The Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) federal student loan repayment plans are being phased out. Existing borrowers on these plans can generally remain on these plans until July 1, 2028. After that date borrowers will need to move into another repayment plan, such as the new Repayment Assistance Plan (RAP), depending on their eligibility.
What federal student loan borrowers need to know.
Like all income-driven repayment (IDR) options, the PAYE and ICR plans based monthly student loan payments on income and family size and extended repayment terms from the standard 10 years to 20 or 25 years. After the repayment term, any remaining debt was forgiven. Because PAYE is ending, very few PAYE borrowers will actually have their federal student loan debt forgiven, as borrowers are only eligible for PAYE if they borrowed after 2007 (and it takes 20 years of payments to reach forgiveness).
Being enrolled in PAYE or ICR could allow you to start building credit toward federal student loan forgiveness — but your payments could be higher compared to what you owed under other plans.
Here's what the timeline on these plans looks like, and whether switching plans to a soon-to-end plan makes sense.
Is the PAYE or ICR repayment plan going away?
The PAYE and ICR repayment plans will be going away July 1, 2028. Borrowers who take out new student loans after July 1, 2026 are not able to enroll in these plans.
Federal student loan borrowers currently enrolled in PAYE or ICR can remain in these plans until 2028, but if you do not change plans by the deadline, you may be automatically enrolled in another repayment plan.
PAYE offers lower monthly payments (10% of income) and a quicker path to IDR forgiveness (20 years), compared to the ICR plan (20% of income and 25 years to forgiveness).
Who can still use PAYE or ICR before 2028?
Borrowers currently on these plans can still use PAYE and ICR, but eligibility for these repayment plans will depend on when students borrowed federal student loans.
If you are enrolled in school and take out a new federal student loan after July 1, 2026, you will only be able to enroll in the RAP plan or the Tiered Standard plan for repayment. If you don’t take out any new student loans, you can stay in PAYE or ICR until 2028.
If you don’t take out or consolidate any student loans after July 1, 2026, you may be able to switch from your current repayment plan and enroll in PAYE or ICR before July 1, 2027, depending on your eligibility and the most current federal guidelines.
Following the changes made by the One Big Beautiful Bill Act, new Parent PLUS borrowers will only be able to access the Tiered Standard repayment plan (meaning they won’t have access to PAYE and ICR plans). Parent borrowers who consolidated their PLUS loans into a Direct Consolidation Loan by July 1, 2026 may be enrolled in ICR.
Should you stay on PAYE or ICR until 2028 or switch now?
Staying on PAYE or ICR might might sense for you if:
- You have a payment that is already low.
- You could reach forgiveness before the 2028 deadline.
- Are pursuing Public Service Loan Forgiveness (PSLF).
- Or, if switching increases your payment.
Switching plans from PAYE or ICR before 2028 might make sense for you if:
- Income-Based Repayment (IBR) lowers your payment.
- RAP better fits your income.
- You’re planning to take out more loans in the future.
- Or, if you know you don’t want to have to deal with switching plans in the summer of 2028.
What happens when PAYE and ICR end?
The Department of Education (ED) will likely give borrowers on PAYE and ICR a transition timeline. You may be able to consolidate into IBR, or choose to enroll in one of the new plans (RAP or Tiered Standard).
One important thing is to track your progress toward forgiveness credit and the implications changing plans has on your potential loan forgiveness. Whether you are paying under the Saving on a Valuable Education plan (SAVE), PAYE, ICR or IBR, your payments should all count toward forgiveness. Be sure to confirm with your loan servicer if the qualifying payments you’ve made will transfer toward federal student loan forgiveness.
Here’s a quick timeline of the next two years for PAYE and ICR:
July 1, 2026:
- New income-driven repayment option (RAP) launched.
- New repayment plan enrollment restrictions began.
- Millions of borrowers were told to switch from the Saving on a Valuable Education plan.
- Borrowers on PAYE and ICR can generally remain on their plans (unless they took out new loans after this date).
