SAVE vs. RAP: How student loan repayment is changing in 2026

Federal student loan repayment is in the middle of its biggest shake-up in years. In 2025, the SAVE Plan—the most generous income-driven repayment (IDR) plan to date—was partially blocked by the courts. Then, on July 4, 2025, Congress passed a new student loan forgiveness program called Repayment Assistance Plan (RAP) as part of the “One Big Beautiful Bill”. RAP will launch July 1, 2026 and replace most existing IDR plans.

If you currently have federal student loans, or you’re helping someone who does—here’s what you need to know about the shift from SAVE to RAP, and how to prepare.

What is the SAVE Plan?

The Saving on a Valuable Education (SAVE) Plan was designed to make monthly payments more affordable by tying them to a borrower’s discretionary income. Key features included:

• Payments calculated using income above 225% of the federal poverty line

• Forgiveness after 10–25 years, depending on loan type

• No interest growth if your payment didn’t cover the interest charged

• Full family size counted in payment calculations

• For some borrowers, $0 monthly payments

Status update: A federal court ruling in 2025 blocked major SAVE benefits, including the $0 payment option and faster forgiveness. As of August 1, 2025, interest began accruing again for about 8 million borrowers.

What is the RAP Plan?

The Repayment Assistance Plan (RAP) will replace most IDR plans starting July 1, 2026. Key features:

• $10 minimum payment, regardless of income

• Payments: 1%–10% of Adjusted Gross Income (AGI) depending on income bracket

• $50/month discount per dependent child

• Unpaid interest waived, plus up to $50/month principal reduction

• Forgiveness after 30 years (or 10 years for PSLF)

SAVE vs. RAP: Key differences

Hypothetical loan comparison: Standard vs. SAVE vs. RAP vs. Earnest Refinance

Let’s look at a hypothetical example.

Let’s imagine a borrower with the following profile: They owe $35,000 in federal student loans at a 6.39% interest rate and are earning $50,000 a year as a single filer with no dependents. For refinancing, we’ll use an Earnest rate of 4.5% fixed over 10 years.¹ To calculate income-driven repayment amounts, we’ll use the 2025 federal poverty guideline for a single person in the 48 contiguous states, which is $15,650.

If this borrower is struggling to make monthly payments under the Standard Repayment Plan, RAP would reduce those payments. However, RAP doesn’t lower the total cost—over the life of the loan, this borrower would end up paying more overall. In contrast, refinancing² in this example both reduces the monthly payment compared to the Standard plan and lowers the total cost of the loan.

What happens next?

The transition from SAVE to RAP will roll out over several years, and the rules are different depending on your loan status. Here’s how it breaks down:

If you are a current borrower in SAVE, ICR, or PAYE

• You can stay in your current plan for now—but expect to transition out by between July 2026 and July 2028

• After July 2028, SAVE, ICR, and PAYE will be phased out, and you’ll need to choose a different repayment plan

• Your only income-driven options will be IBR or RAP

Not sure which plan you’re in? Log in to your StudentAid.gov dashboard and check your Loan Details section—your repayment plan will be listed there.

If you take out a new loan or consolidate after July 1, 2026

• You will not be eligible for IBR

• If you can’t afford Standard repayment, your only income-driven option will be RAP

• This also applies if you consolidate existing loans after this date

If you take out a new loan after July 2028

• Only RAP will be available as an income-driven plan (IBR will be closed to new borrowers)

• If you need an income-driven option or plan to pursue PSLF, RAP will be your only federal choice

The takeaway 

The new RAP plan has reduced benefits compared to SAVE—lower income protection, higher payment percentages, and longer timelines to forgiveness. For many borrowers, that means higher monthly payments and more paid over the life of the loan, even if they qualify for forgiveness at the end.

If you’ve been holding off on refinancing because you hoped for sweeping student loan forgiveness, RAP may be your wake-up call.  The reality is, you can’t make the best financial decision for yourself without comparing your options. This is exactly why now is the time to do your due diligence—run the numbers, see what RAP would cost you over time, and compare it to what refinancing could save you both monthly and in total interest. Only then can you choose a repayment path that’s truly in your financial best interest.

The good news? You still have time before RAP becomes your default. Understanding the real costs now puts you in the driver’s seat—whether you choose to stay in the federal system or move to a private lender.

Compare your repayment options with Earnest

Don’t miss an opportunity to lock in a lower rate simply because you were waiting for a forgiveness program that might not give you the relief you expect. Check your Earnest rate³ in minutes with no impact to your credit score.

This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.

¹ Earnest rate of 4.5% fixed over 10 years* is for illustrative purposes only and may not reflect the rate you qualify for. Actual rates and terms may vary based on creditworthiness and other factors. Rate also reflects our .25% Auto Pay discount**. 

*Earnest’s Loan Cost Examples: These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable annual percentage rate ("APR"): A $10,000 loan with a 20-year term (240 monthly payments of $98.10) and a 10.24% APR would result in a total estimated payment amount of $23,543.43. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $98.10) and a 10.24% APR would result in a total estimated payment amount of $23,543.43. Your actual repayment terms may vary.

**You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.

² Please note that you will lose benefits associated with your underlying federal loans, such as federal Income-driven Repayment Plans, Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options, if you refinance into a private loan. If you file for bankruptcy, you may still be required to pay back this loan.

³ Checking your rate generates a soft credit inquiry, which does not affect your credit score. If you proceed with a loan application, a hard credit inquiry will be performed, which may impact your credit score.

Step-by-step math for loan comparison:

Shared assumptions:

• Loan balance: $35,000

• Federal interest rate: 6.39%

• Earnest refinance rate: 4.5% fixed, 10 years

• Annual income: $50,000

• Poverty guideline (single, 48 states, 2025): $15,650

• Single filer, no dependents

• Monthly interest on federal loan = 35,000 × 0.0639 ÷ 12 =1 86.37

1. Standard repayment (10-year)

• Loan: $35,000 at 6.39%

• Monthly interest rate = 0.0639 ÷ 12 = 0.005325

• Payment formula = $394/month

• No interest subsidy; loan paid in full in 10 years

2. SAVE plan

• Poverty multiplier: 225%

• Protected income = 15,650 × 2.25 = 35,212.50

• Discretionary income = 50,000 − 35,212.50 = 14,787.50

• Payment rate (undergrad) = 5%

• Annual payment = 14,787.50 × 0.05 = 739.375

• Monthly payment = ( 739.375 ÷ 12 ≈ 61.61 → $62

• Interest subsidy: 100% unpaid interest covered

  • Payment covers part of interest, government covers remainder.

3. RAP plan (2026)

• Poverty multiplier: 150%

• Protected income = 15,650 × 1.5 = 23,475

• Discretionary income = 50,000 − 23,475 = 26,525

• Payment rate = 10%

• Annual payment = 26,525 × 0.10 = 2,652.50

• Monthly payment = ( 2,652.50 ÷ 12 ≈ 221.04 → $221

• Interest subsidy: 50% unpaid interest covered (if applicable).

4. Earnest refinance

• Loan: $35,000, 4.5% fixed, 10 years

• Monthly interest rate = 0.045 ÷ 12 = 0.00375

• Number of payments = 120

• ≈ 366.63 → $367