Education Department’s New Plan For Student Loans May Be A Trap

As millions of federal student loan borrowers get pushed out of affordable repayment plans, the Education Department is stepping up efforts to persuade them to enroll in a new repayment program that launched earlier this summer. But while the new plan has some beneficial features for federal student loans, it has some serious downsides that may not be apparent to borrowers until it’s too late.

The program, dubbed the Repayment Assistance Plan (or “RAP” for short) officially debuted in July. RAP was created under the Republican-passed One Big, Beautiful Bill Act last year, which has made significant changes to federal student loan repayment plans. RAP is an income-driven repayment plan and is intended to be somewhat of a replacement for more affordable IDR options that are being phased out, including the SAVE plan (which is in the process of being terminated now) and PAYE (which will be eliminated in 2028). As the Education Department issues dire warnings to borrowers in the SAVE plan urging them to switch to a different income-driven repayment plan before it’s too late, officials are simultaneously continuing a campaign to convince borrowers to sign up for RAP.

“If you’re a student loan borrower who is still enrolled in the SAVE Plan, don’t wait to choose a new repayment plan,” said the Education Department’s Office of Federal Student Aid in a statement on X earlier this month. “Try our Repayment Calculator to see if the Repayment Assistance Plan is right for you,” said the office in an earlier X statement.