The plan with the lower monthly payment is frequently the more expensive plan. If you are comparing RAP vs PAYE, or RAP against SAVE or IBR, the monthly figure is the number least likely to decide the answer. What decides it is whether a balance is ever forgiven, because PAYE and IBR forgive at 20 years and RAP does not forgive until 30.
We ran both plans through our calculation engine across fifteen income and balance combinations. In every single one, the cheaper plan over the life of the loan was the plan that forgave something. The monthly payment predicted nothing. The comparison below shows where each plan wins and why.
The short version
July 1, 2026 introduces the Repayment Assistance Plan (RAP) and begins phasing out the older income-driven options. SAVE has already been struck down by the courts. PAYE and ICR are closing. IBR sticks around as the last “old” plan. RAP is the future, and for brand-new borrowers it is the only income-driven choice. But for existing borrowers, the best plan is whichever one gives you the lowest lifetime cost for your situation, and that is not always RAP.
What is happening to each plan after July 1
SAVE
The SAVE plan is gone. A federal appeals court vacated SAVE on March 10, 2026, so it is no longer an option. Starting July 1, 2026, borrowers who were on SAVE begin receiving transition notices and have a 90-day window to choose a new plan. If you were on SAVE, doing nothing is not a safe option, you need to pick a new plan. We cover this in is my income-driven repayment plan going away?
PAYE and ICR
Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) close to new enrollment on July 1, 2026. Existing borrowers who do not take new loans generally keep access to PAYE and ICR until July 1, 2028, after which both plans sunset entirely and remaining enrollees are moved to IBR or RAP.
IBR
Income-Based Repayment (IBR) has its own statutory authority, so it is not being phased out. It remains available alongside RAP indefinitely. If you also want a fixed-payment comparison, here is how RAP compares with the new Standard plan. For some borrowers, especially those with lower-to-mid incomes (IBR still protects a slice of income at 150% of the poverty line) or a lot of forgiveness progress on an older loan, IBR can still be the better choice.
RAP
RAP is the new plan, available July 1, 2026. For anyone who takes out a federal loan on or after July 1, 2026, it is the only income-driven option. For existing borrowers, it is a choice. RAP’s standout features are waived unpaid interest and a guaranteed $50-a-month minimum drop in principal. See what RAP means for your student loans for the full breakdown.
SAVE vs PAYE, SAVE vs IBR: what to compare now
If you are comparing SAVE against PAYE, you are comparing two plans you almost certainly cannot choose. SAVE was vacated by a federal appeals court on March 10, 2026 and no longer exists. PAYE closed to new enrollment on June 30, 2026, so it is available only to borrowers already enrolled in it. Neither is on the menu for someone electing a plan today.
That makes the real comparison much simpler than it looks. Here is what each starting point actually maps to:
| If you were on | Your live options |
|---|---|
| SAVE | RAP or IBR. You must elect one; the plan no longer exists to stay on. |
| PAYE | Stay on PAYE, or move to RAP or IBR. PAYE itself sunsets July 1, 2028. |
| ICR | Stay until the July 1, 2028 sunset, or move to RAP or IBR. |
| IBR | Stay. IBR has independent statutory authority and is not being phased out. |
| Nothing yet, or a new loan | RAP is the default. IBR if you qualify on partial financial hardship. |
So “SAVE vs PAYE” and “SAVE vs IBR” both collapse into one live question for nearly everyone: RAP or IBR. The one exception is a borrower already sitting in PAYE, and for them the head-to-head is RAP vs PAYE, priced in the next section.
If you were on SAVE, the deadline matters more than the comparison
Borrowers transitioning off SAVE receive a notice that opens a 90-day window to elect a new plan. Letting that window close does not keep you where you are, because there is nothing to keep. It hands the choice to your servicer instead of making it yourself, and the plan you land on may carry a payment far above what an income-driven election would have produced.
Two things work in your favour. Months you already paid under SAVE, PAYE, IBR or ICR carry across to whichever plan you move to, including toward RAP’s 360-payment clock and IBR’s 240 or 300, so you are not restarting. And if you work in public service, both RAP and IBR qualify for PSLF, so the choice narrows to whichever payment is lower. See whether RAP qualifies for PSLF.
