low income, no PSLF, large balance? RAP’s 30-year forgiveness with the interest subsidy is structurally similar to old IDR plans, just slower. Run the numbers in the studentaid.gov Loan Simulator (note: the Simulator may lag behind the launch of RAP and Tiered Standard, confirm with your servicer if results look off).
- Want a predictable fixed payment without recertifying yearly? Tiered Standard. Just understand it has no forgiveness and no income protection.
What to do this week
- Log into studentaid.gov and confirm which plan you’re currently in. SAVE enrollees are still flagged in the system.
- Open the Loan Simulator at studentaid.gov and run scenarios for RAP, IBR, the Tiered Standard Plan, and Standard Repayment using your current income.
- Write down the payment amount, total interest paid, and forgiveness timeline for each.
- Watch your servicer email and dashboard for the official transition notice starting July 1, 2026.
- If you work for a qualifying PSLF employer, submit the Employment Certification Form before switching plans. The form documents qualifying employment and updates your verified payment count. It doesn’t guarantee disputed months will be preserved, but it creates the paper trail your servicer needs to apply credit correctly during the transition.
Do not wait for the servicer notice to start comparing options. The 90-day window includes time to apply, get processed, and begin a new payment cycle.
Common mistakes during the transition
Letting auto-enrollment happen. The default is the Standard Plan or Tiered Standard. For most low-to-middle-income borrowers, that produces a higher payment than RAP would.
Refinancing federal loans into private debt out of frustration. Refinancing eliminates RAP eligibility, PSLF eligibility, and every other federal protection, permanently. The transition is administratively painful, but the underlying federal protections are still valuable.
Assuming SAVE forbearance still means zero interest. It hasn’t since August 1, 2025. If you’re checking your balance for the first time in a year, expect to see new interest accrued.
Not certifying PSLF employment before the plan switch. Submit an Employment Certification Form now to lock in your current payment count. Switching plans without this paper trail can create reconciliation problems.