The second Trump administration has ushered in many changes for student loan borrowers. These changes include, as part of the budget reconciliation bill, a brand-new repayment plan: The Repayment Assistance Plan (RAP), which will replace existing income-driven repayment plans.
Although this does streamline the sometimes confusing array of current choices — and maintain a repayment option that modifies monthly payments based on income — it has some features that borrowers might not find quite as favorable. In short, said NerdWallet, "while some borrowers might have lower monthly bills on RAP compared to existing income-driven repayment plans, they may also see a longer repayment term and pay more overall."
How are payments calculated under the Repayment Assistance Plan?
Unlike existing income-driven repayment plans, RAP "doesn't shield a portion of a borrower's income," said CNBC. Instead, the plan "calculates their bill based on so-called adjusted gross income," which is "your total earnings before taxes, minus certain deductions."
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Borrowers will pay a percentage of their adjusted gross income (AGI) on their student loans, with that rate increasing the higher their income. However, "even the lowest-income borrower must send at least $10 a month, so there would be no more $0 student loan bills," said Saving for College, a student loan blog. Those earning $10,001–$20,000 will pay 1% of AGI, while the next tier would pay 2%, and so on, capping out at 10% of AGI for those earning over $100,000. There is also a $50 deduction per dependent from your base payment.
How does RAP compare to existing plans?
There are a number of differences to RAP worth noting. For one, "you'll never have $0 monthly payments on RAP if you lose your job or have a very low income," with the lowest payment now being $10 per month, said NerdWallet.
The dependents deduction also works a bit differently with RAP. Whereas other income-driven plans looked at "family size," which could "include parents or other adults in your home," RAP "only considers dependent children," said NerdWallet.
Other notable differences: RAP "removes the long deferment windows that protect a borrower's credit during prolonged hardship," and it stretches the timeline for loan forgiveness from 20 or 25 years to "a flat 30 years for everyone," said Saving for College.
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When will RAP apply to borrowers?
RAP is expected to be available by July 1, 2026. As of that date, new borrowers will only have the choice between the standard 10-year repayment plan or RAP.
Existing borrowers, meanwhile, will have a bit more of a choice — if they act quickly enough. If you are among those "currently enrolled in one of the three income-driven repayment plans that are going away — SAVE, PAYE or ICR — your student loan servicer will automatically move you into the RAP by July 1, 2028," said NerdWallet. But if you sign up for the income-based repayment (IBR) plan before July 1, 2028, you can avoid RAP and remain on IBR, if that is the better repayment plan option for you.
Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She previously served as a deputy editor and later a managing editor overseeing investing and savings content at LendingTree and as an editor at the financial startup SmartAsset, where she focused on retirement- and financial-adviser-related content. Before that, Becca was a staff writer at The Week, primarily contributing to Speed Reads.
