Overview
- Starting July 1 the Education Department will offer two repayment choices for federal student loans: the income-driven Repayment Assistance Plan (RAP) and a Tiered Standard Plan.
- RAP sets monthly bills at about 1%–10% of adjusted gross income with a $10 minimum, provides a $50 monthly credit per qualifying dependent, can trigger principal-reduction subsidies, and leads to loan forgiveness after 30 years.
- The Tiered Standard Plan fixes repayment length by total balance: up to $24,999 pays over 10 years; $25,000–$49,999 over 15 years; $50,000–$99,999 over 20 years; and $100,000 or more over 25 years.
- Borrowers with existing loans can remain in some older plans for a transition period and some plans like ICR and PAYE remain available through July 1, 2028, but rules differ on whether prior payments count toward forgiveness and RAP payments generally will not count toward other plans' forgiveness timelines.
- Advocates say millions of borrowers, including those in the popular SAVE plan, must compare monthly bills, total long‑run costs and Public Service Loan Forgiveness timing before choosing or being auto-assigned a plan.