1. Introduction
Quick Answer: Most guides explain income-driven repayment as a list of plan names. That list changed twice in 18 months, so names alone are useless. What matters is your payment, whether your balance falls, and which clock you are on. DollarVisor runs those three numbers.
Every article on this topic opens the same way: five plans, five acronyms, a link to an application. That was already confusing before 2026. Now it is out of date, because SAVE is gone, RAP is live, and two more plans have an expiry date.
This guide does something narrower. It shows what you actually pay under each surviving plan at real income levels, how your state and household size move the IBR number, and what the forgiven balance costs you at tax time.
A short walkthrough before the numbers.
2. What is income-driven repayment, and how does it work?
Quick Answer: Income-driven repayment sets your federal student loan payment from your income and household size rather than your balance. You recertify your income every year, the payment moves with it, and any balance left after 20 to 30 years of qualifying payments is forgiven. Only federal loans qualify.
The mechanics are the same across every plan in the family, which servicers label IDR. You report your adjusted gross income and household size, the servicer applies a formula, and you get a payment good for twelve months. Miss the annual recertification and the payment jumps back to a standard amount.
Three things separate the plans from one another:
- The income the formula uses. Older plans use discretionary income, meaning your income minus a poverty-line floor. RAP uses your full adjusted gross income.
- What happens to unpaid interest. Some plans let it pile up. RAP waives it each month you pay on time.
- How long the clock runs. Twenty years, 25 years, or 30 years, depending on the plan and when you first borrowed.
That third item is where borrowers lose the most money. According to the Department of Education, three out of four borrowers in an income-driven plan owed more than they originally borrowed six years into repayment. A low payment is not the same as progress, which is the same distinction we draw in our loans hub.
Not sure a low payment is helping you?
The same ratio lenders use to size your payment tells you whether the loan is still affordable at all. Check your debt-to-income ratio →
3. Which income-driven repayment plans still exist in 2026?
Quick Answer: Two plans survive: the Repayment Assistance Plan, live since July 1, 2026, and Income-Based Repayment. SAVE ended by court order on March 10, 2026. PAYE and ICR close no later than July 1, 2028. If you borrow on or after July 1, 2026, RAP is your only income-driven option.
Here is the state of play, and it is worth being precise because each line carries a deadline:
| Plan | Status in August 2026 | Forgiveness clock |
|---|---|---|
| RAP | Open to all eligible Direct Loan borrowers | 360 qualifying payments (30 years) |
| IBR | Open; only plan that accepts FFEL loans | 20 or 25 years, by first borrowing date |
| SAVE | Ended March 10, 2026 by court order | None: borrowers must switch |
| PAYE and ICR | Closing no later than July 1, 2028 | Payment credit carries to your next plan |
If you were on SAVE, your servicer notifies you between July 1 and August 15, 2026, and you get 90 days from that notice to pick a replacement. Borrowers whose loans predate July 1, 2026 and who sit on a closing plan have until July 1, 2028 to choose between RAP, IBR and the new Tiered Standard plan. Some of these routes overlap with the forgiveness programs that are still real.
4. What would you actually pay on RAP?
Quick Answer: RAP charges 1% to 10% of your full adjusted gross income, in $10,000 income bands, divided by 12. Every dependent cuts $50 off the monthly figure and the floor is $10. At $45,000 with no dependents that is $150 a month, whatever you owe.
| Adjusted gross income | Rate | Monthly payment, no dependents | With 2 dependents |
|---|---|---|---|
| $10,000 or less | Flat | $10 | $10 |
| $15,000 | 1% | $13 | $10 |
| $25,000 | 2% | $42 | $10 |
| $35,000 | 3% | $88 | $10 |
| $45,000 | 4% | $150 | $50 |
| $55,000 | 5% | $229 | $129 |
| $65,000 | 6% | $325 | $225 |
| $75,000 | 7% | $438 | $338 |
| $85,000 | 8% | $567 | $467 |
| $95,000 | 9% | $713 | $613 |
| $110,000 | 10% | $917 | $817 |
Source: DollarVisor modeling on the official RAP base payment table, 2026.
Two features do the heavy lifting. Unpaid interest is waived every month you pay on time, so the balance cannot grow. And if your payment does not cut principal by $50, the Department adds a matching principal payment up to $50.
