Home · Learn · Student loan IDR vs refinance
Debt · federal vs private
Federal Direct loans are a product. A private refinance is a rate. Google “should I refinance student loans” treats them as the same payment box. After SAVE, they are a fork: RAP or IBR (income, a forgiveness clock, a tax bill at the end) versus a private recast (higher payment, no federal features, no tax bomb because you actually pay it off). The calculator uses your AGI and quote. Defaults are examples, not today’s servicer screen.
Updated 2026-09-08 · 11 min read · Educational, not tax, legal, or loan advice. Run the IDR vs refinance calculator. SAVE is vacated — this page does not invent a 2027 IDR name.
| IBR | RAP | Private refinance | |
|---|---|---|---|
| Job | Keep federal; 20- or 25-year clock | Keep federal; 30-year clock | Cut the rate; kill the balance |
| Payment | 10% or 15% of discretionary income, capped at 10-year Standard | 1–10% of AGI, −$50/dependent, $10 floor | Amortizing quote you typed |
| Forgiveness | 240 or 300 qualifying payments | 360 qualifying payments | None |
| Tax at forgiveness | Generally taxable in 2026+ | Generally taxable in 2026+ | N/A — you paid it |
| PSLF | Yes, if qualifying employment | Yes | Dies on refinance |
| Who can enroll (as of this run) | Direct loans disbursed before July 1, 2026; lost if you take a new loan after that | Open July 1, 2026; the IDR for new loans | Credit, income, a lender |
PAYE and ICR still exist for some pre-July 2026 balances and close no later than July 1, 2028. They are not modeled here. Parent PLUS is not RAP-eligible. This page is Direct loans versus a private recast.
Worked slice
Example federal rate 6.39%, example private 6.00% for 10 years — not a live quote. New IBR: $259/mo, remaining $35,703 at year 20, 22% tax bomb $7,855, cash out ~$69,975. RAP: $229/mo, remaining $24,015 at year 30 after the interest waiver and $50 principal match, tax $5,283, cash out ~$87,783. Private: $500/mo, paid in 120 months, total $59,951, no bomb. Monthly cash-flow and lifetime cash disagree. That is the fork.
The usual “no”
Private refinance ends Direct. PSLF, RAP, IBR, and ED forbearance do not come along. A 0.4% cut that costs a $41,800 PSLF remainder (the 10-year IBR leftover on this slice) is not a rate win. Stay federal until you can name the features you are selling.
| Item | Rule | Source |
|---|---|---|
| SAVE | Vacated March 10, 2026. Not a payment option. | ED, March 27, 2026 |
| SAVE exit window | Servicers began 90-day notices July 1, 2026 | Same / StudentAid.gov |
| RAP | Open July 1, 2026. 1–10% of AGI, $50/dependent, $10 min, 360 payments | P.L. 119-21; CRS IF13075; ED fact sheet |
| RAP extras | Unpaid monthly interest waived on an on-time payment; up to $50 principal match | ED fact sheet |
| IBR | 10% (new) or 15% (old) of discretionary income; 20 or 25 years; cap at 10-year Standard | StudentAid.gov repayment plans |
| 2026 FPL (48 states) | $15,960 (1) / $21,640 (2) / +$5,680 each additional | HHS, effective Jan 13, 2026 |
| IBR 150% of FPL, family of 1 | $23,940 | Same × 1.5 |
| PAYE / ICR | Still enrollable for some pre-July 2026 loans; eliminated no later than July 1, 2028 | StudentAid.gov / OBBBA |
| New Direct loan on/after July 1, 2026 | RAP or Tiered Standard for those balances — and it can pull older loans off IBR | ED fact sheet |
| IDR tax bomb | ARPA exclusion ended Dec 31, 2025. 2026+ IDR forgiveness is generally COD income | IRS Publication 4681 |
| PSLF / work-requirement | Still an exclusion when the discharge is for meeting work requirements | Pub. 4681 |
There is no “SAVE 2027.” RAP is the name of the new income-driven plan. IBR remains for borrowers whose Direct loans were all disbursed before July 1, 2026. Type the rate on your Master Promissory Note and the private quote in your inbox. This classroom does not scrape a refinance marketplace.
