RAP Launches July 1. You Have 90 Days to Switch Plans or Get Auto-Enrolled in Standard Repayment.

Three days ago, on March 27, 2026, federal student loan servicers began sending emails to 7.5 million SAVE Plan borrowers. The subject line was formal but the message was urgent: your current repayment plan is ending. A new one is starting July 1. You have 90 days to choose what comes next. If you don't choose, the government will choose for you. And the government's choice is almost certainly not in your interest.

This is the second major earthquake to hit federal student loan borrowers in eighteen months. The first was the 8th Circuit Court striking down SAVE's legal foundation. The second is this transition to RAP — a new income-driven plan that works differently, calculates payments differently, and has consequences you haven't seen yet.

The good news: RAP is not a disaster. It's actually functional. You can build a long-term repayment strategy around it. But getting there requires action — not confusion, not waiting, not hope that something better comes along. You have until October 1 to move. Here's exactly what you need to know and what to do.

What Just Happened: SAVE's Scheduled Ending

The SAVE Plan didn't get struck down again. Instead, Congress authorized it to end. Under the Working Families Tax Cuts Act, SAVE's legal authority expires on June 30, 2026. On July 1, 2026, the Repayment Assistance Plan takes its place.

This is different from the court challenges that killed SAVE two years ago. This time, Congress explicitly approved the sunset and explicitly authorized RAP as the successor. The Department of Education has been preparing this transition since January. The emails going out now are the official notice. The October 1 deadline is real and non-negotiable.

If you currently pay under SAVE, you are receiving an email from your loan servicer. Check your inbox immediately. Screenshot it. Save it. This is your official notice of the deadline.

The RAP Plan: What Happens Starting July 1

The Repayment Assistance Plan launches on July 1, 2026, as SAVE's authorized successor. It operates on fundamentally different mechanics than SAVE, which matters for your wallet.

RAP's payment formula uses adjusted gross income (AGI) — the income figure that comes straight from your tax return. SAVE used discretionary income, a more generous calculation that excluded more of your actual earnings. RAP uses a sliding scale: 1% of AGI at the lowest income levels, scaling up to 10% of AGI at higher incomes. There's a $10 monthly minimum.

Forgiveness occurs on RAP's standard timeline: 20 years for undergraduate loans, 25 years for graduate and Parent PLUS loans. This is the same as other income-driven plans. The critical piece: RAP payments count toward Public Service Loan Forgiveness. If you're working in public service, RAP is a viable path to PSLF.

Unlike SAVE, RAP allows you to count certain periods of deferment and forbearance toward your forgiveness timeline. This is significant if you've spent time in administrative forbearance. You may not lose all of that time on your new plan, though the exact rules are still being finalized.

Your Three Choices (and Why They Matter Differently)

Starting July 1, you can switch to one of three income-driven plans, or select standard repayment. Here's how they compare:

For borrowers under $75,000 in income with primarily undergraduate loans, RAP typically produces the lowest monthly payment. For borrowers earning $100,000+, especially with graduate debt, IBR may win because its discretionary income calculation excludes more of your income than RAP's AGI-based approach. The only way to know which works best for you is to run both through the StudentAid.gov Loan Simulator.

The Tax Trap Nobody Is Talking About

Here's what almost nobody mentions in discussions of RAP: as of January 1, 2026, the ARPA exemption expired. Any loan balance forgiven under any income-driven plan is now treated as taxable income.

This matters for RAP because if you stay on an income-driven plan for 20 or 25 years and the government forgives your remaining balance, you could receive a 1099-C form treating that forgiven amount as taxable income. If you had $150,000 forgiven, you would owe federal income tax on $150,000 of income that year. Depending on your tax bracket, that could mean $30,000 to $50,000 in taxes owed, due in April of the following year.

This doesn't mean RAP is a bad choice. It means you need to plan for it. If you're choosing RAP or any income-driven plan, you should be building a modest savings account specifically to cover that potential tax bill when forgiveness happens. The tax liability is real. The government is not forgiving the tax. They're only forgiving the loan principal.

Parent PLUS Borrowers: You Have a Different, Harder Deadline

If you borrowed Parent PLUS loans, you face a more restrictive rule. Parent PLUS loans cannot directly enter income-driven repayment plans. To access RAP or IBR, you must consolidate your Parent PLUS loans into a Direct Consolidation Loan before July 1, 2026.

