Student Loans

Income-Based Repayment

Ten percent of discretionary income, capped at the ten-year Standard payment, forgiven after twenty years. Still open indefinitely to borrowers with no loan disbursed since 1 July 2026.

How it works

  • Discretionary income here means adjusted gross income above 150% of the poverty guideline for the household size, so unlike RAP it adjusts for family size properly.
  • The payment is capped at what the ten-year Standard plan would charge, which is why IBR stops helping once the income is high relative to the balance.
  • The partial financial hardship test was removed in July 2025.
  • Interest on subsidized loans is subsidized for the first three years only, unlike RAP's open-ended waiver.
  • Borrowers whose first loans predate 1 July 2014 are on the older terms: fifteen percent of discretionary income and twenty-five years to forgiveness.

Who can still get on it

One loan first disbursed on or after 1 July 2026 puts every one of your Direct Loans into the RAP and Tiered Standard world, including loans you took out years earlier. A new Direct Consolidation Loan counts as such a loan. Consolidating to reach IBR or ICR had to be done by 30 June 2026.

Compare this against the other plans

Sources

  1. Repayment plans and important definitions, U.S. Department of Education. Checked on . Backs which plans are open to which borrowers from 1 July 2026; the Tiered Standard term brackets and its $50 minimum; the effect of a single post-cutover disbursement on all of a borrower's loans.
  2. Income-driven repayment plans, U.S. Department of Education. Checked on . Backs the IBR, PAYE and ICR formulas and forgiveness horizons.
  3. Court actions affecting income-driven repayment, U.S. Department of Education. Checked on . Backs the status of SAVE after the 10 March 2026 order; the 1% automatic debit reduction; that income-driven payment counters are not currently displaying.
  4. Reimagining and Improving Student Education (RISE): Federal Student Loan Program, final regulations, Office of the Federal Register. Checked on . Backs the regulation implementing the plan changes, effective 1 July 2026.

Checked on .