Student Loans This Fall: SAVE Is Over, RAP Is Open and Forced Collections Are on Hold for Now
The SAVE plan ended in March and the Repayment Assistance Plan opened July 1. Wage garnishment and tax-refund offsets were delayed in January, but defaults still reach credit reports. What borrowers should do now.
Three changes define the federal student loan system this fall. The SAVE plan is over: it ended by court order on March 10, 2026. The Repayment Assistance Plan (RAP), created by the 2025 budget law (Public Law 119-21, which federal agencies now call the Working Families Tax Cuts Act), opened on July 1. And the forced collections that were set to restart in January were delayed instead; the Education Department's January 16 announcement set no restart date.
How RAP payments work
RAP bases your payment on adjusted gross income rather than "discretionary" income. The yearly base is $120 if your AGI is $10,000 or less. Above that, it is 1 percent of AGI, rising one percentage point for each additional $10,000 of income, up to 10 percent of AGI above $100,000. Divide by 12, subtract $50 a month for each dependent and you have the payment, which never falls below $10. A single borrower with $45,000 of AGI pays 4 percent, or $150 a month. A borrower with $55,000 of AGI and one child pays 5 percent, about $229 a month, minus $50, for $179.17.
Two features are new. If an on-time payment doesn't cover the month's interest, the unpaid interest is waived instead of piling onto the balance. And if a payment cuts principal by less than $50, the Department adds a matching principal reduction to make up the difference, up to $50. Remaining balances are forgiven after 360 qualifying payments, or 30 years.
Not every loan qualifies. Parent PLUS loans made on behalf of a dependent student are excluded, along with consolidation loans that paid them off. And any new federal loan disbursed on or after July 1, 2026, including a new consolidation loan, can be repaid only under RAP or the new Tiered Standard plan, so consolidating now gives up the older plans. Our RAP vs IBR vs Tiered Standard guide walks through the choice, and the Decision Engine runs it with your numbers. Our student loan repayment guide compares the options.
Collections: delayed, not canceled
On January 16, the Education Department said it would delay involuntary collections: Administrative Wage Garnishment and the Treasury Offset Program, which can take tax refunds and part of certain federal payments. The Department said the delay would give borrowers in default time to use the new repayment options and a second chance at loan rehabilitation, which the 2025 law added. It also said it continues to report defaults to the credit bureaus.
If you're in default, treat this as a window, not a reprieve. Rehabilitation or consolidation can bring loans out of default, and the Department pointed borrowers to their defaulted-loan servicer to start. Federal law requires written notice at least 30 days before wage garnishment begins. Our guide to what happens if you can't pay student loans covers each path.
One more change: tax on forgiveness
The federal tax exclusion for student loan forgiveness that covered 2021 through 2025 has expired, so balances forgiven under income-driven plans after 2025 can count as taxable income. Public Service Loan Forgiveness remains tax-free. If you're close to IDR forgiveness, estimate the tax now; our student loan forgiveness guide explains the programs.