The One Big Beautiful Bill Act introduces two new repayment options for federal student loan borrowers: the Repayment Assistance Plan (RAP) and the Tiered Standard Plan. RAP is an income-driven repayment plan that adjusts monthly payments based on a borrower's income, ranging from 1% to 10%, with a minimum payment of $10.
It offers forgiveness after 30 years and includes benefits such as a $50 monthly discount for each qualifying dependent. In contrast, the Tiered Standard Plan divides debt repayment into fixed payments over varying timelines based on the total amount owed, with terms ranging from 10 to 25 years.
Borrowers are advised to carefully evaluate these options, especially as existing income-driven plans will phase out by July 1, 2028. Experts suggest that those with lower incomes and higher debts may benefit more from RAP, while those with smaller balances might prefer the shorter repayment terms of the Tiered Standard Plan.
The changes are expected to create confusion among borrowers, highlighting the importance of understanding the implications of each repayment option