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Department proposes tiered standard repayment plan, removes 'partial financial hardship' from IDR entry test
Summary
ED staff outlined a new tiered standard repayment plan that changes fixed‑plan repayment periods by borrower balance and proposed replacing the 'partial financial hardship' test in income‑driven repayment with an 'applicable amount' construct; negotiators pressed for operational examples and written follow‑up.
The U.S. Department of Education presented substantial changes to repayment rules during the negotiated rulemaking, proposing a new "tiered standard repayment plan" for direct loans disbursed on or after July 1, 2026, and edits to income‑driven repayment rules that remove the term "partial financial hardship."
Tammy Abernathy described the tiered standard repayment plan as a fixed‑payment option with repayment periods determined by the borrower’s total outstanding principal at the time they enter repayment: under $25,000 — 10 years; $25,000 to less than $50,000 — 15 years; $50,000 to less than $100,000 —…
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