PAYE and ICR End in 2028: What Borrowers Should Do Next

Federal Student Aid and the Contractual Relationship for Income-Driven Repayment (CRI) program describe a hard end date for two legacy income-driven plans. Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) end no later than July 1, 2028. That is not a rumor from a forum. It is in the current Federal Student Aid IDR FAQ and the CRI income-driven repayment materials, last verified on November 12, 2026 for this site.

If you are on PAYE or ICR today, you still have time to plan. You also cannot assume those plans will stay open until the last day. Servicers need lead time, and your next certification cycle may push you toward a different plan sooner. This guide explains the sunset, who it touches, and sensible next steps using only official rules.

What the 2028 sunset means

PAYE and ICR are sunsetting plans. They remain available only for eligible Direct Loans disbursed before July 1, 2026, plus the usual PAYE “new borrower” rules Federal Student Aid describes in its IDR FAQ. After the sunset date, borrowers on those plans must move to a plan that still exists, such as the Repayment Assistance Plan (RAP), Income-Based Repayment (IBR), or, for many borrowers with post-2026 loans, the Tiered Standard Plan.

ICR and PAYE are not the same product:

• PAYE generally caps payments at 10 percent of discretionary income for borrowers who meet the new-borrower test, with forgiveness timing that depends on when you borrowed.
• ICR uses a different discretionary-income formula (20 percent of discretionary income or a fixed payment over 12 years, whichever is less, per Federal Student Aid summaries).

Neither plan is offered for loans that fit the “all loans first disbursed on or after July 1, 2026” bucket. Those borrowers are steered toward RAP as the income-driven option, with Tiered Standard as the extended fixed-payment alternative.

SAVE ended first: do not wait on a dead plan

Before PAYE and ICR sunset, many borrowers already had to leave SAVE. A court order ended the SAVE Plan in March 2026, as Federal Student Aid states in its SAVE FAQ. Servicers began notifying affected borrowers in July 2026, with a limited window to pick another plan.

If you still see SAVE on a screen somewhere, treat it as stale. Pick a living plan on StudentAid.gov and confirm the change with your servicer. The same official FAQ lists RAP, IBR, and Tiered Standard as the paths forward for many SAVE borrowers.

Who should pay attention now

You should read this guide and run numbers if any of these apply:

1. Your servicer shows PAYE or ICR as your current plan.
2. You certified income recently and want to know whether staying on PAYE through 2027 still makes sense.
3. You are pursuing Public Service Loan Forgiveness (PSLF) and need every monthly payment to count.
4. You borrowed before and after July 1, 2026, so you may qualify for more than one plan type across different loan groups.

You can narrow the list with our plan eligibility quiz. It applies the same rule files we use in the repayment plan estimator, without asking you to trust a generic blog chart.

What to compare before 2028

You are not choosing a plan name for sport. You are choosing monthly cash flow, forgiveness timing, and whether payments count for PSLF. Use this comparison frame:

Repayment Assistance Plan (RAP)

RAP uses a sliding share of prior-year AGI (never more than 10 percent), a 50 dollar per dependent reduction, a 10 dollar payment floor, and up to 30 years for forgiveness. RAP payments can count toward PSLF, per Federal Student Aid’s IDR materials.

If your loans include post-July 2026 disbursements and you need income-driven relief, RAP is often the default IDR plan. Read How RAP works before you switch.

Source note: Official servicer tables disagree on the exact AGI at some 10,000 dollar boundaries (for example, whether AGI of exactly 20,000 dollars is in the 1 percent or 2 percent band). Sources disagree at exact AGI bounds; this site follows Edfinancial upper-inclusive brackets in its calculator.

Income-Based Repayment (IBR)

IBR remains important for loans first disbursed before July 1, 2026. Discretionary income is AGI minus 150 percent of the HHS poverty guideline. Payments are 10 percent of discretionary income for new borrowers after July 1, 2014, otherwise 15 percent. IBR payments can count toward PSLF.

For 2026, the contiguous-states poverty guideline for one person is 15,960 dollars, so 150 percent is 23,940 dollars (Federal Register notice, effective January 13, 2026).

Tiered Standard Plan

Tiered Standard offers fixed payments over 10, 15, 20, or 25 years, depending on total Direct Loan principal (for example, less than 25,000 dollars gets 10 years; exactly 25,000 dollars gets 15 years). It is available when at least one Direct Loan was first disbursed on or after July 1, 2026.

Critical PSLF warning: Payments under Tiered Standard do not count toward PSLF, per Federal Student Aid’s SAVE FAQ. If you work in qualifying public service, Tiered Standard is usually the wrong plan even if the payment looks affordable.

See Tiered Standard explained for the balance cutoffs.

A practical timeline

Here is a planning sequence that avoids a last-minute panic:

1. This month: Export your loan list from StudentAid.gov. Note disbursement dates and current plan.
2. Before your next IDR recertification: Run the repayment plan estimator with your AGI, family size, and balance. Compare RAP and IBR side by side.
3. If you want PSLF: Confirm your employer form status on the PSLF Help Tool. Do not switch to Tiered Standard without understanding the PSLF impact.
4. 2027 (or earlier): Enroll in the plan you intend to keep past 2028. Give your servicer time to process paperwork.
5. Before July 1, 2028: Reconfirm you are not still coded as PAYE or ICR.

Federal Student Aid also notes that borrowers who enroll in auto pay may receive a 1 percent interest rate reduction through June 30, 2028 if they enroll by December 31, 2026 (or are already enrolled). That is optional, but it is a real federal benefit tied to the same IDR FAQ.

Tax treatment after forgiveness

Federal Student Aid states that IDR discharges on or after January 1, 2026 may be taxed as income at the federal level. Forgiveness is not automatically tax-free. Plan for that with a tax professional if a discharge is on your horizon.

You never have to pay for help

The same Federal Student Aid FAQ is explicit: you never have to pay for help with your federal student loans. Apply for income-driven repayment and PSLF on StudentAid.gov. This site does not sell or promote paid debt-relief or paid forgiveness services. If someone charges you to “enroll you in RAP before PAYE ends,” that is a red flag.

Bottom line

PAYE and ICR are on a clock. July 1, 2028 is the outside date. Your job is to pick a current federal plan that matches your income, your loan disbursement history, and whether you need PSLF-qualifying payments. Use the plan eligibility tool to see which plans apply to you, then use the repayment plan estimator for dollar amounts. When you are ready, enroll through StudentAid.gov and keep screenshots of confirmations.

For a full three-way comparison of today’s main options, read RAP vs IBR vs Tiered Standard.