How to pay for college · By CalChannel Editorial Team · Updated September 29, 2026
Federal student loan repayment usually begins after a six-month grace period once you graduate, leave school or drop below half-time enrollment. Since July 1, 2026, anyone with a federal Direct Loan first disbursed on or after that date can repay only under two plans: the income-driven Repayment Assistance Plan (RAP) or the Tiered Standard Plan. Under RAP, payments are 1% to 10% of adjusted gross income, with a $10 minimum.
Federal student loan repayment changed a lot in 2026. The One Big Beautiful Bill Act created two new plans, RAP and the Tiered Standard Plan, and is phasing out some older income-driven plans. Which plans you can use now depends on when your loans were first disbursed.
This guide explains when payments start, how RAP and the Tiered Standard Plan work, what happens to older plans, and where to get help.
| Fact | Details |
|---|---|
| When payments start | After a six-month grace period for Direct Subsidized and Unsubsidized Loans |
| Plans for loans first disbursed on or after July 1, 2026 | Repayment Assistance Plan (RAP) or Tiered Standard Plan |
| RAP payment | 1% to 10% of AGI divided by 12, minus $50 per dependent; at least $10 a month |
| RAP discharge | After 360 qualifying monthly payments over at least 30 years |
| Tiered Standard Plan term | 10 to 25 years, based on your balance; at least $50 a month |
| ICR and PAYE plans | Available only to borrowers with no new loans on or after July 1, 2026, and only through July 1, 2028 |
| Default plan if you don’t choose | Tiered Standard Plan (for loans disbursed on or after July 1, 2026) |
Sources: Federal Student Aid, OBBBA Important Definitions, OBBBA Updates and Repayment Plans. Full list at the end of the article.
In This Article
When Do Student Loan Payments Start?
For Direct Subsidized and Unsubsidized Loans, you get a six-month grace period after you graduate, leave school or drop below half-time enrollment. Your first payment is typically due after that grace period ends. Interest on subsidized loans is covered during the grace period, but interest on unsubsidized loans keeps accruing. See our guide to subsidized vs. unsubsidized loans for the details.
Private loans follow the lender’s own terms. Check your loan agreement or ask your lender when payments begin.
Which Repayment Plans Can You Use?
Your student loan repayment options depend on when your federal loans were first disbursed.
| Your situation | Available federal plans |
|---|---|
| At least one loan first disbursed on or after July 1, 2026 | RAP or the Tiered Standard Plan, for all of your Direct Loans |
| All loans first disbursed before July 1, 2026, and no new loans | Older plans such as the Standard Repayment Plan and IBR, plus RAP; ICR and PAYE only through July 1, 2028 |
| Parent PLUS Loans | Not eligible for RAP; under the new plans, they can be repaid only under the Tiered Standard Plan |
Source: Federal Student Aid, OBBBA Updates and OBBBA Important Definitions.
Taking out even one new loan after July 1, 2026, including a new consolidation loan, moves all of your Direct Loans onto the new plans. Borrowers with older loans who are thinking about consolidating should check how it affects their plan options first.
How the Repayment Assistance Plan Works
RAP is the new income-driven plan. Your payment is based on your adjusted gross income (AGI) and your number of dependents, not on how much you owe.
| Adjusted gross income | Monthly payment (no dependents) |
|---|---|
| $10,000 or less | $10 |
| $20,001-$30,000 (2% of AGI) | $33.34-$50.00 |
| $40,001-$50,000 (4% of AGI) | $133.34-$166.67 |
| $60,001-$70,000 (6% of AGI) | $300.01-$350.00 |
| $80,001-$90,000 (8% of AGI) | $533.34-$600.00 |
| More than $100,000 (10% of AGI) | At least $833.33 |
Source: Federal Student Aid, OBBBA Important Definitions. The percentage rises by one point for each $10,000 of AGI between $10,000 and $100,000. Subtract $50 a month for each dependent; the minimum payment is $10.
- Interest subsidy: If a full, on-time payment doesn’t cover the month’s interest, the unpaid interest is waived, so your balance won’t grow above what it was when you entered RAP.
