Quick Answer
What are income-driven repayment plans? IDR plans cap your federal student loan payments at 5-20% of your discretionary income and forgive any remaining balance after 20-25 years of qualifying payments. The go-forward plans in 2026 are IBR and the new RAP (launched July 1, 2026); SAVE was vacated by a federal court in March 2026 and is being wound down, and PAYE/ICR are being phased out by July 2028.
Key Takeaways
- IBR and RAP are the go-forward choices in 2026 -- RAP opened for enrollment July 1, 2026 and is PSLF-qualifying
- IDR forgiveness is now taxable for balances forgiven after December 31, 2025
- The SAVE plan is terminated -- its rule was vacated March 10, 2026, and remaining enrollees are being moved to other plans
- PAYE and ICR are ending -- both will close to new enrollees by July 2028
- The new Repayment Assistance Plan (RAP) launched July 1, 2026 with 1-10%-of-AGI payments and a 30-year forgiveness timeline
- All IDR plans require annual income recertification to maintain your payment amount
What Are Income-Driven Repayment Plans?
Income-driven repayment (IDR) plans are federal student loan repayment options that set your monthly payment based on your income and family size rather than your loan balance. They are designed for borrowers whose standard 10-year repayment payments would be unaffordable relative to their earnings.
There are currently four IDR plans available to federal student loan borrowers:
- SAVE (Saving on a Valuable Education) -- replaced REPAYE in 2023; terminated: its rule was vacated by a federal court on March 10, 2026 and the plan is being wound down (no enrollment; remaining borrowers are being transitioned off)
- PAYE (Pay As You Earn) -- available but being phased out by July 2028
- IBR (Income-Based Repayment) -- fully available; the most reliable option in 2026
- ICR (Income-Contingent Repayment) -- available but being phased out by July 2028
Each plan uses a formula tied to your discretionary income (your adjusted gross income minus a percentage of the federal poverty guideline) to determine what you pay each month. After 20 or 25 years of qualifying payments, any remaining balance is forgiven.
Federal loans only
IDR plans are exclusively for federal student loans (Direct Loans, FFEL, Perkins). Private student loans from banks or credit unions are not eligible. If you have private loans, contact your lender about hardship options or consider refinancing.
IDR Plans Comparison: SAVE vs PAYE vs IBR vs ICR
The following table compares all four income-driven repayment plans across the key factors that affect your monthly payment, forgiveness timeline, and eligibility.
| Feature | SAVE | PAYE | IBR | ICR |
|---|---|---|---|---|
| Current Status | Blocked | Ending 2028 | Available | Ending 2028 |
| Payment (% of Discretionary Income) | 5% (undergrad) / 10% (grad) | 10% | 10% (new) / 15% (old) | 20% |
| Discretionary Income Threshold | 225% of poverty line | 150% of poverty line | 150% of poverty line | 100% of poverty line |
| Forgiveness Timeline | 20 years (undergrad) / 25 years (grad) | 20 years | 20 years (new) / 25 years (old) | 25 years |
| Payment Cap | No cap | Standard 10-year amount | Standard 10-year amount | No cap |
| Interest Subsidy | No unpaid interest accrual | Subsidized loans: first 3 years | Subsidized loans: first 3 years | None |
| Eligible Loan Types | Direct Loans only | Direct Loans only | Direct + FFEL | Direct Loans only |
| Borrower Eligibility | Any Direct Loan borrower | New borrower after Oct 1, 2007; first loan after Oct 1, 2011 | Must demonstrate partial financial hardship | Any Direct Loan borrower |
| Spouse Income (Married Filing Separately) | Excluded | Excluded | Excluded | Included regardless |
| PSLF Eligible | Yes | Yes | Yes | Yes |
| Parent PLUS Eligible | No | No | No | Yes (after consolidation) |
Key distinctions to note:
- "New borrowers" for IBR means you had no outstanding balance on a Direct Loan or FFEL Loan on July 1, 2014, and received a new loan on or after that date. New borrowers pay 10% with 20-year forgiveness; older borrowers pay 15% with 25-year forgiveness.
- "New borrowers" for PAYE means you had no outstanding balance on a Direct Loan or FFEL Loan on October 1, 2007, and received a Direct Loan disbursement on or after October 1, 2011.
- ICR is the only IDR option for Parent PLUS Loans (after consolidation into a Direct Consolidation Loan).
