New H.R.1 Bill adjustments to loan repayment options took effect on July 1, 2026. The new law replaces most existing income-driven repayment plans with a new framework for federal student loan repayment. If you borrow additional loan funds on or after July 1, 2026, your repayment options will be limited to the tiered Standard Plan (with fixed monthly payments and fixed terms) and the Repayment Assistance Plan (RAP). This will affect both current and prospective students who take out new federal loans.
This summary of definition changes on loan repayment options was published by the National Association of Student Financial Aid Administrators (NASFAA).
Repayment plan options for New Borrowers
Borrowers with new loans made on or after July 1, 2026, can be repaid using only two plans: a new standard repayment plan with fixed monthly payments and fixed terms ranging from 10 to 25 years based on the amount borrowed and the new income-based repayment plan, the Repayment Assistance Plan (RAP).
Repayment plan options for Current Borrowers
Borrowers with no new loans made on or after July 1, 2026, can continue to be eligible to enroll in the current Standard, current Income Based (IBR), Graduated, and Extended repayment plans, and could also opt in to the new RAP. Current borrowers enrolled in ICR, PAYE, or SAVE plans must transition to a new repayment plan by July 1, 2028. If no selection is made by that date, they will be moved into RAP.
Repayment Assistance Plan monthly payments calculation
Borrowers who either don’t have an Adjusted Gross Income (AGI) or whose AGI doesn’t reasonably reflect the borrower’s current income are required to provide the Department of Education (ED) with documentation to calculate their monthly payments.
Repayment Assistance Plan monthly payment amount
The law requires a $10 minimum monthly payment under RAP, and a borrower’s RAP monthly payment will be based on their AGI and number of dependents. Income and dependents are calculated separately for married borrowers who filed taxes separately from their spouses.
Income Based Repayment (IBR) plan changes
An earlier version of the bill proposed to remove the cap on monthly payments made under the IBR plan to no more than the borrower would have paid under the standard 10-year repayment plan, while the law retains the cap. The law also removes the requirement for borrowers to demonstrate a partial financial hardship in order to enroll in IBR. Additionally, the law retains cancellation for balances of loans repaid under IBR at 25 years.
Economic Hardship Deferment and Unemployment Deferment
The law eliminates the Economic Hardship Deferment and Unemployment Deferment for borrowers with an effective date for borrowers who received a loan on or after July 1, 2027. A borrower who receives a loan on or after July 1, 2027, may only be eligible for a discretionary forbearance for no more than 9 months during a 24-month period.