- Principal match: If an on-time payment reduces your principal by less than $50, the government adds a matching payment so it drops by $50 (or by the amount you paid, if your payment is under $50).
- Discharge: Any remaining balance may be discharged after 360 qualifying payments over at least 30 years. The discharged amount may be taxable.
- PSLF: On-time, full RAP payments generally count toward Public Service Loan Forgiveness.
How the Tiered Standard Plan Works
The Tiered Standard Plan has fixed monthly payments, and its length depends on your total Direct Loan principal when you enter the plan. Payments must be at least $50 a month.
| Total Direct Loan principal | Maximum repayment period |
|---|---|
| Less than $25,000 | 10 years |
| $25,000 to less than $50,000 | 15 years |
| $50,000 to less than $100,000 | 20 years |
| $100,000 or more | 25 years |
Source: Federal Student Aid, OBBBA Important Definitions.
Payments under the Tiered Standard Plan don’t count toward PSLF. If you work in public service, RAP is usually the plan to look at.
Our take: If you don’t pick a plan, you’ll be placed on the Tiered Standard Plan, which may mean a higher monthly bill. Graduates with modest starting salaries should compare RAP before their grace period ends.
How Do You Pay Back Student Loans?
Federal student loan repayment goes through your loan servicer, the company that handles billing for the Department of Education. You can find your servicer and your loans in your studentaid.gov account. Most servicers accept automatic debit, online payments and mailed payments, and servicers can change over time, so confirm yours before you pay.
To pay off loans faster, make extra payments and ask your servicer to apply them to principal, starting with your highest-rate loans. Refinancing federal loans with a private lender may lower your rate, but you lose federal benefits such as RAP, deferment options and PSLF.
What If You Can’t Make a Payment?
If student loan repayment gets hard, contact your servicer before you miss a payment. You may be able to switch to RAP to lower your payment, or ask about deferment or forbearance. Interest usually keeps building during those pauses, and time in deferment or forbearance may not count toward discharge. For private loans, ask your lender about its hardship options.
Frequently Asked Questions
When do I have to start repaying my student loans?
For Direct Subsidized and Unsubsidized Loans, repayment usually starts after a six-month grace period that begins when you graduate, leave school or drop below half-time.
What is the Repayment Assistance Plan?
RAP is a federal income-driven plan that launched July 1, 2026. Payments are 1% to 10% of your adjusted gross income, reduced by $50 a month per dependent, with a $10 minimum. Any balance left after 360 qualifying payments may be discharged.
Can I still use PAYE or ICR?
Only if you haven’t received a new loan, including a consolidation loan, on or after July 1, 2026. Those plans remain available only through July 1, 2028.
Can parent PLUS loans be repaid under RAP?
No. Parent PLUS Loans and consolidation loans that repaid them aren’t eligible for RAP. Under the new plans, they can be repaid only under the Tiered Standard Plan.
Who do I contact with questions about my repayment plan?
Start with your loan servicer, which you can find in your studentaid.gov account. For private loans, contact your lender.
The Bottom Line on Student Loan Repayment
Federal loan payments usually start after a six-month grace period. If you have any loan first disbursed on or after July 1, 2026, your choices are RAP, which bases payments on income, or the Tiered Standard Plan, which uses fixed payments over 10 to 25 years. Compare both before your grace period ends so you aren’t placed on a plan by default. If debt is weighing on you, see mental health resources for California students.
Before borrowing, see our guide to how to pay for college for grants and scholarships that don’t need to be repaid.
Sources
- Federal Student Aid. “One Big Beautiful Bill Act: Important Definitions.” studentaid.gov.
- Federal Student Aid. “One Big Beautiful Bill Act Updates.” studentaid.gov.
- Federal Student Aid. “Federal Student Loan Repayment Plans.” studentaid.gov.
- U.S. Department of Education. “Federal Student Loan Program Final Regulations.” Federal Register, May 1, 2026.
CalChannel Editorial Team California college guides
The CalChannel editorial team researches and writes guides to California colleges, admissions and financial aid. We build our college profiles and aid guides from colleges’ own published data, federal IPEDS data and the California Student Aid Commission. Read our editorial policy.
