You never have to pay for federal student loan help. Applying for a repayment plan, consolidation, rehabilitation or forgiveness is free at StudentAid.gov or through your loan servicer. Companies that charge upfront fees for this are, at best, charging you for free paperwork. Debt settlement and consolidation-loan companies can't settle or wipe out federal student loans.
What changed in 2026
- The SAVE plan ended. Starting July 1, 2026, borrowers on SAVE began getting notices with 90 days to choose a new plan. If you don't choose, you're placed in a standard plan, which usually means a higher payment. If you're working toward Public Service Loan Forgiveness, choose another income-driven plan so your payments keep counting.
- The new Repayment Assistance Plan (RAP) opened July 1, 2026. Payments are based on your income, starting at a $10 monthly minimum and rising to as much as 10% of your adjusted gross income, reduced by $50 a month for each dependent. Any remaining balance is forgiven after 30 years of qualifying payments.
- Income-Based Repayment (IBR) is still available for existing borrowers. ICR and PAYE are scheduled to close July 1, 2028.
- New loans are different. For loans made on or after July 1, 2026, including new consolidation loans, RAP is the only income-driven option.
Which plan costs less depends on your income, family size and balance. Compare them with the official Loan Simulator (log in so it uses your actual loans), and double-check the numbers with your servicer before you switch.
If you're behind or in default
A federal student loan generally goes into default after about 270 days of missed payments. Default can lead to collection fees, credit damage, and involuntary collection: the government can take tax refunds and certain federal payments (Treasury offset) and garnish wages without a court order.
Where collections stand right now
Treasury offset restarted in May 2025. In January 2026 the Education Department delayed wage garnishment and Treasury offset while it rolled out the new repayment plans. As of our last review in November 2026, we haven't found an official restart date. That delay isn't forgiveness: loans stay in default, and defaults are still reported to credit bureaus. Use this window to get out of default. Check StudentAid.gov for the current status.
Two ways out of default
- Loan rehabilitation: make 9 voluntary, on-time monthly payments within 10 months, at an amount based on your income that can be very low. When you finish, the default record is removed from your credit history (the late payments before default stay). The law now allows rehabilitation twice.
- Direct Consolidation: combine defaulted loans into a new Direct Consolidation Loan and agree to an income-driven plan, or make 3 on-time payments first. It's faster than rehabilitation, but the default record stays on your credit history. Remember that new consolidation loans only get RAP as their income-driven option.
To start, contact the Education Department's Default Resolution Group at myeddebt.ed.gov or 1-800-621-3115. If you have older FFEL loans held by a guaranty agency, contact that agency, since its rules may differ.
Forgiveness and discharge programs worth checking
- Public Service Loan Forgiveness (PSLF): for government and qualifying nonprofit employees, after 120 qualifying payments. Use the PSLF Help Tool.
- Total and Permanent Disability discharge, if you have a qualifying disability.
- Closed school and borrower defense discharges, if your school closed or misled you.
- Deferment or forbearance for short-term hardship, like unemployment. Interest may keep building, so use these as a bridge, not a plan.
Private student loans are different
Private student loans from banks and online lenders don't get federal plans or forgiveness, but they can sometimes be negotiated or included in a debt settlement program. Call your lender and ask about hardship options first. If it's part of a larger pile of debt, compare your options.
Feeling squeezed everywhere? Our budget builder shows what's left after essentials and minimum payments, which helps when you're choosing between repayment plans.
Sources
- U.S. Department of Education, Department delays involuntary collections (January 2026)
- NYC Department of Consumer and Worker Protection, Key changes in federal student loan repayment
- Federal Student Aid, Getting out of default and repayment plans
Federal student loan rules changed several times in 2025 and 2026. Always confirm details with StudentAid.gov or your servicer before making a decision.