5. RAP vs IBR on the same borrower
Quick Answer: Take a single borrower earning $45,000 with $35,000 at 6.5%. IBR charges $176 a month and the balance still grows. RAP charges $150, waives the shortfall and adds $50 to principal. IBR wins only on the clock: 20 years against 30.
| Feature | IBR (borrowed 2014 or later) | RAP |
|---|---|---|
| Monthly payment | $176 | $150 |
| Income used | 10% of discretionary income | 4% of full AGI at this income |
| Per-dependent cut | Indirect, via household size | $50 each, direct |
| Unpaid interest | Covered on subsidized loans for 3 years only | Waived monthly, indefinitely |
| Balance direction | Grows about $14 a month after year 3 | Falls at least $50 a month |
| Forgiveness clock | 20 years (25 for pre-2014 loans) | 30 years |
| FFEL loans | Eligible | Not eligible |
| Parent PLUS consolidation | Not eligible | Not eligible |
| Tax on forgiven balance | Taxable | Taxable |
Source: DollarVisor modeling on Department of Education and servicer plan rules, 2026.
The honest read: RAP is better if forgiveness is a distant backstop and you want the balance to shrink. IBR is better if you have already banked years of credit and the 20-year mark is genuinely in sight. That is the same trade-off between speed and total cost we work through in snowball versus avalanche.
6. Why your state changes the IBR number but not the RAP one
Quick Answer: IBR subtracts 150% of the federal poverty guideline for your household, and Alaska and Hawaii have higher guidelines than the other 48 states. So the same $60,000 earner pays $301 in Texas and $251 in Alaska. RAP ignores geography entirely.
| State group | Household | Income floor (150% of guideline) | IBR monthly payment |
|---|---|---|---|
| 48 states and DC | 1 person | $23,940 | $301 |
| 3 people | $40,980 | $159 | |
| Alaska | 1 person | $29,925 | $251 |
| 3 people | $51,225 | $73 | |
| Hawaii | 1 person | $27,540 | $271 |
| 3 people | $47,130 | $107 | |
| RAP, all 50 states | 1 or 3 | No floor applied | $250, or $150 with two dependents |
Source: DollarVisor modeling on the 2026 HHS poverty guidelines. Single filer, 10% IBR rate.
Read the bottom row against the rest. A single Alaskan at $60,000 pays about the same on either plan. The same earner in Ohio pays $51 more each month on IBR. And a three-person Alaskan household pays $73 on IBR against $150 on RAP, which flips the answer completely.
Cannot afford either number this month?
A short pause is sometimes the right call, but the two versions cost very different amounts. Compare forbearance and deferment →
7. How common is income-driven repayment now?
Quick Answer: About 13 million borrowers were in an income-driven plan as of March 2026, roughly 44% of the population with a repayment plan. Those plans hold $784 billion, up from $728 billion a year earlier, and now cover 62% of federally serviced repayment balances.
| Measure | Borrowers | Balances | Share |
|---|---|---|---|
| Income-driven plans, year over year | |||
| March 2025 | Not published | $728 billion | 55% |
| March 2026 | ~13.0 million | $784 billion | 62% |
| Rest of the portfolio, March 2026 | |||
| Repaying or delinquent | 17.2 million | $633 billion | 39% |
| In forbearance | 8.4 million | $485 billion | 30% |
| In deferment | 3.6 million | $157 billion | 10% |
| In default | ~9.0 million | $220 billion | 13% |
Source: Federal Student Aid, data through March 31, 2026. Borrowers counted per loan status, so categories overlap.
The default line is the one to sit with. Nine million borrowers now sit in default, up by 1.3 million in a single quarter, while an income-driven plan was available to almost all of them at $10 to $150 a month.
8. Will you owe tax on the forgiven balance?
Quick Answer: Yes, in most cases. A balance forgiven under an income-driven plan after December 31, 2025 counts as ordinary income, because the American Rescue Plan exclusion expired. Public Service Loan Forgiveness, teacher cancellation, and death or disability discharges stay tax-free.
The Taxpayer Advocate Service is direct about the mechanics. Your servicer sends a Form 1099-C, and the forgiven amount goes on that year’s return at your ordinary rate.
Three ways to soften it:
- Start setting money aside years out. You know the discharge year in advance, so the bill is predictable in a way most tax surprises are not.
- Check insolvency. If your debts exceeded your assets when the balance was forgiven, Form 982 can exclude some or all of it.
- Re-check whether PSLF is reachable. Ten tax-free years often beats 30 taxable ones, even at a higher monthly payment.
On a 30-year RAP clock, this is a long way off. If it is closer, the choice between banking cash and killing the balance is a live one, and we price both sides in using savings to pay off debt.
