First Federal Loan After July 1, 2026? Meet Your Two Repayment Options

If your first-ever federal student loan was disbursed on or after July 1, 2026, you're in the first wave of borrowers under the repayment system created by the 2025 overhaul (H.R. 1, the One Big Beautiful Bill Act). The changes are structural: instead of choosing among several income-driven plans, you have exactly two repayment options, and only one of them is income-driven.

Your Two Repayment Options

1. Standard 10-Year Plan

This is the default if you don't actively choose another plan. Fixed monthly payments pay off the loan in 10 years.

• Pros: debt-free in 10 years, least total interest paid, no risk of a tax bill from forgiveness
• Cons: payments can be high relative to graduate-level debt, no flexibility if your income is low or unstable

2. Repayment Assistance Plan (RAP) — Your Only Income-Driven Option

RAP replaced PAYE, ICR, and SAVE for new borrowers. It launched on schedule on July 1, 2026 and calculates your payment as a straight percentage of your total adjusted gross income (AGI) — there's no poverty-level income shield subtracted first, the way older plans worked.

• $0–$10,000 income: $10 minimum monthly payment
• $10,001–$20,000: 1% of AGI
• $20,001–$30,000: 2% of AGI
• Each additional $10,000 band adds one percentage point, topping out at 10% for AGI above $100,000
• A $50-per-dependent credit reduces your monthly payment
• If your payment doesn't cover that month's interest, the unpaid interest is waived outright — your balance doesn't grow from underpayment
• A built-in principal-assistance guarantee ensures at least $50 a month goes toward your principal, even if your calculated payment is lower
• Remaining balance is forgiven after 30 years (360 payments); public-service employees may qualify for Public Service Loan Forgiveness (PSLF) after 120 qualifying payments, same as under the older plans

• Pros: payments scale with income, built-in interest protection, forgiveness still available, especially useful for public-service careers or low-earning early years
• Cons: no 10-year payment cap the way PAYE or IBR had, 30 years is a long horizon, a forgiven balance is currently taxable unless tax law changes, and higher-income borrowers may eventually pay more than they would under Standard since RAP has no ceiling

Which Plan Should You Choose?

• Planning to work in public service? RAP is generally the stronger fit — your lower early payments still count toward PSLF's 120 payments, with tax-free forgiveness at the end.
• Struggling to afford payments right now? RAP's income-scaled formula and interest waiver make it the more forgiving option in the short term.
• Expecting a high income soon? The Standard plan (or refinancing once you can qualify for better private rates) may cost less long-term, since RAP's percentage keeps climbing with income and has no ceiling.
• Uncertain income, or planning a career break or further school? RAP's payment adjusts annually and drops during lean years, offering more flexibility than a fixed Standard payment.
• Worried about a runaway balance? RAP's monthly interest waiver is specifically designed to prevent the balance growth that borrowers on some older IDR plans experienced when payments didn't cover interest.

Can You Switch Between Them?

Yes. You can move between RAP and the Standard plan; you're not locked into your first choice. Since RAP is your only income-driven option in this cohort, there's no legacy-plan credit-portability issue to weigh the way earlier borrowers face — the main tradeoff is simply Standard's speed and certainty versus RAP's flexibility and lower near-term payments.

Before You Graduate

• Confirm your loan servicer and set up your online account
• Estimate your AGI if you're entering RAP — your first year's payment may be based on your most recent tax return or a manual income form
• Certify your public-service employment early if you're pursuing PSLF
• Run repayment simulations at StudentAid.gov's Loan Simulator across a few income scenarios before committing