The one thing that does not work in your favour is waiting. Interest accrues while you decide, and months spent in a forbearance count toward neither forgiveness nor PSLF.
RAP vs PAYE: which is actually cheaper?
This is the comparison most borrowers are searching for, and it only applies to one group: people already enrolled in PAYE. PAYE closed to new enrollment on June 30, 2026, so nobody can elect it now. If you are on it, the question is whether to stay or move to RAP.
The two plans differ in three ways that matter. PAYE charges 10% of your discretionary income, the amount above 150% of the poverty guideline, and caps your payment at the 10-year Standard amount. RAP charges a tiered 1% to 10% of your entire AGI, minus $50 per dependent, with no cap at all. And PAYE forgives at 240 payments where RAP forgives at 360.
That last difference is the one that decides the money. Here is the all-in cost of each plan, payments plus the federal tax owed on any forgiven balance, for a single borrower at a 6.53% blended rate with income growing 3% a year:
| AGI | Balance | RAP / mo | PAYE / mo | RAP all-in | PAYE all-in | Cheaper |
|---|---|---|---|---|---|---|
| $40,000 | $40,000 | $100 | $134 | $73,445 | $66,552 | PAYE by $6,892 |
| $55,000 | $40,000 | $229 | $259 | $66,412 | $66,487 | Effectively a tie |
| $90,000 | $40,000 | $600 | $455 | $48,269 | $54,576 | RAP by $6,308 |
| $40,000 | $80,000 | $100 | $134 | $129,304 | $88,861 | PAYE by $40,444 |
| $55,000 | $80,000 | $229 | $259 | $163,588 | $120,019 | PAYE by $43,569 |
| $90,000 | $80,000 | $600 | $550 | $118,239 | $131,588 | RAP by $13,348 |
| $55,000 | $120,000 | $229 | $259 | $229,314 | $148,386 | PAYE by $80,928 |
| $90,000 | $120,000 | $600 | $550 | $224,136 | $212,916 | PAYE by $11,221 |
| $120,000 | $120,000 | $1,000 | $800 | $181,046 | $203,114 | RAP by $22,069 |
The rule the table produces
Across all fifteen combinations we ran, the result was the same every time: PAYE was cheaper in every case where PAYE forgave a balance, and RAP was cheaper in every case where it did not. There were no exceptions. So the question is not which payment is smaller. It is whether forgiveness ever arrives.
Look at the fourth row. RAP’s payment is $100 a month against PAYE’s $134, so RAP is $34 a month cheaper and looks like the obvious choice. It costs $40,444 more, because PAYE writes off the remaining balance at year 20 and RAP makes you keep paying for another decade. The worst case in our set is a borrower earning $55,000 against $120,000 of debt: choosing by monthly payment costs $80,928.
RAP wins in the opposite situation. When income is high relative to the balance, no forgiveness arrives on either plan, and RAP’s larger payment simply retires the loan sooner and cheaper. That is why the $120,000-income borrower saves $22,069 by moving.
Two things the table does not price
Public service changes the answer entirely. If you are pursuing PSLF, forgiveness arrives at 120 payments on either plan and it is tax-free, so the 20-versus-30-year difference disappears and the lower monthly payment wins outright. See whether RAP qualifies for PSLF.
Affordability beats optimisation. Cheapest over thirty years is irrelevant if the payment is not survivable this month. If PAYE’s figure does not fit your budget and RAP’s does, that is the answer, whatever the lifetime column says.
Figures computed with Finology Software’s parity-verified calculation engine at a 6.53% blended rate, 3% annual income growth, 2026 federal poverty guidelines and 2026 federal tax brackets, single filer, no dependents, over a 30-year horizon. Forgiven balances outside PSLF are taxed as ordinary income and that tax is included above. These are illustrations of how the formulas behave, not a projection of your loans.
