Another federal student‑loan plan is coming

A new federal student-loan repayment plan is about to arrive at the same moment an old one is being pushed off the stage. On July 1, 2026, the Education Department says it will launch the Repayment Assistance Plan, or RAP, while also starting the process of moving borrowers out of the Biden-era SAVE plan. Borrowers now in SAVE are expected to get notices from servicers beginning July 1 and will have at least 90 days to pick another legal repayment plan before being shifted into a standard plan if they do nothing (ed.gov, forbes.com). That makes this less a debut than a handoff. RAP was created by the 2025 budget reconciliation law, which rewrote the federal repayment system and set July 1, 2026 as the date the new plan becomes available for eligible Direct Loan borrowers. The same law also starts phasing out older income-driven options, with SAVE, PAYE, and ICR scheduled to end by July 1, 2028 (congress.gov, ticas.org). RAP works differently from the plans many borrowers know. Older income-driven plans usually looked at “discretionary income,” which means income above a protected floor tied to the poverty line. RAP instead uses a share of a borrower’s adjusted gross income, with payments starting at a $10 monthly minimum for the lowest earners and rising with income; the law also includes reductions tied to dependents, full unpaid-interest relief when a payment does not cover monthly interest, and a government principal match of up to $50 in some months (congress.gov, mass.gov, sofi.com). That design produces the strange mix that has made RAP so hard to read politically. It can look more borrower-friendly than a plain standard plan because balances are less likely to swell from unpaid interest, and because even small payments can chip away at principal. But it can also be harsher than older income-driven plans for people with very low incomes, since RAP does not exempt a slice of income before calculating the bill. The Institute for College Access & Success argues that this shift will raise payments for many borrowers and could hit the poorest borrowers hardest (ticas.org, ticas.org). The forgiveness clock is longer, too. Existing income-driven plans generally offered cancellation after 10 to 25 years, depending on the plan and the borrower’s circumstances. RAP stretches that maximum repayment period to 30 years before any remaining balance is forgiven, which means a borrower could get a steadier balance month to month and still stay in debt much longer (congress.gov, ticas.org). The biggest unanswered question is not what RAP says on paper, but how smoothly the government can move millions of people into a new system on time. The Education Department has said RAP and a new Tiered Standard Plan will both be available on July 1, 2026, and servicers are already warning borrowers that SAVE ended after a March 10, 2026 court order. Forbes noted that the practical choice for many borrowers may come down to comparing RAP with Income-Based Repayment, not waiting for a broad forgiveness event that is not coming. For now, the concrete date is July 1, and the concrete risk is a notice from a servicer that starts a 90-day clock (ed.gov, mohela.studentaid.gov, forbes.com).