New IBR: 10% of (AGI − 150% of the poverty guideline), never more than the 10-year Standard payment, 240 qualifying payments. Old IBR (first loan before July 1, 2014): 15% and 300 payments. On the worked slice, AGI $55,000 minus $23,940 is $31,060 of discretionary income → $259 a month, under the $508 Standard cap.
RAP ignores poverty guidelines. CRS IF13075: AGI $10,000 or less is $10 a month; above that, 1% of AGI plus one percentage point per $10,000 increment, cap 10% above $100,000; then subtract $50 per dependent; floor $10. $55,000 sits in the 5% band → $229 a month with no dependents. Married filing jointly uses combined AGI — a real marriage penalty RAP only partly offsets if the spouse also has Direct loans.
The RAP interest waiver and $50 principal match are why the 30-year leftover on the slice is $24,015, not the $56,000 you get if you accrue unpaid interest like old IBR. The calculator models those two RAP features. It holds AGI and the poverty guideline constant. Real recertifications change the payment. Type a raise if you want that world; do not freeze a COLA we did not publish.
From 2021 through 2025, ARPA generally excluded student-loan discharges from gross income. That window closed December 31, 2025. IRS Publication 4681 is the cite: time-based IDR and RAP forgiveness in 2026 or later is usually cancellation-of-debt income. You should expect a Form 1099-C the January after the discharge year. At 22% federal, the IBR leftover on the slice is a $7,855 tax, not a parade. State tax may stack. Insolvency is Form 982, a facts-and-circumstances test, not a slogan.
Public Service Loan Forgiveness is 120 qualifying payments while working full-time for a qualifying employer, then the remainder is discharged. Pub. 4681 still lists cancellation for meeting certain work requirements as an exclusion. Teacher Loan Forgiveness is the other common work-requirement path. Do not refinance onto a private note and then “apply for PSLF.” The Direct loan has to exist.
This is already built in the DTI calculator — we do not recast a mortgage here. Conventional underwriting often uses the billed IDR payment when it is above $0, and 0.5% of the outstanding balance when the billed payment is $0 or the loan is deferred. $45,000 × 0.5% = $225 a month, almost RAP on the slice. A $0 SAVE-hangover payment is not a $0 DTI line. FHA/VA are more likely to take the documented IDR amount. Ask the loan officer which rule they will run before you pay for an appraisal. Details: DTI guide.
A private note is an auto loan with a diploma: rate, term, extra principal. Credit-score and income quotes move weekly. The calculator’s 6.00% is an example, the same way the I-bond tool refuses to scrape Treasury. If you can pay the recast, you do not need IDR, you have no PSLF path, and the after-fee rate actually clears the federal payment plus the eventual tax bomb — then the math can favor private. Extra principal belongs on that note, or on federal loans you have already decided to amortize. It does not shorten a RAP 360-payment clock.
Do not skip a 401(k) match to crush 6% federal. A 100% match is not a student-loan APR. Order of operations still starts at the match — never skip it.
Free tool
IBR, RAP, private recast, forgiveness clock, tax-bomb flag, extra principal, bars, shareable URL. Rates are yours.
PayPal
12 steps: NSLDS pull, SAVE exit, recert, PSLF file, tax-bomb calendar, DTI recast, one-way refi door.
Only if you can name the federal features you do not need, and the private quote wins after fees. One-way door.
Vacated March 10, 2026. 90-day servicer notices from July 1, 2026. Pick IBR or RAP. No 2027 SAVE.
1–10% of AGI, $50/dependent, $10 min, 30-year clock, interest waiver, $50 principal match. Open July 1, 2026.
Generally yes. ARPA ended 12/31/2025. PSLF is the work-requirement exclusion. Form 1099-C, maybe Form 982.
10% or 15% of (AGI − 150% of 2026 FPL), cap at 10-year Standard. Family of 1: 150% = $23,940.
$0 IDR often counts as 0.5% of balance on a conventional file. Use the DTI tool. Do not guess.
On a note you will amortize, yes — it is the rate, guaranteed. On RAP/IBR the clock is payments, not balance.
Usually RAP or Tiered Standard only, including for older Direct balances. IBR eligibility can vanish.
Educational only. Confirm StudentAid.gov, your servicer, IRS Publication 4681, and a written refinance quote before you sign. Written by Thomas Sanders.