2026 to 2028:
- Borrowers on PAYE and ICR continue making their payments.
- Borrowers compare repayment options and decide which payment makes sense.
- Some borrowers switch out of PAYE or ICR ahead of the 2028 deadline, if another plan would be financially wiser.
- No new borrowers join PAYE or ICR.
July 1, 2028:
- PAYE ends.
- ICR ends.
- Borrowers transition into remaining repayment options.
- Be sure to continue to monitor your email for any notices from the ED or from your loan servicer.
» COMPARE: Compare current federal repayment options.
Switching from SAVE to PAYE
In March 2026 the federal Saving on a Valuable Education plan ended, forcing millions of borrowers to consider other repayment plans. Borrowers on the SAVE plan will need to change plans within 90 days of receiving notice from their loan servicer.
If you switch from SAVE to PAYE, you can continue to build credit toward Public Service Loan Forgiveness (PSLF). This impacts teachers, government workers and many nonprofit employees.
PAYE could be a good fit for former SAVE borrowers if you’re in any of these situations, if you had no outstanding direct loan or FFEL Program loan debt as of Oct. 1, 2007, and you took out a direct loan on or after Oct. 1, 2011:
- You were enrolled in PAYE before switching to SAVE. If you were on the PAYE plan before, you may already be comfortable with the plan and generally know what to expect.
- You expect to earn a high income in the future. PAYE payments are capped at 10% of your discretionary income, but even if your earnings grow in the future, payments will never be higher than what they would be under the standard 10-year repayment plan.
- You’re ineligible for New IBR. The New IBR plan is very similar to PAYE, but it requires that you originally took out a student loan between July 1, 2014 and July 1, 2026.
Determine the best option for you
Just because you can switch plans now doesn’t necessarily mean you should. Evaluate your student loans and overall financial situation to determine your best route forward. Under some current guidance, existing federal loan borrowers have until July 2027 to enroll in PAYE or ICR.
Start with the ED’s loan simulator. This tool connects with your studentaid.gov account to estimate your monthly bills, overall repayment costs and potential forgiveness timeline under different repayment plans, including PAYE and ICR. Switching plans could increase your monthly payments, depending on your income. You can also call your federal student loan servicer for guidance.
» Explore your options: Use our student loan repayment calculator to learn what you could pay under each plan.
Frequently asked questions about PAYE and ICR
Is PAYE ending?
Yes, the Pay As You Earn (PAYE) repayment plan is being phased out. PAYE stopped accepting new borrowers on July 1, 2026, and the plan will end entirely on July 1, 2028. At that point, remaining borrowers will have to transition to another eligible repayment plan.
Is ICR ending?
Yes, the Income-Contingent Repayment (ICR) plan is being phased out. New enrollment ended on July 1, 2026, and the plan will end on July 1, 2028 for existing borrowers.
Can I still enroll in PAYE?
As of July 1, 2026, borrowers who take out new loans can no longer enroll in the PAYE plan, although borrowers already enrolled may remain on it until it sunsets in 2028.
Will I lose forgiveness credit if I switch plans?
Generally, no. Qualifying payments you've already earned toward Income-Driven Repayment (IDR) forgiveness or Public Service Loan Forgiveness (PSLF) continue to count when you switch to another eligible repayment plan, though your repayment timeline or monthly payment amount may change depending on the new plan. Check with your student loan servicer for more information.
What repayment plans replace PAYE?
Any borrower who takes out new federal student loans after July 1, 2026 will only be able to choose from the Tiered Standard Plan and the Repayment Assistance Plan to pay off their loans.
For most borrowers, the primary alternatives to PAYE are Income-Based Repayment (IBR) and the new Repayment Assistance Plan (RAP), with eligibility depending on when you borrowed and whether you take out new federal loans after July 1, 2026. Borrowers with only pre-July 1, 2026 loans may still be eligible for IBR, while RAP becomes the new income-driven option for newer borrowers. Reach out to your student loan servicer for more information.
