Student Loan Borrowers Gain Two New Repayment Options Starting July 1 Millions of federal student loan borrowers will have access to two new repayment plans beginning on July 1, as part of changes introduced by the One Big Beautiful Bill Act. These updates replace some existing repayment options, offering borrowers more flexibility but also requiring careful consideration to choose the most suitable plan. The Repayment Assistance Plan (RAP), a new income-driven repayment (IDR) option, sets monthly payments as a percentage of a borrower’s income, with rates ranging from 1% to 10% of earnings. Unlike previous IDR plans, RAP does not shield a portion of income from calculations and instead uses adjusted gross income (AGI), which is total earnings before taxes minus certain deductions. Borrowers will also face a minimum monthly payment of $10, a change from some current IDR plans that allow certain low-income borrowers to pay $0. RAP also offers a $50 monthly discount for each qualifying dependent and may provide subsidies to those who are making payments but not reducing principal. Additionally, payments under RAP count toward the Public Service Loan Forgiveness (PSLF) program’s 10-year timeline, which benefits not-for-profit and government employees. The Tiered Standard Plan, the second new option, replaces the traditional Standard Plan by offering fixed payments spread over four different repayment periods, depending on the borrower’s total debt. Borrowers with balances up to $24,999 will still repay over 10 years, while those with $25,000 to $49,999 will have a 15-year term, $50,000 to $99,999 will take 20 years, and those with over $100,000 will repay over 25 years. This structure allows for tailored repayment timelines based on debt size.#repayment_assistance_plan #one_big_beautiful_bill_act #tiered_standard_plan #income_based_repayment #public_service_loan_forgiveness
