How to Choose the Best Repayment Plan After SAVE: A Borrower’s Guide

Core Insights - The Department of Education will eliminate the Saving on a Valuable Education (SAVE) repayment plan, affecting approximately 7.4 million borrowers, although the official end date has not been announced [2][4] Repayment Plan Options - Borrowers can utilize the Federal Student Aid Loan Simulator to compare various repayment plans based on their income, family situation, and loan balance [3] - Current repayment plans include Standard, Graduated, Extended, and Income-Driven options, each with different structures and eligibility criteria [5][6][7][8] Standard Plans - Standard Repayment Plan: Fixed payments over 10 years, with consolidation options extending the period to 30 years based on debt amount [5] - Graduated Repayment Plan: Payments increase every two years over a period of up to 10 years, with consolidation options extending to 30 years [6] - Extended Repayment Plan: Payments can be fixed or graduated over a period of up to 25 years [7] Income-Driven Repayment Plans - Existing plans (IBR, ICR, PAYE) are based on discretionary income, requiring annual recertification [10][11] - The ICR and PAYE plans will be eliminated after July 1, 2028, necessitating a transition to other repayment plans [12] - A new Repayment Assistance Plan (RAP) will be available starting July 1, 2026, offering payments based on adjusted gross income [13][22] Specific Income-Driven Plans - Income-Based Repayment (IBR): Payments are 15% of discretionary income, with forgiveness after 20 or 25 years depending on the loan origination date [14][15] - Income-Contingent Repayment (ICR): Payments are either 20% of income or the fixed 12-year standard plan amount, with forgiveness after 25 years [17][18] - Pay As You Earn (PAYE): Payments are 10% of discretionary income, with forgiveness after 20 years [20][21] Repayment Assistance Plan (RAP) - Monthly payments under RAP are determined as a percentage of adjusted gross income, with specific thresholds for different income levels [22][24] - Borrowers with a loan balance after 30 years will have the remaining balance forgiven [23]