New Repayment Assistance Plan (RAP) <p>The Repayment Assistance Plan (RAP) is a new Income-Based Repayment (IBR) option established through the One Big Beautiful Bill.</p> <p><strong>Key Features of the Plan</strong></p> <ul> <li>Borrowers who are married and file taxes separately will not have their spouse’s adjusted gross income (AGI) or dependents included in the monthly payment calculation.</li> <li>The minimum monthly payment is $10.</li> <li>Monthly payments range from 1% to 10% of income, based on the borrower’s AGI.</li> <li>Borrowers may receive a $50 reduction to their monthly base payment for each dependent.</li> <li>The repayment term is 30 years.</li> <li>The plan eliminates negative amortization, meaning loan balances will not grow due to unpaid interest.</li> <li>There is no cap on monthly payments, even if the payment amount exceeds what would be required under the Standard Repayment Plan.</li> <li>If a borrower makes an on-time payment and less than $50 is applied to the loan principal, the U.S. Department of Education (ED) may apply an additional principal payment. The additional amount will be the lesser of:</li> <li>$50</li> <li>the amount paid by the borrower minus the amount already applied to principal.</li> </ul> <p><strong>Transition from Current Repayment Plans</strong></p> <p>Current Income-Driven Repayment (IDR) plans and Standard Repayment plans will be phased out after existing borrowers transition to the new repayment structure.</p> New Standard Repayment Plan <p>The bill establishes a new Standard Repayment Plan with fixed repayment terms of 10, 15, 20, or 25 years. The repayment term is determined by the borrower’s total amount borrowed or outstanding loan balance for borrowers already in repayment.</p> Updates to Current Income Based Repayment (IBR) Plan <p>The bill removes the requirement for borrowers to demonstrate a partial financial hardship to qualify for the Income-Based Repayment (IBR) Plan.</p> <p>The legislation also:</p> <ul> <li>Retains loan forgiveness after 25 years of qualifying repayment for existing borrowers.</li> <li>Retains loan forgiveness after 20 years of qualifying repayment for new borrowers. <ul> <li>Allows eligible Income-Contingent Repayment (ICR) loans to be repaid under the IBR Plan.</li> </ul> </li> </ul> Repayment Plans for New Borrowers <p>Borrowers who receive new federal student loans on or after July 1, 2026, will have access to only two repayment plan options:</p> <ul> <li>Standard Repayment Plan</li> <li><strong>Repayment Assistance Plan (RAP</strong>), an Income-Based Repayment (IBR) plan.</li> </ul> <p></p> <p>Borrowers who do not select a repayment plan will automatically be enrolled in the new Standard Repayment Plan.</p> <p>Since all federal student loans must be repaid under the same repayment plan, borrowers who previously received loans before July 1, 2026, and later borrow additional loans on or after July 1, 2026, will also be limited to these two repayment options: <strong>the new Standard Repayment Plan</strong>, or <strong>RAP</strong>.</p> Repayment Plans for Current Borrowers <p>Borrowers who did not receive new federal student loans on or after July 1, 2026, may continue to enroll in the current <strong>Standard</strong>, <strong>Graduated</strong>, <strong>Extended</strong>, or <strong>current Income-</strong>Based Repayment (IBR) plans. These borrowers may also choose to enroll in the new Repayment Assistance Plan (RAP).</p> <p>Current borrowers may remain in, enter, or switch between existing Income-Driven Repayment (IDR) plans through July 1, 2028.</p> <p>Borrowers currently enrolled in the following repayment plans <strong>must</strong> transition to another eligible repayment option by July 1, 2028:</p> <ul> <li><strong>Income-Contingent Repayment</strong> <strong>(ICR)</strong></li> <li><strong>Pay As You Earn (PAYE) </strong></li> <li><strong>Saving on a Valuable Education (SAVE)</strong></li> </ul> <p></p> <p>Borrowers who do not select a new repayment plan by July 1, 2028, will automatically be enrolled in RAP<strong>.</strong></p> Repayment Requirements for Parent Plus Loans <p>New Parent PLUS Loans first disbursed on or after July 1, 2026, must be repaid under the Standard Repayment Plan and are not eligible for the Repayment Assistance Plan (RAP).</p> <p>Borrowers who enroll in RAP but also have loans that are not eligible for RAP, such as Parent PLUS Loans or certain consolidation loans, must repay those ineligible loans separately under an eligible repayment plan.</p> Repayment Requirements for Consolidation Loans <p>Consolidation loans first disbursed on or after July 1, 2026, are eligible only for:</p> <ul> <li>The new Standard Repayment Plan</li> <li>Repayment Assistance Plan (RAP).</li> </ul> <p></p> <p>Consolidation loans disbursed before July 1, 2026, including subsidized and unsubsidized consolidation loans, are treated like other eligible federal student loans. Borrowers currently enrolled in an Income-Driven Repayment (IDR) plan have until July 1, 2028, to select one of the following repayment options:</p> <ul> <li>a Standard Repayment Plan</li> <li>the current Income-Based Repayment (IBR) plan</li> <li>RAP</li> </ul> <p></p> <p>If a consolidation loan was used to repay a Parent PLUS Loan, the loan must enter the Income-Contingent Repayment (ICR) Plan before July 1, 2028, to become eligible for IBR.</p> <p>Borrowers who do not select a repayment plan by July 1, 2028, will be automatically assigned as follows:</p> <ul> <li>loans eligible for RAP will be placed into RAP, and</li> <li>loans not eligible for RAP will be placed into IBR.</li> </ul> Updates to Loan Rehabilitation Terms <p>Borrowers may rehabilitate a defaulted federal student loan up to two times, instead of the current limit of one time.</p> <p>The minimum monthly payment required to rehabilitate a Direct Loan is set at $10.</p> Updates to Loan Deferment Options <p>The bill eliminates the economic hardship and unemployment deferment options.</p> <p>Borrowers with loans made on or before July 1, 2027, may continue to use these deferment options under current rules.</p> <ul> <li>These deferment options will be phased out once all loans made prior to July 1, 2027, have been fully repaid.</li> </ul> Updates to Loan Forbearance <p>For loans made on or after July 1, 2027, borrowers may receive forbearance for up to nine months within any two-year period.</p> <p>This differs from current rules, which allow for forbearance of up to 12 months at a time, with a total cumulative limit of three years.</p> Additional Information <p><a href="https://studentaid.gov/announcements-events/big-updates">Big Updates to Federal Student Aid - Federal Student Aid (studentaid.gov)</a></p> <p><a href="https://www.nasfaa.org/ob3">One Big Beautiful Bill Act Web Center - National Association of Student Financial Aid Administrators (NASFAA)</a></p> <p><a href="https://www.naicu.edu/policy-advocacy/advocacy-resources/reconciliation-advocacy-center/frequently-asked-questions-about-the-one-big-beautiful-bill-act">FAQs about the OBBBA - National Association of Independent Colleges & Universities (NAICU)</a></p> <p><a href="https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2025-07-18/federal-student-loan-program-provisions-effective-upon-enactment-under-one-big-beautiful-bill-act">Federal Student Loan Program Provisions Effective Upon Enactment Under the One Big Beautiful Bill Act (GEN-25-04) - Federal Student Aid Partners</a></p>