Side-by-side comparison of the four legacy IDR plans. IBR is the established go-forward option in 2026 (alongside the new RAP). SAVE is shown for historical comparison -- its rule was vacated in March 2026 -- and PAYE/ICR are being phased out.
How IDR Payments Are Calculated
Understanding how your IDR payment is calculated helps you predict your monthly cost and plan ahead. Every IDR plan follows the same basic formula, though the specific percentages and thresholds differ.
The IDR Payment Formula
Your monthly payment is determined by three variables:
- Your Adjusted Gross Income (AGI) -- from your most recent federal tax return
- The poverty guideline threshold -- a multiplier of the federal poverty line for your family size (100%, 150%, or 225% depending on plan)
- The payment percentage -- the share of discretionary income you pay (5%, 10%, 15%, or 20%)
The formula:
Annual Payment = (AGI - Poverty Threshold) x Payment Percentage
Monthly Payment = Annual Payment / 12
2026 Federal Poverty Guidelines (48 Contiguous States)
| Family Size | Poverty Guideline | 150% (IBR/PAYE) | 225% (SAVE) |
|---|---|---|---|
| 1 | $15,960 | $23,940 | $35,910 |
| 2 | $21,640 | $32,460 | $48,690 |
| 3 | $27,320 | $40,980 | $61,470 |
| 4 | $33,000 | $49,500 | $74,250 |
Source: Department of Health and Human Services, 2026 poverty guidelines (Federal Register notice 2026-00755). Alaska and Hawaii have higher thresholds.
Example: Calculating Your IBR Payment
Borrower Profile
- Adjusted Gross Income (AGI) -- $50,000
- Family Size -- 1 person
- 150% of Poverty Guideline -- $23,940
- Discretionary Income -- $26,060
- IBR (New Borrower) = 10% -- $2,606/year
- Monthly Payment -- $217
Same Borrower on Different Plans
To illustrate how dramatically plans differ, here is what the same borrower ($50,000 AGI, single, $60,000 loan balance at 6.0% interest) would pay each month:
| Plan | Monthly Payment | vs. Standard Plan ($666/mo) |
|---|---|---|
| SAVE (undergrad) | $59 | Save $607/month |
| PAYE | $217 | Save $449/month |
| IBR (new borrower) | $217 | Save $449/month |
| IBR (old borrower) | $326 | Save $340/month |
| ICR | $567 | Save $99/month |
| Standard 10-Year | $666 | -- |
Run your own numbers
These examples use simplified calculations. Your actual payment depends on your exact AGI, family size, loan type, and state. Use our student loan calculator to see personalized estimates.
Who Qualifies for Each IDR Plan?
Eligibility for IDR plans depends on your loan type, when you borrowed, and in some cases whether you can demonstrate financial hardship. Here is a breakdown of each plan's requirements.
IBR (Income-Based Repayment) -- Most Accessible in 2026
- Loan types: Direct Loans and FFEL Program Loans
- Requirement: Must demonstrate a "partial financial hardship" -- meaning your IBR payment would be less than the standard 10-year payment
- New vs. old borrowers: If you had no loan balance on July 1, 2014, you qualify for the newer, more generous terms (10% / 20 years). Otherwise, you use the original terms (15% / 25 years).
- Best for: Most borrowers in 2026, especially those with older FFEL loans who do not want to consolidate
PAYE (Pay As You Earn) -- Closing to New Enrollees by 2028
- Loan types: Direct Loans only
- Requirement: Must be a "new borrower" -- no outstanding Direct/FFEL balance on October 1, 2007, AND received a new Direct Loan disbursement on or after October 1, 2011
- Must demonstrate partial financial hardship
- Best for: Borrowers who already qualify and are enrolled, since PAYE offers 10% payments with a 20-year timeline
SAVE (Saving on a Valuable Education) -- Currently Blocked
- Loan types: Direct Loans only
- Requirement: Any Direct Loan borrower (no financial hardship test)
- Status: Terminated. Blocked by federal courts in 2024; rule vacated March 10, 2026. Remaining enrollees are being transitioned to other plans through late 2026.
- Best for: Would have been the best plan for undergraduate borrowers due to the 5% payment rate. Currently unavailable for new enrollment.
