Repayment Assistance Plan

The U.S. Department of Education launched the Repayment Assistance Plan (RAP), allowing federal student loan borrowers to make income-based payments of 1-10% of their income, reduced by $50 per dependent. Borrowers making 360 on-time payments can apply for an interest waiver and matching principal payment. A separate Tiered Standard plan offers fixed repayment terms of 10-25 years based on loan amounts, replacing the previous 10-year default plan. Both programs began on July 1.

Student-loan borrowers in the SAVE repayment plan began receiving notices on July 1 to switch to new repayment plans within 90 days. Servicers like EdFinancial and Nelnet are notifying borrowers in waves, with some having until May 2027 to transition. The SAVE plan was eliminated via a court settlement, and borrowers are being directed to the Repayment Assistance Plan (RAP) or standard repayment options.

President Donald Trump's One Big Beautiful Bill Act introduces new federal student loan repayment plans and stricter borrowing limits, affecting lower-income borrowers, graduate students, and parents. The changes include a tiered standard repayment plan and a Repayment Assistance Plan (RAP), with existing repayment options set to be phased out by 2028.

Student loan repayment plans face significant changes starting July 1, including the end of the SAVE Plan and the introduction of two new repayment options. Borrowers must switch to the Tiered Standard Plan or the Repayment Assistance Plan, with Parent PLUS borrowers facing stricter repayment terms and loan caps.

The U.S. Department of Education announced a 1% interest rate reduction for student loan borrowers enrolled in auto pay from July 1, 2023, through June 30, 2028. New repayment plans, including the income-driven Repayment Assistance Plan (RAP) and Tiered Standard Repayment Plan, will launch next month, with RAP offering a match on on-time payments and eligibility for Public Service Loan Forgiveness (PSLF) after 120 payments.

A legal filing seeks to halt the forced transfer of millions of student-loan borrowers off the SAVE repayment plan, which the Trump administration plans to eliminate. Borrowers will receive a 90-day window starting July 1 to switch to a new plan, or they will be automatically moved to more expensive options. The lawsuit argues the transfer would harm borrowers who reached relief thresholds under SAVE.

The Education Department under President Donald Trump announced a 1% interest-rate reduction for federal student-loan borrowers who enroll in autopay by September 30. Borrowers already in autopay receive an additional 0.75 percentage point reduction, with benefits lasting until June 30, 2028. The policy aims to encourage timely repayments and improve the federal loan portfolio's health.

Starting July 1, 7.5 million borrowers in the SAVE student loan repayment plan have 90 days to select a new plan before being moved to the standard repayment plan. Borrowers must check with their loan servicers for updates, and options include the standard plan, income-based repayment (10-15% of discretionary income), or the new Repayment Assistance Plan (RAP) launching in July.

Starting July 1, the SAVE student loan repayment plan will end, giving borrowers 90 days to choose a new plan. Borrowers who do not select a new plan will be moved to the standard repayment plan, with payments due by October 2026. Options include the standard plan, income-based repayment (10-15% of discretionary income), or the new Repayment Assistance Plan (RAP) starting at $10/month.

Student-loan borrowers on the SAVE plan will receive notices to transfer to a new repayment plan by July, with automatic placement into more expensive options if no action is taken. The Department of Education warns payments will likely increase under the new plans, while over 60 lawmakers urge borrowers to be placed in cheaper alternatives.