Student loan changes are happening soon: This is how much you’ll pay with the Repayment Assistance Plan

Starting July 1, 2026, Americans who want to take out a new student loan will only have two choices of how to repay. This measure is part of the One Big, Beautiful Bill Act, which was renamed the Working Families Tax Cuts Act, or simply the Act, designed to “simplify” the student loan repayment process and make it more affordable for borrowers.

The two new plans are the Repayment Assistance Plan and the Tiered Standard repayment plan. The former will provide relief from runaway interest and matching principal payment benefit to eligible borrowers, while the latter will implement a sliding-scale repayment structure extending repayment periods to lower monthly payments.

How much you’ll pay with the Repayment Assistance Plan

The Department of Education says that borrowers who enroll in the Repayment Assistance Plan (RAP) will have their federal student loan repayments based on between one to ten percent of their income. Additionally, they will have $50 taken off their monthly student loan bill for each of their dependents.

Those borrowers enrolled in RAP that make on-time monthly payments will have the remaining unpaid monthly interest waived. Furthermore, if these same borrower’s monthly payment does not reduce their principal by at least $50, the DOE will provide a matching payment up to $50 each month.

How much you’ll pay with the Tiered Standard repayment plan

According to NPR, the Tiered Standard repayment periods would be based on the following student loan debt amounts incurred:

• $25,000 or less: 10 years
• $25,000-$49,999: 15 years
• $50,000-$99,999: 20 years
• $100,000 or more: 25 years

The Department of Education gives the example of a borrower with $30,000 initial loan balance. Previously that individual would have had a minimum monthly payment of $341 under a standard 10-year plan. However, “the borrower’s minimum monthly payment decreases to $262 because the loan can be repaid over 15 years rather than 10 years.”

What if you already have a student loan repayment plan?

If you are one of the over 7 million borrowers that managed to get on Saving on a Valuable Education (SAVE) plan, you’ll be receiving a notice that you’ll have to switch to another repayment plan of your choice or have one chosen for you. What was touted as “the most affordable repayment plan in history,” was struck down by a federal court, officially putting to rest the Biden-era measure to provide relief for student loan borrowers.

For everyone else, whether you need to switch plans or not depends on two factors, what type of repayment plan you have and if you plan to take out more student loans in the future.

Firstly, no matter what, both the Income-Contingent Repayment (ICR) and the Pay As You Earn (PAYE) plans will be phased out by July 1, 2028. They are no longer available for borrowers, but those who are already enrolled will have to change by the phaseout date.

Those who don’t plan to take out any new federal student loans after July 1, 2026, they can remain on their previous repayment plan, except for the above-mentioned three. Those who plan to take out new loans after July 1, 2026, will have to switch all of their federal student loans to one of the new repayment plans.

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