Education Department Launches Repayment Assistance Plan Amid Payment and Forgiveness Concerns

The U.S. Department of Education announced the Repayment Assistance Plan (RAP), an income-driven repayment option, will launch on July 1, 2026. A two-week X campaign seeks to enroll borrowers before rollout. Secretary of Education Linda McMahon testified on May 14, 2026, calling RAP a remedy for “runaway interest” and “ballooning principal balances.”

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RAP follows the Department’s July 1, 2026 overhaul that phases out SAVE—the most affordable IDR option—and ends PAYE by 2028. The Office of Federal Student Aid leads implementation; the National Consumer Law Center and Protect Borrowers monitor borrower impact.

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RAP sets payments from Adjusted Gross Income and family size. A borrower with two dependents and $75,000 AGI would pay $340—higher than SAVE’s $125 and PAYE’s $290, but equal to IBR. RAP requires 360 payments over 30 years for forgiveness, longer than PAYE’s 20-year and ICR’s 25-year periods. Payments apply only to RAP’s term.

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The $340 payment may strain households moving from SAVE’s $125 rate, creating a payment shock. A 30-year forgiveness horizon could raise interest costs if earnings rise. The interest-subsidy caps balance growth only for full payments; missed or partial payments forfeit the benefit, and extra payments above the minimum may reduce the subsidy.

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The Department said RAP ends “runaway interest” and offers interest waivers for on-time payers. Guidance lets borrowers re-enroll in IBR, ICR, or PAYE after RAP, but RAP payments won’t count toward forgiveness under those plans. It also notes a borrower’s balance will never exceed the amount at RAP entry if payments are made in full.

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The National Consumer Law Center warned that borrowers leaving SAVE will likely face higher payments because RAP uses recent income. Protect Borrowers called the shift an “immediate and unprecedented payment shock.” Both groups note the 30-year forgiveness period may raise repayment costs, especially for borrowers whose earnings rise in the final five years.

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• “? Runaway student loan interest. ? Ballooning principal balances. ? Years of payments with no progress. The cycle of student loan debt ends with the Repayment Assistance Plan,” — U.S. Department of Education, X statement

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• “Not only will the new Repayment Assistance Plan (RAP) make repaying your student loans easier, but it can reward borrowers who pay on time with interest waivers and matching principal payments,” — Office of Federal Student Aid, X statement

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• “SAVE was the most affordable repayment plan, and your last payments in SAVE were likely based on your income from two or more years ago,” — National Consumer Law Center, statement

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• “will experience an immediate and unprecedented payment shock as their monthly payments jump” — Protect Borrowers, letter to lawmakers

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RAP opens July 1, 2026; borrowers may apply via the Federal Student Aid portal.

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