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Education Department to Launch Two New Student Loan Repayment Plans on July 1
The Education Department will introduce a tiered Standard repayment plan and a Repayment Assistance Plan for federal student loans starting July 1. The plans differ from existing options in repayment terms, payment calculations, and eligibility for forgiveness.
May 29, 1:30 PM·1m read1 source
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The Education Department will introduce two new repayment plans for federal student loans on July 1. One plan sets fixed monthly payments based solely on loan balance, interest rate, and repayment term. The second plan calculates payments as a percentage of a borrower's adjusted gross income.
Under the Tiered Standard plan, repayment terms range from 10 to 25 years depending on total loan balance. Balances under $25,000 receive a 10-year term. Payments under this plan do not adjust for income and do not qualify for Public Service Loan Forgiveness. Borrowers must repay the full balance by the end of the term.
The Repayment Assistance Plan bases monthly payments on a percentage of adjusted gross income. Borrowers earning $10,000 or less pay 1 percent of AGI. The plan allows no income exclusion and deducts only $50 per dependent child from monthly payments.
Non-PSLF borrowers must make payments for 30 years to qualify for forgiveness. Payments made under this plan count only toward forgiveness under this plan and do not transfer to other income-driven plans.
