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4w ago

Education Department Publishes Overhaul of Student Loan Repayment, Creating RAP as SAVE Ends

The proposal lengthens forgiveness to 30 years under tighter family‑size rules that can raise monthly costs for many borrowers.

FILE - People demonstrate in Lafayette Park across from the White House in Washington, June 30, 2023, after a sharply divided Supreme Court has ruled that the Biden administration overstepped its authority in trying to cancel or reduce student loan debts for millions of Americans. (AP Photo/Andrew Harnik, File)
FILE - In this May 5, 2018, file photo, graduates at the University of Toledo commencement ceremony in Toledo, Ohio. (AP Photo/Carlos Osorio, File)
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Successful graduation from university. Smiling beautiful girl university or college graduate standing with diploma and looking at camera over mates around and university at background

Overview

  • Proposed regulations implementing the One Big, Beautiful Bill Act would consolidate income-driven options by creating the Repayment Assistance Plan and preserving IBR for existing borrowers while phasing out PAYE and ICR over time.
  • The Education Department says SAVE is ending under a settlement and current enrollees will be moved to other plans, with roughly 7.5 million borrowers affected.
  • RAP would include an interest subsidy and principal credits to prevent balance growth but require 30 years of payments before forgiveness, leading to far fewer borrowers qualifying for discharge.
  • Analyses indicate many borrowers will pay more each month, especially those previously on SAVE or in non‑traditional households, as RAP counts only dependent children listed on tax returns for family‑size calculations.
  • Key dates in the proposal include a July 1, 2026 cutoff after which new loans or consolidations are limited to RAP, an advised April 1, 2026 consolidation application date for Parent PLUS borrowers to preserve IDR access, and a pause on involuntary collections for borrowers in default until rules are finalized.