Decision time is near for millions of federal student loan borrowers who will need to pick a new repayment plan starting July 1.
Due to the Big Beautiful Bill Act passed in July 2025, repayment plans for student loans will look different, requiring borrowers to choose from just two options: a Repayment Assistance Plan and a Tiered Standard Plan. For those who do not choose in time, the government will make a decision for them.
Among those affected are the roughly 7 million loan holders enrolled in Saving for a Valuable Education (SAVE), the Biden-era repayment program. The income-driven plan offered one of the most affordable options for individuals.
SAVE holders have already been in a complicated situation since 2024, when they were placed in a nearly two-year, interest-free forbearance due to Republican-led legal battles. Starting July 1, those enrolled in SAVE will receive notice from federal loan servicers with further instructions and deadlines on how to take action.
But it’s not just SAVE enrollees affected, as other repayment plans will also be phased out.
What are the new student loan payment plans?
The Repayment Assistance Plan, or RAP, is an income-driven option first offered in the ’90s in an effort to make repayments affordable for individuals. These plans tend to cap monthly payments based on an individual’s income level, canceling remaining debt after two decades of payment.
RAP determines payments based on adjusted gross income, with payments ranging from 1% to 10% (higher earners pay a higher percentage), with a mandatory $10 minimum.
Perks for the plan include $50 off per dependent on their monthly bills, as well as giving individuals credit on the timeline for the Public Service Loan Forgiveness program.
The tiered plan will fix a borrower’s debt into payments spread across four time frames. Those with a loan below $25,000 will have to repay the loan within 10 years; the repayment time is longer for higher loan amounts.