How the plans compare at a glance
| Plan | Status after July 1, 2026 | Payment basis | Non-PSLF forgiveness |
|---|---|---|---|
| RAP | New, available now | 1% to 10% of full AGI, minus $50/dependent, $10 minimum | 30 years (360 payments) |
| SAVE | Struck down; choose a new plan | (no longer available) | (no longer available) |
| PAYE | Closed to new enrollment; sunsets July 1, 2028 | 10% of discretionary income | 20 years |
| ICR | Closed to new enrollment; sunsets July 1, 2028 | 20% of discretionary income | 25 years |
| IBR | Remains available | 10% or 15% of discretionary income | 20 or 25 years depending on when you borrowed |
A quick note on “discretionary income”: the older plans subtract a poverty-line amount from your income first (150% of the federal poverty level for PAYE and IBR; 100% for ICR), then charge a percentage of what is left. RAP skips that subtraction and applies its tier to your full AGI. That single difference is why no plan is automatically cheapest for everyone.
How does RAP compare to the new Standard plan?
RAP sizes your payment to your income. The new Standard plan sizes it to retire the balance on a fixed schedule. That single difference drives most of the decision.
The Standard plan is built around fixed payments designed to pay your loans off over a set term. Your payment generally doesn’t move with your income; instead, it’s sized to retire the balance on schedule. That predictability is the main appeal, you know what you’ll pay and roughly when you’ll be done.
Neither is universally better. RAP tends to favor borrowers who want payments to stay manageable relative to income, who have a high balance relative to earnings, or who are pursuing forgiveness. Standard tends to favor borrowers who can comfortably afford the fixed payment, want to be debt-free on a set timeline, and want to minimize total interest paid over the life of the loan. A lower monthly payment can mean more interest over time; a faster payoff can mean tighter cash flow now.
Advisors comparing the tools that run these projections: see our buying guide for student loan repayment software.
How to actually choose
There is no single “best” plan. The right answer depends on:
- Your income and how it will grow. A lower payment today can cost more over the life of the loan.
- Your family size. RAP’s $50-per-dependent deduction helps families.
- Your balance and interest rate. RAP’s interest waiver and $50 principal floor matter most when your balance is high relative to your income.
- Whether you are pursuing PSLF. If you work in public service, the plan you pick interacts with your 120-payment count. See RAP and PSLF.
- How far you already are toward forgiveness. Switching plans can affect your forgiveness clock. Payments you already made on SAVE, PAYE, IBR, or ICR do count toward RAP’s 30-year clock, so you do not restart from zero.
The mistake to avoid is choosing by the lowest monthly payment alone. The number that matters is the total you will pay over the life of the loan, including any forgiveness and any tax on forgiven debt.
When RAP is the better deal, and when it is not
RAP tends to help borrowers with high balances relative to income, dependents, or low incomes where the interest waiver and the $50 principal floor do real work. RAP can be a worse deal for borrowers who are close to forgiveness on an older plan with a shorter forgiveness term, or whose older-plan payment is already lower because of the discretionary-income subtraction. The only way to know which camp you are in is to compare the plans side by side on your actual numbers. If you are comparing tools to do that, see how Finology Software compares.
Not sure which plan wins for you? Get matched with a student-loan advisor who compares them on your real numbers, or start a free trial.
July 1 student-loan changes: the full series
- July 1 student-loan changes, explained simply (start here)
- What RAP means for your student loans
- Is my income-driven repayment plan going away?
- Signs you are on the wrong repayment plan after July 1
- RAP and PSLF: what forgiveness-seekers need to know
- RAP payment calculator: what you will actually pay
- Should I consolidate my student loans?
- How Long Until Student Loans Are Forgiven?
- Why Your Best Clients Haven’t Told You About Their Student Debt Yet
- Student Loan Repayment Guide (2026)
Related reading: the July 1 RAP changes
- What is the Repayment Assistance Plan (RAP)?
- How to switch to RAP, step by step
- Estimate your RAP payment
- SAVE is ending July 1, 2026
Put your plan where you can see it
Add your loans and your plan in a free borrower account. See your payoff date, watch your progress, and know exactly what an extra $50 a month changes.
