Income-Driven Repayment in 2026: Which Plans Exist and When Forgiveness Happens

Income-driven repayment (IDR) sets your federal student loan payment as a percentage of your income rather than a fixed amount based on what you borrowed — and after a set number of years, whatever balance remains is forgiven. The short answer most people are looking for: forgiveness takes 20 years on PAYE and on IBR for newer borrowers, 25 years on older IBR and ICR, and 30 years on the new Repayment Assistance Plan. The longer answer matters, because the plan lineup was rebuilt in 2026.

What Changed in 2026

The SAVE plan is gone. Courts found it unlawful, and the Department of Education began directing the roughly 7.5 million borrowers enrolled in it to exit and choose a legal repayment plan, giving them 90 days to do so. If you were on SAVE and haven't picked a new plan, that decision is now time-sensitive rather than optional.

In its place, a new income-driven plan called the Repayment Assistance Plan (RAP) became available on July 1, 2026, alongside a new tiered standard plan. Two older plans are also being retired: PAYE and ICR close no later than July 1, 2028. Once the transition settles, IBR and RAP are the two income-driven plans that remain.

When IDR Forgiveness Actually Happens

This is the part borrowers most often get wrong, because the timeline depends entirely on which plan you're on and, for IBR, when you first borrowed.

20-Year Forgiveness

PAYE forgives the remaining balance after 20 years of qualifying payments at 10% of discretionary income. IBR also forgives after 20 years — but only for borrowers who were new to federal borrowing on or after July 1, 2014, who pay 10% of discretionary income. This is the fastest standard IDR forgiveness timeline available, and it's why 20 years is the number most commonly quoted.

25-Year Forgiveness

Borrowers who took out their first federal loans before July 1, 2014 fall under the older version of IBR: 15% of discretionary income, with forgiveness after 25 years rather than 20. ICR also runs on a 25-year timeline at 20% of discretionary income, though ICR is being phased out by July 2028.

30-Year Forgiveness

RAP, the new plan, forgives after 360 qualifying monthly payments — 30 years — regardless of whether the debt is from undergraduate or graduate study. That's a longer road to forgiveness than the plans it replaces, which is the main tradeoff borrowers should understand before assuming the newest plan is automatically the best one.

How the Repayment Assistance Plan Works

RAP calculates your payment as 1% to 10% of your adjusted gross income, rising with income and capping at 10% for borrowers earning above roughly $100,000. There's a floor of $10 per month no matter how low your income is, and each qualifying dependent reduces the monthly payment by $50 — though never below that $10 minimum.

RAP's more meaningful feature is what it does to your balance. Any monthly interest your required payment doesn't cover is waived, so unpaid interest can't inflate what you owe. And if your payment reduces principal by less than $50 in a month, the government contributes the difference, guaranteeing the balance falls by at least $50. For borrowers whose balances have been growing despite years of payments, that structural change can matter more than the monthly number itself.

Who Has a Choice and Who Doesn't

If your first loan was disbursed on or after July 1, 2026, RAP is the only income-driven plan available to you. If you have older loans, you can move to RAP or stay on your current plan for as long as that plan continues to exist — which, for PAYE and ICR, means until 2028 at the latest. Borrowers on IBR can stay put indefinitely.

How Discretionary Income Is Calculated

For IBR, discretionary income means your adjusted gross income minus 150% of the federal poverty guideline for your family size and state. Someone single earning $45,000, against a 150% poverty threshold of roughly $23,500, has about $21,500 in discretionary income — so a 10% IBR payment works out to roughly $2,150 a year, or about $179 a month. RAP works differently: it applies its percentage to your full AGI rather than to discretionary income, which is why comparing the two by percentage alone is misleading.

The Tax Bill Nobody Plans For

Forgiveness under a standard IDR plan is generally treated as taxable income at the federal level. A temporary exemption applied to discharges through the end of 2025; absent new legislation extending it, a borrower whose $60,000 balance is forgiven can face a tax bill on that amount in the year of discharge. Because forgiveness arrives 20 to 30 years out, this is worth setting money aside for well in advance rather than discovering at the finish line. PSLF is the significant exception — it's tax-free.

PSLF: The 10-Year Exception

If you work full-time for a government agency or a qualifying nonprofit, Public Service Loan Forgiveness discharges your remaining balance after 120 qualifying payments — 10 years — and does so tax-free. You must be on an income-driven plan for those payments to count. For anyone eligible, PSLF is dramatically better than waiting two or three decades for standard IDR forgiveness, and it's worth organizing your career and repayment plan around if public service is realistic for you.

How to Apply or Switch Plans

1. 1Log in at studentaid.gov with your FSA ID
2. 2Use the Loan Simulator to compare what each available plan would cost you monthly and in total
3. 3Check your first disbursement date — it determines whether older plans are open to you at all
4. 4Apply for your chosen plan and submit income documentation
5. 5Recertify your income and family size every year, or your payment can jump to the standard amount

When IDR Is Not the Best Choice

If your balance is modest relative to your income and you can afford standard payments, paying aggressively on a 10-year timeline saves far more in interest than stretching payments across decades to reach forgiveness you may never actually benefit from. IDR earns its keep when your balance is large relative to income, when your income is genuinely unstable, or when you're pursuing PSLF.