Student loan borrowers will have two new repayment options come July 1. Here's how to pick one
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- One Big Beautiful Bill Act mandates two new federal student loan repayment options beginning July 1 and phases out some existing income‑driven plans.
- RAP caps monthly payments at 1‑10 % of earnings, sets a $10 minimum, extends forgiveness to 30 years, and offers a $50 per month dependent credit plus possible subsidies for borrowers who are current but not reducing principal.
- Tiered Standard Plan provides fixed payments over several timelines based on total debt, creating a non‑income‑driven alternative.
- Center for Responsible Lending warns borrowers of confusion and urges careful review of all options.
- Institute of Student Loan Advisors notes RAP payments count toward Public Service Loan Forgiveness.
Why it matters: Millions of borrowers gain a lower‑cost, longer‑term repayment path, while existing IDR participants lose some benefits; the 30‑year forgiveness horizon and $50 dependent credit lower monthly payments for many families.
