Student Loan Planner
Who Would Switch to the “RAP” Plan?
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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Quick takeaways
- The Repayment Assistance Plan (RAP) proposes a significant overhaul in how student loan repayments are calculated, focusing on a uniform 10% of adjusted gross income.
- The uncertain political landscape surrounding RAP raises concerns about its passage and the potential implications for affordability and diversity in graduate education.
Deep dives
Overview of the Repayment Assistance Plan (RAP)
The Repayment Assistance Plan (RAP) proposes a repayment structure where borrowers pay 10% of their income over 30 years, or 10% for 10 years if eligible for Public Service Loan Forgiveness (PSLF). This plan will be the only option available for borrowers who are not enrolled in existing programs by July 2026. Those already enrolled will retain their current repayment plans for up to three years, allowing time to complete their education under existing rules. The RAP contrasts with previous income-driven repayment options, consolidating various plans into a singular approach that calls for 10% of adjusted gross income (AGI) without accounting for discretionary income thresholds.
