Expert explains new Repayment Assistance Plan for student loans

The federal student loan system is undergoing one of its biggest changes in years. Beginning July 1, 2026, the new Repayment Assistance Plan (RAP) becomes the primary option for new borrowers, while borrowers currently enrolled in the SAVE plan will need to choose a new repayment path.

In this interview, Becca Craig, wealth adviser at Focus Partners Wealth, explains how RAP works, who may benefit, who could face higher costs, and why borrowers should focus on long-term outcomes rather than monthly payments alone.

Below is a transcript of the interview with Becca Craig, edited for brevity and clarity.

The federal student loan system is changing

Robert Powell: We have a lot to go through today. Where should we begin?

Becca Craig: Let's start at the beginning. For years, student loan borrowers have had to wade through an alphabet soup of acronyms for different income-driven repayment plans.

As part of the Trump administration's overhaul of the federal student aid system, certain income-driven repayment plans are being phased out over the next several months and years, while the RAP plan is being introduced.

For current and future borrowers, it's important to understand that RAP will be the only new repayment plan offered to new borrowers. There is a lot of nuance within the system, and borrowers need a firm understanding of how these changes affect them.

Why monthly payments are only part of the story

Robert Powell: Are monthly payments what people care most about?

Becca Craig: That's usually where people start because it's the most immediate concern.

About 44 million Americans with student loans will have decisions to make regarding current and future repayment plans. Beginning July 1, 2026, RAP becomes available.

Current borrowers generally can remain in their existing plans, except those enrolled in SAVE. Those borrowers will need to switch to another income-driven repayment plan or a standard repayment plan.

At first glance, RAP addresses some longstanding concerns. Payments are based on adjusted gross income, unpaid interest is waived, and safeguards help prevent balances from growing even when borrowers are making payments.

But there is no one-size-fits-all solution. Personal financial circumstances will determine whether RAP is the most effective choice.

How RAP affects Public Service Loan Forgiveness

Robert Powell: What about Public Service Loan Forgiveness?

Becca Craig: It still matters.

Like previous income-driven repayment plans, RAP qualifies for Public Service Loan Forgiveness. Monthly payments are based on adjusted gross income, and borrowers must make at least a $10 monthly payment, even during periods of financial hardship or unemployment.

What will be interesting is how income-based payment calculations affect borrowers pursuing forgiveness. Higher earners, including doctors, attorneys, and others earning more than $100,000 annually, could see substantially higher monthly payments.

Who may benefit most from RAP

Robert Powell: Lower-income borrowers may benefit from the combination of income-based payments and interest subsidies?

Becca Craig: Exactly.

There is no good or bad repayment plan. There is only what's optimal for a particular borrower.

RAP may work especially well for lower-income borrowers whose student loan balances are equal to or less than their annual income. Lower monthly payments, interest subsidies, and eventual forgiveness can create a more manageable repayment experience.

That's where RAP may provide meaningful advantages.

Parent PLUS borrowers face special challenges

Robert Powell: Do Parent PLUS loans qualify for RAP?

Becca Craig: No. Parent PLUS borrowers cannot choose RAP.

Borrowers with Parent PLUS loans need to take action if they want access to certain income-driven repayment options. There are resources and financial professionals available to help borrowers understand those options.

New Parent PLUS borrowers will not be eligible for income-driven repayment plans under the new framework.

There's another important point. Taking out a new federal student loan after July 1 can permanently change repayment options. Even borrowers who currently have federal student loans may lose access to older repayment plans if they borrow again to continue their education.

Borrowers should stay engaged and make informed decisions about how they finance their education.

The trade-offs borrowers need to understand

Robert Powell: Your article discusses longer forgiveness timelines. How important is that?

Becca Craig: It's very important.

Historically, borrowers could move among several income-driven repayment plans as their circumstances changed. That flexibility is shrinking for existing borrowers and disappearing entirely for new borrowers.

The challenge is that no single repayment plan fits every situation.

Under RAP, forgiveness generally requires 30 years of payments, compared with 20 or 25 years under some previous plans.

Higher-income borrowers may also face larger monthly payments because of the way RAP calculates payment obligations.

And once borrowers choose RAP, they cannot switch back to previous plans.

Borrowers need to think carefully about how they'll repay student loans over the long term, not just next month.

Comparing RAP with previous repayment plans

Robert Powell: You included several borrower scenarios. Walk us through them.

Becca Craig: Looking at hypothetical borrowers helps illustrate the differences.

In one scenario, a borrower earns $50,000 annually and has $20,000 in student loan debt. Total repayment costs across plans are fairly similar, but RAP produces slightly lower monthly payments.

In a second scenario, the borrower still earns $50,000 but has $100,000 in student loan debt. In that case, total repayment costs under RAP increase significantly because of the longer repayment timeline and forgiveness requirements.

A third scenario involves a borrower earning $150,000 with $100,000 in student loan debt. Monthly payments under RAP are higher than under previous income-driven repayment plans, but total lifetime costs may be somewhat lower because more principal is repaid earlier.

The impact of RAP depends heavily on individual circumstances. Borrowers should evaluate both immediate payments and long-term costs.

Tools borrowers can use before the deadline

Robert Powell: Are there calculators borrowers can use to compare options?

Becca Craig: Absolutely.

Several organizations offer repayment calculators. For my analysis, I used the VIN Foundation calculator, which has been a reliable source of student loan planning information for many years.

Borrowers can create scenarios and compare options before the July 1 deadline.

Why extra payments may or may not make sense

Robert Powell: Should borrowers consider making extra payments to reduce total costs?

Becca Craig: It depends.

Some borrowers ask whether they should refinance into private loans. Others ask whether paying extra toward principal makes sense.

Those scenarios can be modeled using calculators.

The answer depends on income, cash flow, financial goals and competing priorities. A borrower who wants to buy a home may make a different decision than someone focused solely on eliminating debt.

Student loan planning should be considered within the context of an overall financial plan.

One of the biggest student loan changes in years

Robert Powell: Anything else borrowers should know?

Becca Craig: RAP represents one of the most significant changes to the federal student loan system in years.

For some borrowers, particularly those with lower incomes relative to their debt, the plan may provide meaningful benefits. For others, it may create challenges.

As with most financial planning decisions, the right answer depends on the individual.

There are resources available, including financial planners, student loan specialists, and certified student loan professionals.

Focusing only on the monthly payment is like judging a book by its cover. A borrower's student loan journey unfolds over decades.

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This story was originally published June 2, 2026 at 9:03 PM.