Student Loan Planner Who Would Switch to the “RAP” Plan?
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May 20, 2025 Unpack the intricacies of the Repayment Assistance Plan and why it could reshape student loan repayment. Dive into the uncertainties surrounding its implementation and the political backdrop influencing the movement. Consider the potential inequality in graduate professions as affluent students might dominate if changes occur. Also, explore the proposed tax on endowments and how it may alter the landscape of educational borrowing and financial aid. This conversation is packed with insights that could impact borrowers profoundly.
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Unique RAP Plan Payment Formula
- The RAP plan requires 10% of your AGI for 30 years or 10 years if pursuing PSLF, differing from traditional discretionary income calculations.
- It deducts $50 monthly per child from AGI, making payments vary by income and family size uniquely compared to previous plans.
Choose Plans Based on Forgiveness Proximity
- Borrowers close to forgiveness should likely stay on IBR to retain benefits.
- RAP may benefit PSLF participants as it lowers payments to 10% from 15%.
RAP Plan Permanent Enrollment Trap
- Switching to RAP traps borrowers permanently with no option to revert to other plans.
- Unlike previous proposals, the GOP plan removes any grace period or plan switching flexibility.