WASHINGTON, D.C. — Two new federal student loan repayment options will become available to borrowers starting July 1 under the One Big Beautiful Bill Act. The U.S. Department of Education will offer the Repayment Assistance Plan (RAP), an income-driven repayment (IDR) option, and the Tiered Standard Plan, which adjusts repayment timelines based on total debt.

The Repayment Assistance Plan (RAP) sets monthly payments between 1% and 10% of a borrower's earnings, with higher earners paying a larger share. Unlike other IDR plans, RAP bases payments on adjusted gross income (AGI) without shielding any portion of income. All borrowers under RAP must pay a minimum of $10 per month, and those with qualifying dependents receive a $50 monthly deduction per dependent. The plan leads to loan forgiveness after 30 years, and payments count toward the 10-year requirement for Public Service Loan Forgiveness (PSLF).

Borrowers who make payments under RAP but do not reduce their principal may receive a subsidy from the Department of Education. "In some cases, the feds will even throw in some dollars to reduce principal if the billed payment doesn't do that on its own," said Betsy Mayotte, president of The Institute of Student Loan Advisors. "While payments on the existing plans, such as IBR, PAYE and ICR count towards the RAP's 30-year forgiveness, RAP payments don't count towards the other plans' forgiveness timeline," she said.

The Tiered Standard Plan replaces the current 10-year fixed repayment schedule with four possible timelines based on loan balance. Borrowers owing up to $24,999 will repay over 10 years, while those with balances between $25,000 and $49,999 will repay over 15 years. The plan applies fixed payments across the selected term.

Existing borrowers retain access to the Income-Based Repayment (IBR) plan, with payment percentages and forgiveness timelines varying based on loan origination dates. The ICR and PAYE plans remain available until July 1, 2028, though they no longer offer debt forgiveness. "The only reason you'd want to be in either plan, then, is if it brings you the lowest monthly payment," said Carolina Rodriguez, director of an education debt assistance organization in New York.

Consumer advocates urged borrowers to review their options carefully. "Borrowers are facing a great deal of confusion and anxiety ahead of the changes," said Jaylon Herbin, director of federal campaigns at the Center for Responsible Lending. "We're encouraging borrowers to carefully review all available repayment options before enrolling in a new plan," he added.