July's Federal Student-Loan Overhaul: RAP Debuts, Caps Tighten, PSLF Rules Shift

Starting July 1, the federal student-loan system undergoes a sweeping overhaul: a new Repayment Assistance Plan (RAP) will consolidate income-driven options with payments roughly 1%–10% of income and forgiveness after 30 years; the Biden-era SAVE plan ends, with about 7 million borrowers transitioning to new plans and many seeing higher monthly payments; legacy plans like PAYE and ICR will be phased out by 2028; new borrowing caps tighten Parent PLUS and Grad loans, Grad PLUS for new borrowers ends, and PSLF criteria are updated; there’s also a 1% auto-pay interest-rate reduction through 2028. Borrowers will receive 90-day notices and must act to choose a plan or risk automatic placement into a standard plan with fewer benefits.