Education Department Launches 2 Tiered Student Loan Plans July 1 as RAP Forgiveness Stretches to 30 Years
Updated
Updated · Forbes · May 29
Education Department Launches 2 Tiered Student Loan Plans July 1 as RAP Forgiveness Stretches to 30 Years
4 articles · Updated · Forbes · May 29
July 1 will bring two new federal student loan repayment options: a Tiered Standard plan with fixed payments and RAP, an income-driven plan tied directly to adjusted gross income.
The Tiered Standard plan sets repayment terms by balance—10 years under $25,000, 15 years for $25,000-$49,999, 20 years for $50,000-$99,999, and 25 years at $100,000 or more—and does not qualify for PSLF.
RAP charges 1% of AGI at $10,000 income, rising by 1 percentage point per $10,000 until 10% at $100,000 or more, with no monthly payment cap and only a $50 deduction per dependent child.
RAP payments can count toward PSLF, but non-PSLF forgiveness requires 30 years, and time paid under RAP will not transfer toward forgiveness under other income-driven plans.
Most Direct loans qualify, but Parent PLUS loans are barred from RAP; borrowers who take new federal loans or consolidate on or after July 1 will generally lose access to legacy plans such as IBR, ICR and PAYE.
Your student loan plan is being replaced. Will the new options leave you paying more for a longer period of time?
With new caps on Parent PLUS loans, how will families afford college as tuition continues to rise?
The government is overhauling student debt. But could these changes make a college degree less accessible for many?
July 2026 Federal Student Loan Reforms: New Repayment Plans, Borrowing Caps, and What They Mean for Borrowers
Overview
A major overhaul of the federal student loan system will take effect in July 2026, introducing new repayment structures and tighter borrowing limits. These changes, set by the Department of Education’s RISE regulations, aim to curb access to billions in student loans and reconfigure how borrowers manage their debt. Key updates include the launch of the Tiered Standard Plan, which offers fixed monthly payments similar to car loans or mortgages, and the introduction of stricter borrowing caps for students and parents. Together, these reforms mark a significant shift in how federal student loans are accessed and repaid.