ICR (Income-Contingent Repayment) -- Closing to New Enrollees by 2028
- Loan types: Direct Loans only
- Requirement: Any Direct Loan borrower (no financial hardship test)
- Special note: Only IDR plan available for consolidated Parent PLUS Loans
- Best for: Parents who consolidated PLUS Loans and need an income-driven option
Check your loan types first
Before applying for any IDR plan, log in to StudentAid.gov (opens in new tab) to verify which types of federal loans you hold. If you have FFEL loans and want access to PAYE or SAVE, you will need to consolidate them into a Direct Consolidation Loan first.
SAVE Plan Changes in 2025-2026: What You Need to Know
The SAVE plan has been at the center of student loan policy changes over the past two years. Here is the full timeline and what it means for borrowers.
Timeline of SAVE Plan Events
| Date | Event |
|---|---|
| July 2023 | SAVE plan announced as replacement for REPAYE, offering lower payments (5% for undergrad loans) and a higher income exemption (225% of poverty line) |
| 2024 | Federal courts block SAVE plan implementation following legal challenges from multiple states |
| August 2025 | Interest begins accruing on SAVE forbearance balances after a grace period ends |
| Late 2025 | One Big Beautiful Bill Act passes, formally eliminating SAVE, PAYE, and ICR with a July 2028 deadline |
| March 2026 | SAVE rule formally vacated by federal court (March 10, 2026); wind-down begins |
| July 2026 | RAP opens for enrollment (July 1); servicers begin notifying remaining SAVE borrowers to choose a new plan within 90 days |
| July 2028 | SAVE, PAYE, and ICR formally closed. Only IBR and RAP remain for new enrollees. |
If You Are Currently in SAVE Forbearance
Following the March 2026 vacatur, remaining SAVE borrowers are being moved off the plan -- servicer notices that began July 1, 2026 give 90 days to choose a new plan before default placement on the Standard plan. Here is what you should consider:
- You are not required to make payments during forbearance, but interest has been accruing on forbearance balances since August 2025
- Forbearance time does not count toward IDR forgiveness or PSLF qualifying payments
- Consider switching to IBR if you want payments to count toward forgiveness. Contact your loan servicer to request the change.
- Voluntary payments during forbearance can reduce interest capitalization but typically do not count as qualifying payments for forgiveness
SAVE forbearance does not count toward forgiveness
If you are pursuing PSLF or IDR forgiveness, every month in SAVE forbearance is a month that does not count toward your payment requirement. Switching to IBR or RAP means your payments start counting again immediately.
The Repayment Assistance Plan (RAP)
The One Big Beautiful Bill Act of 2025 created a new income-driven repayment option called the Repayment Assistance Plan (RAP), now live. Key details:
- Launch date: July 1, 2026 -- open for enrollment at StudentAid.gov
- Forgiveness timeline: 30 years (longer than the 20-25 years under current IDR plans)
- Payment calculation: 1-10% of adjusted gross income on a sliding scale, minus $50 per dependent, with a $10 monthly minimum
- Transition: After July 2028, RAP and IBR will be the only IDR options for new enrollees
The longer forgiveness timeline under RAP means borrowers would pay for a full decade longer than under PAYE or IBR before receiving forgiveness. Combined with the fact that IDR forgiveness is now taxable, this makes it important to carefully evaluate whether IDR forgiveness or accelerated payoff makes more financial sense for your situation.
How to Apply for an Income-Driven Repayment Plan
Applying for an IDR plan is free and can typically be completed online in 10-15 minutes. Follow these steps:
Step-by-Step Application Process
- Check your loan details at StudentAid.gov (opens in new tab)
Log in to confirm your loan types, balances, and current servicer. This determines which IDR plans you are eligible for.
- Gather your income information
You will need your most recent Adjusted Gross Income (AGI) from your federal tax return. If you consent, the system can retrieve your tax data automatically from the IRS.
- Submit the IDR Plan Request online
Go to StudentAid.gov/idr (opens in new tab) and complete the Income-Driven Repayment Plan Request form. You can select a specific plan or let your servicer place you on the plan with the lowest payment.
- Continue making current payments while your application is processed
Processing typically takes 2-4 weeks. If you are switching from one plan to another, keep paying under your current plan until you receive confirmation of the change.
- Recertify your income annually
You must recertify your income and family size every year. If you miss the deadline, your payment may temporarily increase to the standard amount, and any unpaid interest may capitalize (be added to your principal).
What Happens If You Miss Annual Recertification?
