Student loan repayment: the Repayment Assistance Plan, and the 2028 deadline

Federal student loan repayment is being rebuilt around a single new plan, and the mechanism is already law. This page is written from the statute, Public Law 119-21, rather than from a summary of it, because the Department of Education's own guidance is still catching up and the dates in the law are what will actually happen.

The new plan is called the Repayment Assistance Plan. It is added to the Higher Education Act as section 455(q), and it replaces the tangle of income-driven plans with one formula.

What you would pay

The plan starts from your adjusted gross income, the figure on your tax return, and applies a percentage that rises in bands. That annual figure is divided by 12 to give the monthly payment, and then $50 comes off for each dependent.

The bands run:

• Adjusted gross income of $10,000 or less: a flat $120 a year
• More than $10,000 up to $20,000: 1 percent
• More than $20,000 up to $30,000: 2 percent
• More than $30,000 up to $40,000: 3 percent
• More than $40,000 up to $50,000: 4 percent
• More than $50,000 up to $60,000: 5 percent
• More than $60,000 up to $70,000: 6 percent
• More than $70,000 up to $80,000: 7 percent
• More than $80,000 up to $90,000: 8 percent
• More than $90,000 up to $100,000: 9 percent
• More than $100,000: 10 percent

A borrower earning $55,000 with no dependents is in the 5 percent band. That is $2,750 a year, or about $229 a month. The same borrower with two dependents pays $129. Whatever the arithmetic produces, the floor is $10 a month.

A married borrower who files a separate return is assessed on their own income alone, and can count only the dependents claimed on that return.

Two provisions that matter more than the percentage

Unpaid interest is not charged. In any month when your payment does not cover the interest that accrued, the shortfall is not added to what you owe. That single sentence removes the feature borrowers hate most about income-driven repayment, where a balance grows for years despite every payment being made on time.

There is a matching principal payment. If you make an on-time payment and it reduces your principal by less than $50, the Secretary reduces the balance by the difference, up to $50. So every on-time month moves the principal by at least $50, even when the payment itself is small.

Together those two rules mean a balance under this plan should fall rather than grow, which was not true of the plans it replaces.

Forgiveness after 360 payments

The balance is cancelled once you have made 360 qualifying monthly payments, which is 30 years of them, or earlier if the loan is simply paid off. Cancellation applies to borrowers who took part in the plan and whose most recent payment was made under it.

For anyone in public service, on-time payments under the new plan count toward Public Service Loan Forgiveness. The statute adds them to the list explicitly, so time on this plan is not lost time for that purpose.

The dates

July 1, 2026 is the line between old and new. The older repayment plans remain available to borrowers who took their loans before that date and have not borrowed since.

July 1, 2028 is the date that will surprise people. Borrowers repaying under the older income-contingent plans have to select one of three options: the Repayment Assistance Plan, income-based repayment under section 493C, or another plan still authorised under section 455(d)(1). Repayment under the plan chosen begins on July 1, 2028, and a borrower can start earlier if they want to.

If you do not choose, the choice is made for you. The statute directs the Secretary of Education to enroll a borrower who fails to select into the Repayment Assistance Plan where the loan qualifies, or into income-based repayment where it does not, and to begin repayment on that basis on July 1, 2028. Doing nothing is therefore a decision, and it may not be the cheapest one.

July 1, 2027 brings a separate floor: for loans made on or after that date, the total monthly payment across all such loans cannot be less than $10.

What else the same law changed

Graduate and professional PLUS loans are terminated, and new loan limits are set for graduate students, professional students and parent borrowers. The law also changes deferment and forbearance, loan rehabilitation and student loan servicing, and delays two rules on borrower defense and closed school discharges. Those sit in sections 81001 and 82002 through 82005 of the same Act.

What this page cannot tell you

The statute sets the rules. It does not tell you which loans you hold, who services them or what you are currently paying, and the Department of Education's implementation guidance will fill in procedure the law leaves open. Your own position starts at Federal Student Aid, and this page will be updated as the Department publishes the detail.