9. How to apply for income-driven repayment
Quick Answer: Apply free at StudentAid.gov with your FSA ID. Approving the IRS data transfer takes the application to roughly ten minutes. Nobody should ever charge you a fee, and a company asking for your FSA login is a scam.
Applying for an income-driven repayment plan step by step
The whole process runs online and costs nothing.
- Confirm what you have. Log in to StudentAid.gov and note your loan types, your servicer, and your current plan. Direct, FFEL and Parent PLUS loans have different options.
- Model both plans. Run RAP and IBR through the official Loan Simulator using your real income and household size. Compare the payment and the payoff year together.
- Start the application. Open the IDR plan request and name the plan you chose.
- Approve the IRS transfer. Consenting to pull your tax data removes the need to upload pay stubs. If your income has dropped since your last return, submit alternative documentation instead.
- Recertify every year. Set a calendar reminder for eleven months out. A missed recertification is the single most common way borrowers lose a low payment.
If your income fell recently, apply straight away rather than waiting for a bill you cannot pay. That is faster and cheaper than the routes in our guide to hardship programs.
Stuck with a payment you cannot make?
Federal loans have exits that private debt does not, and the same logic applies elsewhere. See how to exit a loan you cannot afford →
10. Five mistakes that cost the most
Quick Answer: The expensive errors are not about picking the wrong plan. They are missing recertification, taking a new loan without realizing it locks you into RAP, and refinancing federal debt into a private loan you can never undo.
- Missing the annual recertification. Your payment reverts to a standard amount and unpaid interest can capitalize. One calendar reminder prevents it.
- Taking any new federal loan after July 1, 2026. A single new Direct Loan or consolidation makes RAP your only IDR option, even on old balances.
- Refinancing federal loans privately. A lower rate looks good until you notice you gave up every income-driven plan, PSLF, and every discharge route, permanently.
- Filing jointly without checking. On both plans a joint return pulls your spouse’s income into the formula. Filing separately sometimes cuts the payment more than it costs in tax.
- Waiting out the 2028 deadline. Borrowers on a closing plan who never choose get moved to a standard schedule, not to an income-driven one.
The joint-filing item is worth real arithmetic, because the tax cost and the payment saving rarely move together. The same care applies to how a payment change lands on your credit and your true cost of borrowing.
11. Conclusion
Quick Answer: Income-driven repayment still works, but it is now a two-plan choice with real trade-offs. RAP usually gives the lower payment and a falling balance. IBR gives the shorter clock. Run both numbers on your own income before you enroll.
The plan names will keep changing. The three questions will not: what do I pay this month, is my balance falling, and when does the clock end. Answer those and the acronym sorts itself out.
Model both plans, note your deadline, and put the recertification date in your calendar. More payoff math sits in our loans guides.
12. Frequently Asked Questions
1. What is income-driven repayment?
It is a group of federal repayment plans that set your monthly student loan payment from your income and household size instead of your balance. You recertify each year, and any balance left after 20 to 30 years of qualifying payments is forgiven. Private student loans do not qualify.
2. Which income-driven repayment plan is best in 2026?
For most borrowers, RAP. It usually costs less each month, waives unpaid interest, and adds up to $50 to principal. IBR is better if you have already banked many years toward its 20-year clock, or if you hold FFEL loans, which RAP does not accept.
3. What happened to the SAVE plan?
A court order ended SAVE on March 10, 2026. Servicers notify affected borrowers between July 1 and August 15, 2026, and you then have 90 days to choose a replacement. Payments you already made under SAVE still count toward forgiveness on your new plan.
4. How much is the minimum payment?
On RAP, $10 a month. Anyone earning $10,000 or less pays that flat amount, and dependents can bring a higher-income borrower down to the same floor. IBR has no fixed floor, but a low enough income produces a $0 payment that still counts toward forgiveness.
5. Does income-driven repayment hurt your credit?
No. Enrolling is not a negative event, and on-time payments at a lower amount report the same as any other on-time payment. Missing payments and defaulting damage your credit badly, which is why enrolling early is the protective move.
6. Can I switch plans later?
Usually yes, and the qualifying payments you already made carry across. The exception matters: if you take out a new Direct Loan or consolidate on or after July 1, 2026, RAP becomes your only income-driven option and you cannot move back.
Want both plans run on your own numbers?
Send us your income, household size, state and loan types, and we will show the monthly payment, the balance direction and the payoff year on each plan side by side. No lender pays for placement in our rankings, and the comparison is free.
This article is for general information and is not financial or legal advice. See our disclaimer.