The Rules Changed. Most Borrowers Did Not Get the Memo.
On July 1, the federal student loan system got its biggest rewrite in years. Not a tweak. A rewrite. New repayment plans. New borrowing caps. New deadlines with real money attached.
Most borrowers will find out when a letter shows up. You can do better than that.
SAVE Is Out. RAP Is In.
The SAVE plan is being phased out. The new primary income-driven option is the Repayment Assistance Plan, or RAP.
The math: payments run 1% to 10% of income, based on income and family size. Each dependent knocks $50 off the monthly payment.
Here is the part that matters. Pay on time, and unpaid monthly interest may be waived. Your balance stops growing while you pay. If your payment does not cut principal by at least $50, the government may match up to $50 a month.
For years, borrowers made payments and watched balances sit still. That was the design flaw. RAP is the first serious attempt to fix it.
The 10-Year Standard Plan Is Gone
The new Tiered Standard Plan sets your term by your balance: 10, 15, 20, or 25 years.
Longer term. Lower payment. More total interest. The payment is not the price. The total cost is the price.
This is the same trade-off homeowners face with mortgages. Strategy Beats Rate. Always.
The Blank Check Era Is Over
Grad PLUS loans are eliminated for new borrowers. The new caps: $20,500 a year and $100,000 lifetime for standard graduate programs. $50,000 a year and $200,000 lifetime for professional programs like medical and law school. Plus a combined federal lifetime limit that counts what you already borrowed.
Parent PLUS got capped too: $20,000 per child per year, $65,000 lifetime per child. And new Parent PLUS loans issued after July 1, 2026 may carry fewer repayment options than the old ones.
Run the numbers. A family with a $40,000 a year gap between savings and tuition cannot close it with federal loans anymore. That family needs a written plan years before the acceptance letter, not a scramble in the aid office.
The 1% Auto-Pay Discount Has a Deadline
One piece of good news. The auto-pay interest rate discount jumped from 0.25% to a full 1%. Enroll by September 30, 2026. The enhanced discount currently runs through June 30, 2028.
Free money for a habit you should have anyway. Take it, if your budget can handle automatic drafts safely.
Why a Mortgage Advisor Cares About Student Loans
Your student loan is not just a college bill. It is a line on your credit report and a line in your debt-to-income ratio.
Payment history is the biggest factor in your credit score. Servicer transitions are exactly when payments slip through cracks. And when you apply for a home loan, your student loan payment helps decide how much house you qualify for. A plan change of a few hundred dollars a month can move your buying power by tens of thousands.
Check your credit while these changes roll out. Pull your report and score at rsrlinks.com/FICO and see what lenders see.
The Next Step
The new rules reward families who run their own numbers. Ron offers a free tool for exactly that. KeySteps helps you monitor your credit, build a budget, and track your assets in one place.
Set it up at RSRLinks.com/KeySteps.
Know the rules. Run the math. Decide on purpose.