This is a hard deadline. After July 1, Parent PLUS borrowers who haven't consolidated will have no way to enter RAP or any other income-driven plan. You'll be locked into standard repayment only. If you have Parent PLUS loans and have been waiting for SAVE fixes or considering your options, this is your wake-up call. Consolidate before July 1 or lose access to IDR entirely.

To consolidate, log into StudentAid.gov, go to your loans, and select "Consolidation" from the repayment options. The consolidation itself takes a few weeks to process, so don't wait until June 30. Do it now.

RAP vs. IBR: Which Should You Choose?

The decision depends almost entirely on your income and loan composition. RAP uses AGI, a simpler and often smaller number. IBR uses discretionary income, which is your gross income minus 150% of the federal poverty line for your family size.

For a single borrower earning $50,000, discretionary income is roughly $30,000 (after the $20,000 poverty adjustment). AGI is $50,000. If you earn $50,000, IBR wins: 10% of $30,000 is $3,000 per year, or $250 per month. RAP would calculate something closer to 5–7% of your AGI depending on the exact sliding scale — potentially $208–$291 per month. IBR could be lower or higher depending on the exact formula. The only way to know is to run both.

Use the StudentAid.gov Loan Simulator. It now includes RAP. Compare your projected monthly payments, total interest paid, and forgiveness timelines under both RAP and IBR. Pick the plan that produces the lowest payment for your specific situation. This fifteen-minute calculation can save you thousands of dollars.

What About Your SAVE Payment History?

Your SAVE payments do not transfer to your forgiveness count on RAP or IBR. You're starting fresh. If you had five years of SAVE payments accumulated, those don't count toward the 20-year forgiveness timeline on your new plan. You start at zero on July 1.

This is ugly. The litigation that was ongoing to restore SAVE credits may ultimately force the Department to allow transfers, but as of now, there is no guarantee. Document everything: download your complete payment history from StudentAid.gov, screenshot your payment count, and save any enrollment letters showing your SAVE start date. These records become evidence if the litigation ultimately requires the Department to restore SAVE credits to borrowers who switch.

For public service employees, this is even worse. If you were on SAVE accumulating toward 120 PSLF payments, you're starting over on RAP. Your SAVE payments may eventually be restored through litigation, but don't assume it. Treat RAP as starting fresh and calculate your PSLF timeline from July 1 forward.

The 90-Day Window: What Happens If You Miss October 1

The Department of Education will automatically enroll you in standard repayment on October 1, 2026, if you don't select a plan before that date. Standard repayment is a 10-year fixed schedule. Your monthly payment is determined by dividing your loan balance by 120 months.

If you have $80,000 in loans, standard repayment is roughly $800 per month for 10 years. If you were paying $350 per month under SAVE, standard repayment doubles your payment. If you miss the October 1 deadline, you're locked in. Changing plans after you've been auto-enrolled is possible but complicated and requires contacting your servicer and reapplying.

This is sloppy design on the Department's part — auto-enrollment into a much harder repayment plan. But it's intentional. The Biden Administration designed SAVE to be generous. The Trump Administration designed RAP and auto-enrollment to be stricter. This is the policy choice reflected in the deadline.

Your Four-Step Action Plan

The Bottom Line: You're Not Forced Into Disaster, But You Must Act

RAP is not perfect. It's based on AGI instead of the more generous discretionary income formula. You're losing your SAVE payment history. Forgiven balances are now taxable. Parent PLUS borrowers face a separate nightmare.

But RAP is workable. Payments are capped at 10% of your income. Forgiveness is still available on a 20–25 year timeline. PSLF borrowers can still count RAP payments toward the 120-payment requirement. It's not SAVE, but it's functional.

What will destroy you is inaction. October 1 is not a suggestion. The Department will auto-enroll you in standard repayment if you sit still. Your payment will jump. Your 10-year obligation will begin. All of that is avoidable with one hour of work this week: log in, run the numbers, pick your plan, and submit the application.

The clock is running. You have 123 days from today. Use them.

RepayPath provides general educational information only. Nothing on this site constitutes legal, financial, or tax advice. Consult a student loan counselor, accountant, or attorney for advice specific to your situation.