- The Repayment Assistance Plan (RAP) replaces most income-based repayment options, as the SAVE program is terminated and enrollment in legacy plans ceases for future borrowers.
- Many borrowers are still expecting the lower savings payments they received two years ago during the forbearance period, despite the resumption of interest and the plan’s phasing out.
- The resettlement program offers subsidies to reduce interest and principal, but relief takes 30 years, and some borrowers may face higher costs over their lifetime.
Millions of federal student loan borrowers are entering a new era of repayment. After years of uncertainty (payment pauses, court orders, administrative forbearance, and policy changes), the United States is preparing to consolidate repayment options, ending multiple plans (including Savings, Repayment, and ICR) and replacing them with a Repayment Assistance Plan, or RAP.
The challenge is that many borrowers are still focused on their old payments from 2022 or 2023 and are concerned about what the cost will be in 2025 or 2026.
During SAVE’s administrative forbearance period, payments were $0, and before that, they were based on historical income statements from as early as 2019. This fixation has left many borrowers with expectations that no longer match current options. Interest has resumed, SAVE is no longer accepting new enrollees, and for new borrowers in 2026, RAP will be the only income-based option.
RAP has many advantages, but the transition process is not simple. Understanding how RAP compares to SAVE, PAYE and IBR can help borrowers plan for the next several years.
What the new RAP offers
The RRP will become the primary income-driven repayment plan for future borrowers and, over time, for most current borrowers. It retains some concepts from SAVE but is more conservatively structured.
Main Features:
- Income-based payments with a minimum: Payments will depend on income, but borrowers will pay at least $10 per month. This removes the “zero payment” feature that existed under previous IDR plans.
- Unpaid interest support: If the borrower’s payment does not cover the interest, the government covers the unpaid amount. Balances won’t swell just because payments are low.
- Basic discount of up to $50 per month: If the low payment still doesn’t reach the principal, the RAP can reduce the principal by up to $50 each month. This prevents balances from remaining stagnant for years.
- Amnesty after 30 years: This is longer than the 20- or 25-year timelines in older IDR plans, extending the repayment period for many households.
The RAP design favors stability for borrowers with low or inconsistent income. When comparing RAP to IBR directly, RAP is usually better for borrowers with income less than $100,000 per year.
How PAYE, ICR and IBR fit into the picture
PAYE and ICR are terminated for future borrowers and will eventually expire. The current expected timeline based on sources in student loan servicers is that PAYE and ICR will stop enrolling in late 2027 or early 2028.
The IBR remains available for older loans but will not be available for new student loans after July 1, 2026.
The IBR retains the traditional structure of 10-15% of discretionary income with forgiveness for 20-25 years. For existing borrowers, the IBR may still be a reasonable alternative.
Fixation problem: Borrowers focus on old savings payments
Based on Hundreds of comments on our TikTok videosmany borrowers feel frustrated with the future payment options available to them.
Many borrowers compare RAP or IBR projections to their old savings payments, often calculated using 2021 or 2022 income statements. During the savings grace period, borrowers essentially “frozen” their sense of what their student loan payment should be.
This anchoring is understandable. But this can lead to a financial crisis:
- Monthly payments recalculated on current income may be much higher.
- Unpaid interest grows again, surprising borrowers who did not know that the interest paused ended, but the payment pause did not.
- Months spent in administrative forbearance do not count toward IDR or PSLF amnesty.
Many SAVE borrowers who are considering a PSLF repo also have misinformation about how the repo is calculated. They assume they will benefit from the savings payment, but the reality is that they will have the repayment account for 12 months and then the current time spent in forbearance will depend on the IBR or PAYE.
Who may benefit from a RAP program (and who may not)
RAP is not automatically better or worse than SAVE or IBR and the right choice depends on the borrower’s situation.
RAP may benefit from:
- Borrowers with low income or unstable employment.
- Borrowers with large balances who expect decades of slow progress. This can also help reduce a potential tax bomb in the future.
RAP may be less effective for:
- Borrowers who can get forgiveness faster under IBR (20-25 years).
- Borrowers with higher or increasing incomes who want to reduce their total repayment cost.
- Borrowers seek PSLF, where payment amounts matter – although PSLF qualifies under RAP, lower payments under IBR are more beneficial.
Because the resettlement program extends the repayment period to 30 years, borrowers with stable or increasing income may pay more over time.
Comparison table: RAP vs. SAVE vs. PAYE vs. IBR
10-15% of discretionary income | 5% of discretionary income | 10% of discretionary income | ||
Full support on unpaid interest | Full support on unpaid interest | |||
Opens July 2026, excludes parent plus loans | Only available to borrowers before June 2026 |
Key takeaways for borrowers
Currently, borrowers in the SAVE forbearance period need to plan for their future payments in IBR or RAP. The 2020-2023 student loan environment is dead, and relying on outdated numbers simply skews the future picture. Borrowers should evaluate their options by current income, recent program rules, and realistic expectations.
RAP may be better for low-income people. Especially with the interest subsidy and capital reduction program. But the longer repayment schedule may not suit everyone. Borrowers who want faster relief or who expect their earnings to rise should compare options carefully, especially since IBR is still available for pre-2026 loans.
The most important step now is to update the assumptions and develop a plan. Payments from two years ago are no longer a reliable standard.
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