A new program called the Repayment Assistance Plan (RAP) will soon become the primary income-based repayment option for federal student loan borrowers. At the same time, several existing programs—including SAVE, PAYE, and Income-Contingent Repayment (ICR)—will be phased out over the next few years.
Why the Government Is Changing Repayment Plans
Historically, borrowers could choose among several income-driven repayment (IDR) programs that based monthly payments on income and family size. However, policymakers argued that having multiple overlapping plans created confusion and administrative complexity.
Recent legislation simplifies the system by gradually eliminating most existing IDR plans and introducing RAP as a standardized option tied to income.
By July 1, 2028, the older programs such as SAVE, PAYE, and ICR will be retired, leaving primarily Income-Based Repayment (IBR) for some existing borrowers and the new Repayment Assistance Plan as the main income-based option.
How the New RAP Plan Works
The Repayment Assistance Plan is designed to make payments more predictable and prevent loan balances from growing due to unpaid interest.
Key features include:
- Income-based payments: Monthly payments generally range from about $10 up to roughly 10% of income, depending on earnings.
- Interest support: Any interest not covered by your monthly payment will be waived.
- Government principal assistance: If a borrower’s payment does not reduce the principal, the RAP plan will reduce the borrower’s principal by up to $50, depending on earnings. .
- Longer forgiveness timeline: Remaining balances can be forgiven after 30 years of qualifying payments, compared with 20–25 years under some previous programs.
Starting July 1, 2026, new federal student loan borrowers will generally have RAP as their only income-driven repayment option.
What Happens to Current Borrowers
If you already have federal student loans, your options will depend largely on when you borrowed:
- Borrowers with older loans may still use or switch to Income-Based Repayment (IBR).
- Borrowers can opt into RAP if it makes sense for their situation.
- Over time, borrowers currently in SAVE, PAYE, or ICR will need to transition to either IBR or RAP before those plans are retired.
The Bottom Line
The new Repayment Assistance Plan (RAP) represents a major shift in the federal student loan system. While it simplifies repayment options and provides protections against growing loan balances, it also extends the timeline to forgiveness and replaces several well-known programs.
For workers with student debt, understanding these changes—and how they fit into broader financial planning, including retirement savings—will be key in the years ahead.
Sources:
https://financialaid.tcnj.edu/update-on-federal-loan-changes-beginning-in-2026/