Editor's Note: The Department of Education has released guidance in a blog post that PAYE enrollment is open until July 1, 2027. While this doesn't explicitly address the discrepancy between the rules and guidance, borrowers should take note of this deadline being communicated.
Federal student loan borrowers wanting to enroll in the Pay As You Earn (PAYE) plan as their next move after SAVE may have a much narrower window to enroll than expected.
New regulations released last week (PDF File) and set to take effect on July 1, 2026, impose conditions on PAYE enrollment that could lock out a large share of borrowers — including many who are about to be pushed off the SAVE plan this summer. PAYE was already scheduled to be phased out entirely by July 2028, but borrowers not enrolled in the plan may have a limited to to sign up.
Why It Matters: With SAVE terminating this summer, PAYE could offer the lowest monthly payment among the remaining income-driven options for borrowers who qualify - especially borrowers who first took out loans between 2011 and 2014.
Using a 10% discretionary income formula and 20-year forgiveness timeline, PAYE typically beats both old IBR and ICR.
The new Repayment Assistance Plan (RAP), launching July 1, 2026, requires 30 years in repayment before forgiveness — the longest timeline of any income-driven option. However, RAP will likely be better than old IBR for many borrowers.
What The New Rules Say: The regulations published in the Federal Register state that through June 30, 2028, a borrower may repay under PAYE only if they:
- Have loans eligible for the plan
- Are a "new borrower"
- Elect to have their aggregate monthly payment recalculated at entry
- Were repaying under PAYE on July 1, 2024
The rules also state: "A borrower who was repaying under the PAYE plan on or after July 1, 2024, and changes to a different repayment plan… may not re-enroll in the PAYE plan."
As such, the language appears to block two groups of people: borrowers who were eligible for or previously enrolled in PAYE but switched to another plan (like SAVE) before July 1, 2024, and borrowers who leave PAYE for another plan and later try to return.
The bottom line is that borrowers not currently in PAYE before July 1, 2026 may not be able to enroll in the plan.
Conflicting Guidance: The regulatory text appears to contradict the Education Department's own guidance on StudentAid, which currently states there will be "If your loans are all first disbursed before July 1, 2026, you’ll have access to the following repayment plans, if you’re eligible:"
The restrictions also are not expressly written into the One Big Beautiful Bill Act, the underlying law the regulations are intended to implement.
Why didn't ED remove or directly address this in the Final Rule? Best guess: timing and litigation posture. The March 10, 2026 vacatur of the SAVE rules came roughly 7 weeks before the May 1 publication. The Final Rule was already drafted around an OBBBA framework that assumed the old July 1, 2024 cutoff. ED chose to acknowledge Missouri v. Trump in the preamble but defer specific implementation guidance.
What Borrowers Should Do Now: Borrowers already in PAYE should think twice before switching out. Once they leave, the new rules suggest they cannot return.
Eligible borrowers not yet enrolled (especially those still in SAVE forbearance) may want to apply for PAYE before July 1, 2026, when the new rules take effect. Online applications at StudentAid.gov with IRS data linkage typically process fastest - 7 to 10 business days.
How This Connects: The College Investor has been tracking the end of the SAVE forbearance closely. Roughly 7 million borrowers in SAVE forbearance will be moved off the plan starting July 1, with a 90-day window to select a replacement before being auto-enrolled in the Standard plan. For many of those borrowers, PAYE was a good alternative.
PAYE has always carried a narrower eligibility test than other income-driven plans, requiring no outstanding federal loans as of October 1, 2007, and a new Direct Loan disbursement on or after October 1, 2011, along with requiring a partial financial hardship. For borrowers with loans after 2014, IBR repayment is generally the same.
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Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.