If you were on the SAVE plan, a notice from your servicer has probably already arrived. SAVE is being wound down, and as of July 1, 2026 the Repayment Assistance Plan created by the One Big Beautiful Bill Act is the income-driven plan for federal student loans.
There is a clock attached, and defaulting into whatever your servicer selects is the one outcome worth avoiding. Here is what changed and what the decision actually involves.
Why SAVE ended
SAVE spent almost its entire existence in litigation. Courts blocked several of its central features — the interest subsidy and the accelerated forgiveness timeline among them — nearly from launch, and enrolled borrowers spent long stretches parked in interest-free forbearance while the case proceeded.
OBBBA resolved the uncertainty by ending the plan outright. The same legislation also phases out two older plans, Pay As You Earn and Income-Contingent Repayment, by 2028.
The practical effect is a substantial narrowing of the menu. Where borrowers once chose among four or five income-driven plans, new borrowers now have one.
The structural change: AGI, not discretionary income
This is the difference that produces every other difference.
The older plans all compute payments from discretionary income: your adjusted gross income minus 150% of the federal poverty guideline for your household size and state. That subtraction shields a meaningful floor of income before any percentage applies — for a family of four it can exceed $45,000, which is why very low earners frequently owed nothing at all.
RAP removes that step. It applies its percentage to the full AGI, in $10,000 bands. Below $10,000 of AGI the payment is a flat $10 a month. From $10,000 to $20,000 it is 1% of AGI. Each successive band adds a percentage point, reaching 10% for AGI above $100,000.
Because no income is exempted at the bottom, RAP payments begin at income levels where a discretionary-income plan would still be calculating zero.
What the numbers look like
A borrower with $45,000 of AGI and no dependents falls in the 4% band: $1,800 a year, or $150 a month.
The same borrower with two dependents subtracts $100 a month, paying $50.
A borrower at $85,000 of AGI falls in the 8% band: $6,800 a year, or roughly $567 a month.
Above $100,000, the rate is 10% of the entire AGI — so $130,000 produces a $13,000 annual figure, about $1,083 monthly, before any dependent reduction.
The dependent adjustment is a flat $50 per dependent per month regardless of income, which is structurally different from the poverty-guideline approach, where each additional household member raised the exempt amount and therefore the benefit scaled with the calculation.
The genuine improvement: no more growing balances
RAP does something none of the older plans reliably did. If your required payment does not cover the interest that accrued that month, the government covers the difference, so the balance shrinks every month you pay on time.
The complaint this fixes is a familiar one: a borrower on an income-driven plan making every payment for years and watching the balance climb, because the payment never covered accruing interest. That mechanic is gone under RAP.
For borrowers with large balances relative to income — the situation where negative amortization was most severe — this is a substantial change in the shape of the debt over time, independent of the monthly payment amount.
The 90-day clock
Borrowers transitioning off SAVE have a 90-day window from July 1, 2026 to actively select a repayment plan. Miss it and you are enrolled in something automatically, chosen by the servicer rather than by you.
Loans first disbursed on or after July 1, 2026 can use only RAP as their income-driven option. For that cohort there is no comparison to run among income-driven plans — the choice is RAP or a standard or graduated repayment schedule.
If your loans predate the cutoff, other income-driven plans including IBR may still be available to you, which makes actually comparing them worthwhile rather than accepting a default.
What to do this week
Log in to your servicer account and confirm which plan you are currently on and what your transition deadline is. Confirm which of your loans are eligible for RAP — Parent PLUS loans and consolidation loans containing them are not.
Estimate your RAP payment from your AGI band and dependent count, and compare it to your IBR payment if you remain eligible, and to a standard 10-year schedule. IBR caps your payment at the standard 10-year amount; RAP does not have that cap, which matters at higher incomes.
And check whether you are pursuing Public Service Loan Forgiveness, since qualifying-payment treatment under the new plan is the detail most worth confirming directly with your servicer rather than inferring.
One honest caveat: the forgiveness timeline and several administrative details of RAP are still being implemented. Where a specific answer affects a decision, get it from Federal Student Aid or your servicer in writing rather than from any secondary summary, including this one.