PAYE Student Loans in 2026: What Borrowers Need to Know
Pay As You Earn (PAYE) is one of the oldest income-driven repayment plans, and 2026 is a pivot year for it: the SAVE plan is gone, new plans replace PAYE for future loans, and PAYE itself is scheduled to sunset on July 1, 2028. If you are on PAYE — or deciding whether to apply — here is how the math works today and what is changing.
How the PAYE payment is calculated
Your monthly PAYE payment is 10% of your discretionary income, where discretionary income is your adjusted gross income (AGI) minus 150% of the federal poverty line for your family size. If your AGI is at or below 150% of the poverty line, your payment is $0.
For 2026, the poverty line used by the formula is:
| Family size | 2026 poverty line | 150% (PAYE threshold) |
|---|---|---|
| 1 | $15,960 | $23,940 |
| 2 | $21,640 | $32,460 |
| 3 | $27,320 | $40,980 |
| 4 | $33,000 | $49,500 |
Example: a single borrower with $65,000 AGI. Discretionary income is $65,000 − $23,940 = $41,060, and the payment is 10% of that divided by 12 ≈ $342/month. Payments are capped at what the 10-year Standard plan would cost, so high earners never pay more than standard.
Forgiveness and the 20-year clock
PAYE forgives any remaining balance after 20 years of qualifying payments. You must have a Direct Loan (or a consolidated FFEL loan) and have borrowed after October 1, 2007. Payments under the old REPAYE plan count toward PAYE’s 20-year clock if you transferred, but periods in forbearance generally do not.
One 2026 warning: the federal tax exemption for forgiven student loan debt expired at the end of 2025. Forgiveness received in 2026 or later may be taxable as ordinary income (PSLF forgiveness stays tax-free). If you are close to the 20-year mark, the forgiven amount is likely to hit your taxes.
What changed in 2026
SAVE is gone. The SAVE plan was blocked in court in 2024 and ended in late 2025. Borrowers on SAVE were given at least 90 days to pick another plan; many were moved to standard repayment or asked to choose.
New loans get a different menu. Loans first disbursed on or after July 1, 2026 are limited to the 10-year Standard plan and the new Repayment Assistance Plan (RAP) — payments from 1% to 10% of AGI, forgiveness after 30 years. PAYE and ICR are not available for those loans.
PAYE and ICR sunset July 1, 2028. Existing PAYE borrowers can stay enrolled until then. After that, the only income-driven options are IBR (for loans disbursed before July 2026) and RAP. If you do not choose, your servicer will auto-enroll you.
Should you switch plans in 2026?
Three quick checks:
- Close to 20 years of PAYE payments? Stay on PAYE — switching restarts forgiveness clocks on the new plan.
- High income, short clock? PAYE’s standard-plan cap still applies through 2028, which can make it cheaper than RAP’s percentage-of-income formula.
- New borrower after July 1, 2026? You do not have a choice — RAP is the only income-driven option for new loans.
For Public Service Loan Forgiveness, any qualifying income-driven plan works, and payments made on SAVE after the injunction still count toward PSLF for eligible borrowers.
Run the numbers
Use our PAYE student loan calculator to see your estimated payment from your AGI and family size, the student loan payment calculator for a standard amortization comparison, and the student loan refinance calculator if you are weighing a private refi. Compare repayment strategies in our snowball vs avalanche guide.