Frequently Asked Questions
What happened to the SAVE plan?
The SAVE plan was effectively ended. Borrowers were placed in forbearance. The new RAP (Repayment Assistance Plan) launches July 1, 2026 as its replacement with different terms and less generous benefits.
What is the new RAP plan?
RAP launches July 2026 with payments of 1-10% of AGI (scaled by income), for up to 30 years. Key differences from SAVE: forgiveness is taxable, no undergraduate interest subsidy, and Parent PLUS loans are not eligible.
Is student loan forgiveness taxable in 2026?
Yes. Forgiveness under income-driven plans (IBR, RAP, PAYE) is now taxable as ordinary income. This means you could owe a large tax bill (the "tax bomb") in the year your loans are forgiven. PSLF forgiveness remains tax-free.
Which plan is best for me?
It depends on your income-to-debt ratio. If your balance is less than your annual income, Standard repayment usually costs less total. If your balance is much higher than income, IDR plans with eventual forgiveness may save money even after the tax bomb.
Should I pursue PSLF?
If you work for a qualifying employer, PSLF is almost always the best option. Forgiveness after 10 years (120 payments) is tax-free. Enroll in the IDR plan with the lowest monthly payment to maximize forgiveness.