Missing your annual recertification deadline has consequences:
- Your monthly payment increases to the amount under the Standard Repayment Plan
- Any outstanding accrued interest capitalizes, increasing your total balance
- You can reapply for IDR, but it may take several weeks to process
- Months at the higher payment still count toward forgiveness, but you will pay more than necessary
Set a calendar reminder
Mark your recertification date in your calendar and submit 1-2 months early. Your servicer will send a reminder, but do not rely on it alone. Late recertification is one of the most common and costly mistakes IDR borrowers make.
IDR Forgiveness: Timelines, Taxes, and Planning
The promise of loan forgiveness is the primary reason many borrowers choose IDR plans. But forgiveness works differently depending on the plan and your situation.
Forgiveness Timelines by Plan
| Plan | Undergrad Loans | Graduate Loans |
|---|---|---|
| SAVE | 20 years | 25 years |
| PAYE | 20 years | 20 years |
| IBR (new borrower) | 20 years | 20 years |
| IBR (old borrower) | 25 years | 25 years |
| ICR | 25 years | 25 years |
| RAP (new) | 30 years | 30 years |
The IDR Forgiveness Tax Bill
Starting January 1, 2026, any student loan balance forgiven through IDR is treated as taxable ordinary income. The temporary tax exemption that applied from 2021 through 2025 under the American Rescue Plan has expired.
Here is what that could mean financially:
Example: Tax Impact of IDR Forgiveness
- Balance forgiven after 20 years -- $80,000
- Your income that year -- $65,000
- Taxable income with forgiveness -- $145,000
- Estimated federal tax bracket -- 24%
- Approximate tax bill on forgiven amount -- $19,200
How to prepare for the tax bill:
- Start setting aside money in a dedicated savings account years before your forgiveness date
- Consider whether an IRS installment agreement could work if you cannot pay the full tax bill at once
- Consult a tax professional to project your specific liability
- If the tax bill makes IDR forgiveness unattractive, consider accelerating your loan payoff instead
PSLF forgiveness remains tax-free
Public Service Loan Forgiveness (PSLF) is permanently tax-free under federal law. If you work in public service, the PSLF route through our forgiveness guide may save you both time (10 years vs. 20-25) and taxes.
Which IDR Plan Should You Choose?
With four plans (and a fifth launching soon), selecting the right IDR option depends on your loan type, career path, and financial goals. Here are the recommended paths for common borrower situations.
Choose IBR if:
- You want the most stable, available option in 2026
- You are pursuing PSLF and need qualifying payments to count
- You have FFEL loans and do not want to consolidate
- You are a new borrower (post-July 2014) and want the 10% / 20-year terms
Stay on PAYE if:
- You are already enrolled and have been making payments toward forgiveness
- You qualify as a "new borrower" under PAYE's stricter definition
- You prefer the payment cap at the Standard Plan amount
Choose ICR if:
- You consolidated Parent PLUS Loans and need an income-driven option
- No other IDR plan is available for your loan type
Choose RAP if:
- Your payment under RAP's 1-10%-of-AGI formula is lower than under IBR -- compare both before committing
- You value RAP's interest subsidy (unpaid accrued interest is waived while you make your calculated payment)
- You accept the 30-year forgiveness timeline (longest of any plan); RAP is PSLF-qualifying, so PSLF-track borrowers reach forgiveness at 120 payments either way
Consider paying off your loans instead of IDR if:
- Your debt-to-income ratio is manageable
- You can pay off your loans in less than 10 years
- The projected tax bill on IDR forgiveness would offset the savings
- You value being debt-free over lower monthly payments
IDR Plans and Public Service Loan Forgiveness (PSLF)
If you work for a qualifying public service employer, combining an IDR plan with PSLF can be the fastest and most valuable path to loan forgiveness.
Why IDR + PSLF Is the Best Combination
- Faster forgiveness: 10 years (120 payments) instead of 20-25 years
- Tax-free: PSLF forgiveness is permanently exempt from federal income tax
- Lower payments: IDR plans keep your monthly payment affordable while you work toward PSLF
Which IDR Plan for PSLF Borrowers?
All four IDR plans qualify for PSLF, but the best choice maximizes forgiveness by minimizing your payment:
| Scenario | Recommended Plan | Reason |
|---|---|---|
| Most borrowers in 2026 | IBR | Fully available; 10% payments for new borrowers |
| Already on PAYE | Stay on PAYE | Same 10% rate; keep existing payment count |
| Parent PLUS consolidation | ICR | Only IDR option for Parent PLUS |
| Still on SAVE (wind-down) | Switch to IBR or RAP | Start counting payments toward PSLF again |
For a detailed walkthrough of PSLF requirements, timelines, and application steps, see our complete student loan forgiveness guide.
