Repayment after the 2025 law · guide
The Tiered Standard repayment plan
The Tiered Standard plan sets a fixed monthly payment over a term chosen by your total Direct Loan principal when you enter repayment: 10 years below $25,000, 15 years from $25,000, 20 years from $50,000 and 25 years from $100,000. It became available on July 1, 2026 and it is the default: a borrower with a loan made on or after that date who picks no plan is put on it, and so is a former SAVE borrower who ignores the 90-day notice. The Department presents it as more affordable than the old 10-year schedule, and its own example holds: $30,000 costs $262 a month over 15 years instead of $341 over 10 at about 6.5%. The price is time and interest, and one less obvious cost. Because the payment is lower than the 10-year amount for every balance above $25,000, Tiered Standard payments do not count toward Public Service Loan Forgiveness unless you pay more than required. Borrowers on it can move to the Repayment Assistance Plan at any time.
Your Tiered Standard term
Payment over 15 years
$419
| 10-year payment for comparison | $546 |
| Total repaid on Tiered Standard | $75,359 |
| Total repaid over 10 years | $65,462 |
Below the 10-year amount: does not count for PSLF.
The fixed-payment plan the 2025 law created for every borrower with a loan made on or after July 1, 2026.
Checked by Radif Partners · Editorial policy · How we calculate
The tiers, and the jumps between them
The plan has four terms and three thresholds. Because the term changes in one step, a dollar of principal on either side of a threshold changes the payment noticeably. The table shows the edges at the 2026-27 undergraduate rate of 6.52%.
| Total principal | Term | Monthly payment | Total repaid |
|---|---|---|---|
| $24,999 | 10 years | $284 | $34,094 |
| $25,000 | 15 years | $218 | $39,249 |
| $49,999 | 15 years | $436 | $78,497 |
| $50,000 | 20 years | $373 | $89,610 |
| $100,000 | 25 years | $676 | $202,937 |
Crossing $25,000 lowers the payment by about $66 a month and adds $5,156 of interest over the life of the loan. A borrower just above a threshold who wants to finish faster can simply pay more each month; prepaying is allowed on every federal plan without penalty.
Reading the threshold correctly
The thresholds look at principal, not at what you owe in total. A borrower who left school with $24,000 of principal and $1,500 of accrued interest stays in the 10-year tier, even though the statement shows more than $25,000. The test is applied when you enter repayment under the plan, using all your Direct Loans together, old and new. Two borrowers with identical balances can therefore receive different terms if one of them has more interest and less principal in the mix.
Where the plan comes from
Section 455(d)(7) of the Higher Education Act, added by the 2025 law, tells the Secretary to offer borrowers of loans made on or after July 1, 2026 two plans: a standard plan with fixed payments over the tiered term, and the income-based Repayment Assistance Plan (Public Law 119-21, section 82001(b)). The regulation of May 1, 2026 added a second version of the same tiered plan for borrowers who hold loans from both before and after that date, so that all their Direct Loans are repaid together (34 CFR 685.208(b)(8) and (c)(1)). Borrowers whose loans are all older do not get Tiered Standard; they keep the 10-year, graduated and extended plans of the old menu.
Graduate balances and the 25-year tier
Large balances land in the longest tier. $140,000 of graduate loans at 8.07% gives $1,087 a month over 25 years, about $326,113 repaid in total. The same balance on a 10-year schedule would cost $1,704 a month and far less in total. A graduate borrower in that position should also run the RAP calculation: with an income of $90,000 and no dependent, RAP asks $600, and if income rises steadily RAP may end up repaying the loan in full, with no balance left to forgive. The plan comparator shows both totals side by side.
The PSLF catch
PSLF counts payments made under an income-driven plan, the 10-year standard plan, or any other plan whose payment is at least the 10-year amount. Tiered Standard is in the third group. Below $25,000 of principal its term is 10 years, so the payment equals the 10-year amount and qualifies. Above, the payment is lower and does not qualify. A public servant placed on Tiered Standard by default could therefore make years of payments that do not move the PSLF count. The fix is to switch to RAP, whose on-time payments always qualify, or to pay at least the 10-year amount each month. The PSLF calculator shows the payments left.
Tiered Standard and RAP for the same borrower
A borrower limited to the new menu can compare the two plans in a few seconds. The fixed plan wins on total cost when income is high relative to the balance, because RAP's payment would exceed the tiered one and RAP gives no reason to stretch repayment. RAP wins when income is low or uncertain: its payment follows income, the interest an on-time payment does not cover is waived, and any balance left after 360 payments is forgiven. Tiered Standard payments made on time count toward that RAP total, so starting on the fixed plan and moving later loses nothing. Families with children see an extra difference: RAP takes $50 a month off per dependent, while the fixed plan ignores family size entirely.
How the plan behaves over time
A fixed plan is predictable by design. The payment you see in the first month is the payment you will see in the last, apart from the final one, which settles whatever cents remain. Early payments are mostly interest and late ones mostly principal, the usual pattern of an amortizing loan. On a 20-year term at 6.52%, it takes several years before principal makes up half of each payment. That is why prepaying early in the term saves the most: an extra dollar in year one stops interest from running on it for nearly two decades.
Nothing about the plan responds to life events. A job loss, a new child or a pay cut leaves the payment unchanged, which is where the right to move to RAP at any time matters. For a short interruption, deferment and forbearance remain available on loans made before July 1, 2027; loans made after that date lose the unemployment and economic hardship deferments and can be in forbearance for at most nine months in any 24, so for newer borrowers RAP is the main cushion. The deferment and forbearance page details those limits.
Parent PLUS loans on Tiered Standard
A parent PLUS loan made on or after July 1, 2026 must be repaid on the Tiered Standard plan, separately from any loans the parent took for their own studies. RAP is not available for it. The term depends on the principal, so a parent who borrows the new maximum of $20,000 a year for four years, $80,000 in total, ends in the 20-year tier at 9.07%, with a payment of about $723. The parent PLUS calculator computes the payment.