Big Changes to Student Loans: Understanding the New Repayment Help

There's a big update for U.S. federal student loans. The government has introduced a new plan called the Repayment Assistance Plan (RAP) that adjusts how much you have to pay back each month based on the money you earn.

It's designed to be straightforward, but it's a major change that could have a big impact on borrowers across the country.

Starting July 1, 2026, RAP will replace all the current income-based repayment options for people getting new loans.

If you already have student loans, this affects you too, and you need to decide soon if you want to keep your current repayment plan.

Key Changes with RAP

The RAP will work differently from previous plans, and here's how:

You'll pay at least $10 per month if you're earning under $10,000.
As your income goes up, you'll pay between 1% to 10% of your income.
If you support a family member, you'll get a $50 discount per month for each one.
After 30 years, if there's any loan left, they'll cancel it, but you might have to pay taxes on this amount.
RAP puts a stop on your interest getting bigger, which helps prevent your debt from growing.
Payments under RAP will count if you're aiming for Public Service Loan Forgiveness.
People say RAP is likely to be more reliable and predictable, but not as flexible as the older plans.

What Will Change

RAP will take over from almost all other income-driven repayment plans for fresh loan takers, putting an end to:

SAVE (Saving on a Valuable Education)
PAYE (Pay As You Earn)
REPAYE

ICR (Income-Contingent Repayment)
IBR (Income-Based Repayment)

The Duke Chronicle points out the goal here is to make things simpler, but encourages borrowers to review their options now before everything changes.

What you Need to Keep in Mind

If you're currently paying back student loans, think about these tips:

Choose to stay with your existing plan like SAVE or PAYE before July 1, 2028, if you want to.
Check out the Federal Student Aid Loan Simulator to see if RAP could be a better fit for you.
Parents with Parent PLUS loans can't use RAP and might have to stick with standard plans.
If you're making more money, you may end up paying more with RAP because it calculates payments using your total income before taxes instead of what's left after essential expenses.

Experts have different opinions about RAP. Some like it, but others are concerned about how it could hurt those in the middle who can't make $0 payments anymore.

Also, these changes could lead more people to choose private loans, especially those in higher studies who are now facing new borrowing limits.

This might be the most significant change in student lending in quite some time. Borrowers need to be proactive and fully understand what this means for them before the deadlines hit.

Even though RAP is meant to simplify a complicated system, it won't be beneficial for everyone in the same way. By increasing the length of time before forgiveness, changing the income calculation, and making interest relief conditional, the impact can vary.

Students graduating in 2026 or later should start planning and consider their likely future earnings, family size, and income to really understand how RAP will affect their financial situation in the long run.

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