Frequently Asked Questions About IDR Plans
In 2026, the choice for most borrowers comes down to IBR (Income-Based Repayment) or the new Repayment Assistance Plan (RAP), which opened for enrollment on July 1, 2026. The SAVE plan, which offered the lowest payments at 5% of discretionary income for undergraduate loans, had its rule vacated by a federal court in March 2026 and is being wound down. PAYE remains available to borrowers already using it, but closes by July 2028. For most borrowers, IBR or RAP is the recommended choice -- compare your payment under both.
IDR payments are calculated as a percentage of your discretionary income. Discretionary income equals your Adjusted Gross Income (AGI) minus 150% of the federal poverty guideline for your family size (225% under SAVE). For example, if you earn $50,000 and 150% of the poverty guideline for a single person is $23,940, your discretionary income is $26,060. On IBR for new borrowers, your annual payment would be 10% of that, or $2,606 -- about $217 per month.
Yes. As of January 1, 2026, any student loan balance forgiven through IDR plans is treated as taxable income. The temporary tax exemption that applied from 2021 through 2025 has expired. If you have $80,000 forgiven under IDR, you would owe federal income taxes on that amount. PSLF forgiveness, by contrast, remains permanently tax-free.
The SAVE plan (Saving on a Valuable Education), which replaced REPAYE in 2023, was blocked by federal courts in 2024, and its rule was formally vacated on March 10, 2026, ending the plan. Enrolled borrowers spent much of the interim in administrative forbearance with interest accruing. Beginning July 1, 2026, servicers are notifying remaining SAVE borrowers to choose a new plan -- typically IBR or the new RAP -- within 90 days, after which they are moved to the Standard plan. The One Big Beautiful Bill Act of 2025 also eliminates PAYE and ICR by July 2028.
Yes, you can generally switch between IDR plans. If you are pursuing PSLF, switching between qualifying IDR plans does not reset your qualifying payment count. For standard IDR forgiveness (20-25 years), your forgiveness timeline typically continues from when you first entered repayment, though the specific timeline depends on the plan and your loan disbursement dates.
Parent PLUS Loans are not directly eligible for most IDR plans. However, if you consolidate a Parent PLUS Loan into a Direct Consolidation Loan, you can enroll in ICR (Income-Contingent Repayment), which is currently the only IDR option for consolidated Parent PLUS Loans. ICR requires payments of 20% of discretionary income with forgiveness after 25 years.
The Repayment Assistance Plan (RAP) is a new income-driven repayment option created by the One Big Beautiful Bill Act of 2025. It launched on July 1, 2026 and is open for enrollment at StudentAid.gov. Payments are calculated from adjusted gross income on a 1-10% sliding scale (minus $50 per dependent, $10 monthly minimum), and RAP features a 30-year (360-payment) forgiveness timeline -- longer than the 20-25 year timelines of older plans. RAP is PSLF-qualifying. After July 2028, only IBR and RAP will remain as available IDR plans for new enrollees.
You can apply online at StudentAid.gov (opens in new tab) using the IDR Plan Request form. You will need your federal tax information (AGI and family size). Your loan servicer will process the application and notify you of your new payment amount. You must recertify your income and family size annually to stay on the plan.
Sources
- Federal Student Aid -- Income-Driven Repayment Plans (opens in new tab)
- Federal Student Aid -- Public Service Loan Forgiveness (opens in new tab)
- Consumer Financial Protection Bureau -- Repay Student Debt (opens in new tab)
- HHS ASPE -- Federal Poverty Guidelines (opens in new tab)
- IRS Publication 970 -- Tax Benefits for Education (opens in new tab)
- H.R.1 -- One Big Beautiful Bill Act (119th Congress) (opens in new tab)
Important Disclaimer
Disclaimer: This content is for educational and informational purposes only and does not constitute financial, tax, or legal advice. Individual circumstances vary, and you should consult with a qualified professional before making financial decisions. Student loan rules change frequently. This guide reflects information as of August 2026. For the most current information, visit StudentAid.gov (opens in new tab) or consult with a certified student loan counselor. While we strive for accuracy, laws and regulations change frequently. This is not financial advice.
Content reviewed by Mark at Markco Labs. Learn more about our accuracy standards.