Income-Driven Repayment: How These Student Loan Plans Work in 2026

If your student loan payment feels impossible on your current income, you are not alone — and you have options. Income-driven repayment is a group of federal student loan plans that set your monthly payment based on what you earn, not on how much you owe. For many borrowers, that means a payment that actually fits their budget, plus a path to having any remaining balance forgiven after years of on-time payments. The rules are changing in 2026, so this guide walks through how these plans work now, what is new, and how to choose.

What Is Income-Driven Repayment?

Income-driven repayment, often shortened to IDR, ties your monthly federal student loan payment to your income and family size instead of your loan balance. The idea is simple: the less you earn, the less you pay each month. Some borrowers with very low incomes pay as little as $10 a month, and a few pay $0.

These plans share three features. Your payment rises and falls with your income, so it adjusts as your life changes. You recertify your income once a year so the plan stays accurate. And after a set number of years of qualifying payments, any balance you still owe is forgiven. Income-driven plans only apply to federal student loans — private loans are not eligible.

Which Income-Driven Plans Exist in 2026

The income-driven landscape is shifting because of the 2025 law that reshaped federal student aid. Here is where things stand for the 2026-27 year.

The New Repayment Assistance Plan (RAP)

The Repayment Assistance Plan (RAP) launches July 1, 2026. It is the main income-driven plan going forward, especially for people who borrow new loans on or after that date. RAP has a few defining features:

• Your payment is a set share of your total income, ranging from 1% to 10% depending on how much you earn, with a minimum payment of $10 a month.
• If your required payment does not cover the interest that month, the government waives the rest, so your balance does not grow from unpaid interest.
• Any remaining balance is forgiven after 30 years of qualifying payments.

To estimate your own number, see our walkthrough on how to estimate your RAP monthly payment.

Income-Based Repayment (IBR)

Income-Based Repayment has been around for years and remains available. On IBR, your payment is generally 10% of your discretionary income, and your balance can be forgiven after 20 or 25 years, depending on when you first borrowed. Discretionary income is the part of your earnings above 150% of the federal poverty line for your family size, so IBR often produces a lower payment than RAP for borrowers with modest incomes and larger families. IBR also counts toward Public Service Loan Forgiveness.

What Happened to SAVE, PAYE, and ICR

The SAVE plan was struck down in court and is ending. The older PAYE and ICR plans are closing to new enrollment as RAP takes over. If you are currently on SAVE, PAYE, or ICR, your loan servicer will guide you toward a new plan — most likely RAP or IBR. Do not ignore those notices, because staying enrolled in an income-driven plan protects your payment amount and your progress toward forgiveness. Our guide to comparing income-driven plans breaks down the differences side by side.

How Your Payment Is Calculated

Each plan uses a slightly different formula, but they follow the same basic steps. First, the plan looks at your income — RAP uses your total adjusted gross income, while IBR uses your discretionary income. Then it applies the plan's percentage. Finally, it divides that yearly amount into twelve monthly payments.

Here is a simple illustration. Imagine a single borrower earning $40,000 a year:

• On RAP, a borrower in this income range might pay roughly 4% to 5% of total income, which works out to about $130 to $170 a month.
• On IBR, the payment is 10% of discretionary income. With the 150% poverty line for a single person near $23,000, discretionary income is about $17,000, so the payment would be about $140 a month.

Your actual numbers depend on your family size, your state, and the year's poverty guidelines, so always confirm with the official loan simulator at StudentAid.gov.

Who Should Consider an Income-Driven Plan

Income-driven repayment is worth a close look if any of these describe you:

• Your standard 10-year payment is more than you can comfortably afford.
• Your income is low now but expected to rise, such as during a medical residency or early in a teaching career.
• You work in public service and want your payments to count toward Public Service Loan Forgiveness.
• You want a safety net so a job loss or pay cut does not push you into default.

Income-driven plans are not always the cheapest option overall. Because they stretch payments over more years, you can pay more total interest than you would on a standard plan. They make the most sense when affordability or forgiveness matters more than paying the loan off as fast as possible.

Income-Driven Repayment and Loan Forgiveness

Two kinds of forgiveness connect to these plans. The first is long-term IDR forgiveness: after 20, 25, or 30 years of qualifying payments, your remaining balance is wiped out. The second is Public Service Loan Forgiveness, which forgives your balance after just 10 years of payments while you work full-time for a government or nonprofit employer. Payments made on RAP and IBR both count toward PSLF, which is why public-service workers almost always choose an income-driven plan.

How to Enroll

You apply for an income-driven plan for free through the federal government — never pay a company that offers to do it for you. Follow these steps:

1. Gather your most recent income information, such as a tax return or recent pay stubs.
2. Go to the official application at StudentAid.gov.
3. Choose the plan you want, or ask to be placed on the plan with the lowest payment you qualify for.
4. Submit and watch for confirmation from your servicer.
5. Mark your calendar to recertify your income every year.

Watch Out for These Pitfalls

• Missing your annual recertification. If you do not update your income on time, your payment can jump to the standard amount and unpaid interest can be added to your balance. Set a reminder 30 to 60 days ahead.
• Forgiveness and taxes. Long-term IDR forgiveness may be treated as taxable income in some years, while PSLF forgiveness is tax-free. Plan ahead if you expect a large forgiven balance.
• Switching plans too often. Changing plans can restart some forgiveness clocks or trigger interest capitalization. Choose carefully and ask your servicer how a switch affects your timeline.
• Assuming a low payment means low total cost. A smaller monthly payment over more years can mean more interest overall. That is a fair trade for breathing room, but go in with eyes open.

The Bottom Line

Income-driven repayment exists so that paying for your education does not mean going broke. In 2026, the main plan is the new Repayment Assistance Plan, with payments of 1% to 10% of your income, a $10 minimum, an interest waiver that keeps your balance from ballooning, and forgiveness after 30 years. Income-Based Repayment remains a strong choice, especially for lower earners and anyone pursuing public service forgiveness. Whichever you choose, recertify on time, keep records of your payments, and revisit your plan whenever your income changes.

Not sure how much you will need to borrow in the first place? Create your free CollegeLens plan to see your real costs and borrowing needs for every school on your list — and file your FAFSA to unlock federal aid before you borrow.

— Sravani at CollegeLens