Students need to know about changes in loan forgiveness plans

• Starting in 2026, new borrowers will automatically be on RAP.
• Old plans will remain until 2028, after which it will be necessary to switch to RAP.
• The RAP plan proposes new forgiveness conditions, depending on income.

In the USA, significant changes are taking place in the sphere of federal student loans, which will affect millions of borrowers. In particular, the new "Great, Beautiful Law" provides for the introduction of the Repayment Assistance Plan (RAP), which will replace existing forgiveness programs such as SAVE, PAYE, and ICR.

From July 1, 2026, new borrowers will transition to RAP unless they choose the standard 10-year plan. Borrowers who took out loans before this date may remain on their old plans until July 1, 2028. After this, they will have to switch to RAP or the standard plan.

RAP establishes payments based on adjusted gross income (AGI) and proposes a minimum payment of $10 per month for those earning less than $10,000. Payments will range from 1% to 10% of AGI, which will increase over time. After 30 years, the remaining balance will be forgiven, although this may be subject to taxation. Payments for RAP will also be counted towards the loan forgiveness programs for government employees.

Borrowers who remain in PAYE or ICR plans can continue until July 1, 2028, but they should start considering their alternatives, as these programs will also be phased out.

For borrowers who submitted applications to participate in SAVE but did not manage to register through court injunctions, it is recommended to submit applications for other programs, such as ICR, IBR, or PAYE.

Tags: USA/Economy