2026 student loan rules narrow borrowing and repayment to RAP and Tiered Standard plans

New graduate borrowing closed to Income-Based Repayment from July 1, 2026

Loans originated on or after July 1, 2026 for law, medical or other graduate study can only be repaid under the Repayment Assistance Plan (RAP) or the Tiered Standard plan, cutting off access to Income-Based Repayment for those new borrowers. The Repayment Assistance Plan sets monthly payments generally between 1% and 10% of income, with a $50 reduction applied for each dependent. Because the mechanics of two plan options now replace a familiar single default, anyone modeling graduate debt needs to run side-by-side numbers rather than assume the old rule. The new repayment calculators published alongside the rule change are built specifically for that comparison.

RAP runs to 30 years; Tiered Standard finishes in about 18

The Repayment Assistance Plan can extend to 360 payments, a 30-year horizon, and any balance eventually forgiven may be treated as taxable income. Tiered Standard by contrast is structured to retire the loan in about 18 years. That gap in duration and the tax treatment of any forgiven portion is the central trade-off a borrower has to weigh.

A short RAP-vs-Tiered comparison belongs at the front of any graduate debt worksheet for the 2026 cohort, alongside the income-driven 1%–10% range that anchors the RAP payment. Readers already running ordinary loan scenarios can adapt the same logic with a general Loan Payoff Calculator to see how term length alone changes total interest paid.

Grad PLUS eliminated and Parent PLUS limits tightened in 2026

Starting in 2026, Grad PLUS loans are being eliminated and Parent PLUS loans face new limits, cutting off what graduate and professional students can borrow and shifting more of the funding decision onto the student’s own RAP-eligible balance. Parents who previously tapped Parent PLUS now have a harder ceiling on what they can cover, which directly changes the cash flow assumptions a family should plug into a repayment worksheet. Borrowers can model the resulting parent-versus-student split with a Compound Interest Calculator to compare how the same tuition gap grows under each loan type.

What borrowers and parents should model before signing

Four concrete inputs deserve a number before anyone commits: the borrower’s expected income (to find the RAP percentage between 1% and 10%), the count of dependents (each one subtracting $50 from the RAP payment), the projected payoff horizon under each plan (up to 30 years for RAP versus about 18 years for Tiered Standard), and the size of any potential forgiven balance that could be taxed. Running those four values through a fresh comparison calculator lets a household see whether RAP’s lower monthly payment is worth a longer term and a possible tax bill on forgiveness.

The Mortgage Calculator and the Car Loan Calculator walk through the same amortization mechanics in a more familiar setting and are useful as a sanity check on how extending term length raises total interest.

Where to watch next

The rule change is already in force for loans made on or after July 1, 2026, so the next concrete checkpoint is the IRS treatment of any RAP-forgiven balance at tax time and any further guidance from the Department of Education on Parent PLUS limits under the 2026 cohort. Borrowers should keep repayment inputs current as the new plan mechanics settle.