Repayment Changes

Repayment Plans for New Borrowers

Borrowers with new loans made on or after July 1, 2026, can be repaid using only two plans:

• New standard repayment plan:
  • The tiered standard repayment plan will replace all fixed-payment plans and use a sliding repayment term based on the borrower’s outstanding principal at the time they enter the plan.
• New income-based repayment plan, RAP:
  • The OBBBA removes the prior requirement that borrowers must demonstrate partial financial hardship to enter an IBR plan.
  • For married borrowers filing separately, the spouse’s AGI and dependents are excluded from payment calculations. Payments range from 1–10% of AGI with a $10 minimum; borrowers receive a $50 monthly reduction per dependent, and repayment lasts 30 years.
  • If a borrower’s required payment is less than the monthly interest, the remaining interest is subsidized, preventing negative amortization.
  • If an on‑time payment reduces principal by less than $50, ED covers the difference up to the amount paid.
  • IBR monthly payments remain capped at what the borrower would owe under the standard repayment plan.
  • Parent PLUS borrowers with a Direct Consolidation Loan who were previously limited to ICR may now enroll in IBR, provided they enroll in ICR by July 1, 2026, and make at least one ICR payment before switching.

If a borrower with new loans made on or after July 1, 2026, does not select a plan, they will be assigned to the new standard repayment plan.

After all current borrowers move out of all other current IDR or Standard plans, they will be sunset.

Repayment Plans for Current Borrowers

If all of a borrower's loans were made before July 1, 2026, the borrower will still have access to these repayment plans:

• Pay As You Earn (PAYE) Repayment Plan
• Income-Contingent Repayment (ICR) Plan
• Saving on a Valuable Education (SAVE) Plan / Revised Pay As You Earn (REPAYE) Plan*
• Income-Based Repayment (IBR)
• Legacy Standard Repayment Plans
• Extended Repayment Plan
• Graduated Repayment Plan

*SAVE borrowers are currently in forbearance and their access to this plan could be affected by court decisions.

If a borrower takes out more loans after July 1, 2026, including consolidation loans, they will lose access to these plans.

Borrowers in PAYE or ICR have until July 1, 2028, to switch to another repayment plan, including IBR or RAP. If they do not choose a plan by that date, ED will automatically place them in RAP or IBR based on eligibility.

Loan Rehabilitation

Borrowers may rehabilitate a defaulted loan twice, including Federal Direct Loans, FFELP loans, and Federal Perkins Loans, even if the loans were made before July 1, 2026. Beginning July 1, 2027, any Direct Loan rehabilitation will require a minimum monthly payment of $10 during the rehabilitation period.

Loan deferment options

The economic hardship and unemployment deferments will be sunset. Borrowers with loans made on or before July 1, 2027, may still use these deferment options under the current rules.

Loan forbearance

Loans made on or after July 1, 2027, will be eligible for up to nine months of forbearance within any two‑year period. Under current rules, borrowers may receive up to 12 months of forbearance at a time, with a cumulative limit of three years.