RAP vs. Tiered Standard Plan: How New Borrowers Choose

#Repayment

If your first federal student loan is disbursed on or after July 1, 2026, you have two repayment plans to choose from: the Repayment Assistance Plan (RAP) and the Tiered Standard plan. RAP sets your payment as a share of your income and cancels whatever's left after 30 years. The Tiered Standard plan charges a fixed amount that clears your loan in 10 to 25 years, with no forgiveness at the end.

Who has to choose between RAP and the Tiered Standard plan

This choice applies to new borrowers — anyone whose first federal loan is disbursed on or after July 1, 2026. Under the changes signed into law in 2025, the older income-driven plans (IBR, PAYEPay As You Earn (PAYE)A federal income-driven repayment plan that caps monthly payments at 10% of discretionary income and forgives remaining debt after 20 years. It is only available to borrowers who took out their first federal loans on or after October 1, 2007., ICRIncome-Contingent Repayment (ICR)The oldest federal income-driven repayment plan, with payments generally set at 20% of discretionary income or a fixed 12-year amount, whichever is lower. It is the only IDR plan available to Parent PLUS borrowers after consolidation.) and the old repayment lineup are closed to these loans. That leaves exactly two options: RAP, the income-driven plan, or the Tiered Standard plan, the fixed one.

If you already had federal loans before that date, this isn't your decision. Loans disbursed before July 1, 2026 keep their existing repayment plans, and the choice for those borrowers is a different one — usually between staying in IBRIncome-Based Repayment (IBR)A federal income-driven repayment plan that caps monthly payments at 10% or 15% of discretionary income, depending on when the loans were taken out. Remaining debt is forgiven after 20 or 25 years of qualifying payments. and moving to RAP. That comparison is covered in IBR vs. RAP.

The Tiered Standard plan is not the old Standard plan. The 10-year Standard plan still exists for older loans. The Tiered Standard plan is a separate, newer plan that only applies to loans first disbursed on or after July 1, 2026, and it sets your payoff term by how much you owe rather than fixing it at 10 years. It's easy to confuse the two because they share a name.

Parent PLUS loans follow a different track. A new Parent PLUS loanParent PLUS LoanA federal Direct PLUS Loan taken out by the biological, adoptive, or stepparent of a dependent undergraduate student. The parent is legally responsible for repayment, not the student. is treated as an excepted loan and can only use the Tiered Standard plan — it has no income-driven option. If you're a parent borrower, see Parent PLUS loan repayment rather than this comparison.

How the Repayment Assistance Plan (RAP) works

RAP ties your monthly payment to your income, so it rises and falls with what you earn:

• Your payment is roughly 1% to 10% of your income. The percentage starts low for lower incomes and steps up as income rises, reaching 10% at the higher end. Payments are based on your adjusted gross incomeAdjusted Gross Income (AGI)A borrower's total taxable income minus specific deductions, as reported on a federal tax return. Federal income-driven repayment payments are generally calculated using AGI., and there's a minimum payment of $10 a month.
• Unpaid interest is waived. If your monthly payment doesn't cover all the interest that accrued, the government forgives the rest, so your balance doesn't grow while you're paying as agreed.
• Your principal is matched down to $50 a month. If your payment doesn't reduce your principal by at least $50 in a given month, the government covers the difference so your balance still drops by $50.
• You get a $50 reduction for each dependent. That lowers the monthly payment for borrowers with children.
• Whatever's left is forgiven after 30 years. RAP reaches forgiveness after 360 qualifying payments.
• There's no cap on the payment. Unlike the older IBR plan, RAP has no ceiling tied to a standard payment amount, so a high income produces a high payment with nothing holding it down.

RAP also limits hardship pauses more tightly than the plans it replaced. Its full mechanics, including how it handles marriage and filing status, are covered in the Repayment Assistance Plan explained.

How the Tiered Standard plan works

The Tiered Standard plan charges a fixed monthly payment that pays your loan off over a set number of years, with the length of that term set by your balance. It doesn't look at your income or family size. The tiers:

• $25,000 or less: 10 years
• $25,000 to $50,000: 15 years
• $50,000 to $100,000: 20 years
• More than $100,000: 25 years

So a borrower who owes $30,000 pays a fixed amount designed to clear the loan in 15 years; a borrower who owes $120,000 has a 25-year term.

The Tiered Standard plan has no forgiveness. Because it's built to pay your loan in full over the term, there's no balance left to cancel at the end — the plan is finished when the loan is paid off. There's no income-driven forgiveness and no 30-year cancellation the way there is under RAP.

It doesn't qualify for Public Service Loan ForgivenessPublic Service Loan Forgiveness (PSLF)A federal program that forgives the remaining balance on Direct Loans after 120 qualifying monthly payments made while working full-time for a government or qualifying nonprofit employer.. Payments on the plan don't count toward the 120 that lead to PSLF. If you're working toward PSLF, RAP is the plan that keeps that path open. The Tiered Standard plan is also the plan you're placed on by default, so a borrower aiming for PSLF who makes no choice won't be building credit toward it.

What to weigh when you choose

The two plans solve for different things: RAP keeps your payment tied to your income and ends in forgiveness, while the Tiered Standard plan gives you a fixed, predictable payoff. In practice, the first thing most new borrowers look at is which plan is cheaper month to month — and often that's the deciding factor. A few things worth putting next to the payment number:

• The payment difference. Run both numbers. RAP's payment comes from your income and family size; the Tiered Standard payment comes from your balance and term. Whichever is lower right now is the one most borrowers lean toward, and there's nothing wrong with that starting point.
• Whether your income is likely to climb. RAP has no payment cap, so as your income grows, your RAP payment grows with it. If your earnings are likely to rise sharply, the RAP payment can eventually climb past the fixed Tiered Standard payment.
• Whether you expect to pay the loan off anyway. If you're going to clear the balance regardless, the Tiered Standard plan gives you a fixed, predictable schedule and a defined end date, and the forgiveness feature of RAP may never come into play for you.
• A higher income with a smaller balance. Here the Tiered Standard payment often comes out lower than RAP. It's based on paying your balance off over the term, so a modest balance produces a modest payment — while RAP looks only at your income, which for a high earner can run higher.
• Public Service Loan Forgiveness. If PSLF is your goal, RAP is the only one of the two plans that keeps it on the table. RAP and PSLF covers how they work together.
• A balance that would otherwise grow. RAP's interest waiver and principal match mean your balance doesn't grow during low-income years and drops by at least $50 a month. That protection matters most when your income is low relative to what you owe.

None of these points ranks one plan over the other — they're the levers that make one plan cheaper or more useful than the other for a given borrower. The right call depends on your own income, balance, and plans for the loan.

Can you switch between the two later?

Yes. New borrowers can move between the two plans after their loans enter repayment — from the Tiered Standard plan to RAP, or from RAP to the Tiered Standard plan, with no limit on switching back and forth. What's off the table is the older income-driven lineup: IBR, PAYE, and ICR are closed to any loan first disbursed on or after July 1, 2026, so those aren't plans you can switch into. RAP and the switching process are still being set up on studentaid.gov, so your servicer can confirm the current steps when you're ready to change.