BREAKING: Feds Now Cover $50/Month of Your Student Debt—Here’s Who Qualifies

Student loan borrowers just caught a break—or at least, a Band-Aid. The Biden administration’s latest repayment plan throws a lifeline to struggling grads, with Uncle Sam chipping in up to $50 monthly. But before you celebrate: this isn’t blanket forgiveness. We break down who gets the cash—and who’s left holding the bag.

The Fine Print: Not all loans qualify. The plan targets low-income borrowers, prioritizing those drowning in debt relative to their earnings. Think of it as means-tested mercy.

The Catch: $50 barely scratches the interest on six-figure balances. For context, that’s less than your average crypto trader blows on gas fees in a week. But hey—it’s something.

Bottom Line: Another half-measure in America’s student debt circus. Meanwhile, Bitcoin’s fixed supply looks smarter every day.

KEY TAKEAWAYS

• Borrowers who enroll in the new Repayment Assistance Plan next year will see their student loan balances lower every month, no matter their payment size.
• Borrowers with lower incomes could have payments as low as $10 on RAP, which is typically not enough to cover the interest accumulated that month or pay down their principal balance.
• In these cases, the Department of Education will waive unpaid interest and contribute up to $50 to guarantee that the borrower's principal balance shrinks monthly.

Under a newly established repayment plan, some borrowers will see their unpaid interest waived, and the Department of Education will contribute up to $50 to ensure student loan balances decrease every month.

The "One Big, Beautiful Bill" has created a new income-driven repayment plan that is expected to open on July 1, 2026. In addition to calculating monthly payments differently, the Repayment Assistance Plan, also known as RAP, will lower student loan balances more quickly than previous repayment plans.

Monthly payments are calculated using the borrowers' Adjusted Gross Income, and lower-income individuals could qualify for payments as low as $10 under RAP. When a borrower makes a monthly payment, it will first be used to pay off the interest that accrued that month, and whatever is left goes toward paying down the principal balance, or the initial amount borrowed.

However, when borrowers have a lower income level and a high loan amount, their monthly payment may not be enough to pay off the accumulated interest and lower the principal balance. If a borrower's payment under RAP was not enough to cover the total accumulated interest that month, the government will waive the remaining unpaid interest.

Additionally, if a borrower's monthly payments don't lower their principal balance by at least $50 every month, the government will chip in up to $50 to ensure they do.

This guarantees the borrower's total loan amount decreases every month. Comparatively, borrowers whose payments under existing income-driven repayment plans are too small to cover the accumulated interest will have the unpaid interest from that month added to their principal balance.