Student loan borrowers will have two new repayment options come July 1. Here’s how to pick one Starting July 1, federal student loan borrowers will have access to two new repayment options: the Repayment Assistance Plan (RAP), an income-driven plan, and the Tiered Standard Plan, which bases repayment timelines on debt amount. These changes are part of the One Big Beautiful Bill Act and will lead to the discontinuation of some existing repayment plans. Borrowers are encouraged to carefully review all options, comparing monthly payments, total costs, and forgiveness timelines to determine the most suitable plan for their financial situation.

• Two new federal student loan repayment options, RAP and Tiered Standard Plan, become available on July 1.
• RAP is an income-driven repayment plan with monthly payments ranging from 1% to 10% of earnings, with a $50 monthly discount per dependent and potential principal reduction subsidies.
• The Tiered Standard Plan offers fixed payments over four different timelines (10, 15, 20, or 25 years) based on the total debt amount.
• Some existing income-driven repayment plans like ICR and PAYE will no longer offer debt forgiveness after July 1, 2028, though borrowers can remain in them until then.
• Payments made under RAP count towards Public Service Loan Forgiveness (PSLF), which forgives debt after 10 years for public service employees.
• Borrowers should compare monthly payments, total repayment amounts, and the timeline to debt forgiveness when choosing a plan.
• Those with lower incomes and higher debt may prefer RAP, while those with smaller balances might favor the Tiered Standard Plan’s shorter repayment period.