Federal student loan repayment changed in 2026. Here is what a borrower has to decide.
The SAVE plan is over, a new Repayment Assistance Plan is open, and borrowers who do nothing get placed in a plan they did not pick. This page walks through what changed, how to choose, and how employer help fits in. It is general information, and the federal rules are still moving.
Four changes that decide what a borrower pays.
Verified against StudentAid.gov in October 2026. Check there before acting, because the details have shifted more than once.
SAVE Has Ended
A court order ended the SAVE plan in March 2026. Borrowers who were on it must choose another plan. Their servicer sends a notice, and they have 90 days from the date of that notice to choose.
If You Do Not Choose
After a final 30-day notice, a borrower who still has not chosen is placed in a fixed plan: the Standard plan, or the Tiered Standard plan if they have a loan first disbursed on or after July 1, 2026. Those payments can be higher than an income-driven plan.
The Repayment Assistance Plan
RAP sets the payment at 1 to 10 percent of adjusted gross income, reduced by $50 for each dependent, with a $10 monthly minimum and a 30-year term. Borrowers who pay on time may receive an interest benefit and a matching principal payment.
Older Plans Are Winding Down
Income-contingent and PAYE plans end no later than July 1, 2028. Income-based repayment continues. Loans first disbursed on or after July 1, 2026 have Tiered Standard as the only fixed plan, with RAP as the income-driven option.
The cheapest monthly payment is not always the cheapest plan.
Three questions sort most borrowers.
What Is the Goal?
Lowest payment now, lowest total cost, or forgiveness. Those are three different answers, and an income-driven plan that minimizes the payment can cost more over time.
Is Forgiveness on the Table?
Public service loan forgiveness requires qualifying payments under an income-driven plan. Tiered Standard payments do not count toward it, and months spent in the SAVE forbearance do not count either. Earlier qualifying payments still do.
When Were the Loans Disbursed?
Loans from before July 1, 2026 and loans from after it have different plan options. A borrower with both needs to check each loan, not the total.
Run the federal Repayment Calculator → Public service loan forgiveness for employers →
Employer payments sit on top of whatever plan a borrower chooses.
Under Section 127 an employer can pay up to $5,250 a year toward an employee’s student loans without it counting as taxable income to the employee.
Ask How Extra Payments Are Applied
A payment above the required amount may be applied to the next bill instead of to principal unless the servicer is told otherwise. Ask the servicer, and confirm the balance moved.
Keep the Records
Employer payments and the loan statements that show them are worth keeping together. If the employer pays the servicer, the statement is the proof.
Think About Forgiveness First
An employee working toward forgiveness may be better served by using employer help on something else. It is a question for the borrower and, if needed, a financial adviser, not something a benefit page can settle.
Four things that take less than an hour.
Find the Servicer Notice
The 90-day clock runs from the date on the servicer’s notice, not from any other message. If you cannot find it, log in to your servicer account.
List the Loans
Servicer, balance, interest rate and the date each loan was first disbursed. This is what decides the plans available.
Run Two or Three Scenarios
Use the federal Repayment Calculator to compare payment, total cost and forgiveness date across the plans you qualify for.
Ask About Employer Help
If your employer offers it, ask how it is paid and what is required. If it does not, you can share this page with HR.
What borrowers and HR teams ask.
Do I have to do anything if I was never on SAVE?
Usually not. Borrowers who never enrolled in SAVE are not affected by its end and stay on their current plan. Borrowers who are in school or in a grace period have nothing to choose until their loans enter repayment. Check your servicer if you are unsure which group you are in.
Can my employer pay my loans tax-free?
If your employer has a Section 127 program, up to $5,250 a year of payments toward your own education loans is excluded from your income. The program has to be written and offered on a fair basis.
Does employer help count toward forgiveness?
Employer payments do not replace the qualifying payments that forgiveness programs require. Whether extra payments make sense for you depends on whether you expect forgiveness.
Where can I get personal advice?
Your servicer and the federal Repayment Calculator for the mechanics, and a qualified financial adviser for decisions about forgiveness, taxes or paying a balance down faster.
Related guides.
Student Loan Repayment Benefits
How an employer designs a program and what it costs.
Section 127 Educational Assistance
The rules for tuition and student loan payments.
Employee Benefits Concierge
Help for employees who have questions about their benefits.
Want your employer to offer this?
Share this page and our employer guide with your HR team. We help employers design a student loan repayment benefit and set it up.
This page for the borrower view
The employer guide for the design
The IRS limit of $5,250 a year
A request to model the cost
HR can take it from there.
Laws and rules referenced
StudentAid.gov: SAVE plan borrowers — SAVE ending, the 90-day notice window, automatic placement, RAP terms, Tiered Standard and PSLF treatment.
Pub. L. 119-21 (2025) — Created the Repayment Assistance Plan and Tiered Standard plan and made Section 127 loan payments permanent.
26 U.S.C. § 127 — Employer payments toward an employee’s qualified education loans, up to $5,250 a year.
This page is general information, not legal or tax advice. Rules change and facts matter, so confirm your situation with counsel or a qualified advisor.
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