Trump administration confirms interest payment plans in filing

Trump administration confirms interest payment plans in filing

Trump Administration Confirms Changes to Student Loan Repayment Plans

The Trump administration has finalized its transition to the Repayment Assistance Plan (RAP), a new income-driven repayment (IDR) model for federal student loans, effective July 1, 2026. The RAP replaces most existing IDR options, including the Biden-era SAVE Plan, and introduces a simplified but controversial payment structure tied to borrowers' adjusted gross income (AGI).

Under RAP, monthly payments range from 1% to 10% of AGI, with a minimum payment of $10 for incomes under $10,000 and a $50-per-month dependent deduction. Borrowers with AGIs above $100,000 face a fixed 10% payment cap. The plan extends repayment terms to 30 years—longer than most existing IDR plans—and eliminates interest subsidies for negative amortization, though it includes a provision to prevent loan balances from growing unchecked.

Critics argue that RAP could increase financial strain for middle-income borrowers. A TICAS analysis found that a family of four earning the U.S. median income ($81,000) would see payments rise from $36 under the SAVE Plan to $440 under RAP. The plan's rigid income brackets also create abrupt payment jumps for borrowers earning just above threshold levels.

The transition has already caused disruptions. In August 2025, the Department of Education rejected 327,955 IDR applications due to ambiguities in plan selection, according to court filings. Advocacy groups warn that forced transitions from forbearance or existing IDR plans—such as for 7 million SAVE enrollees—could lead to higher delinquency rates. As of late 2025, 9.6% of federal student loans were seriously delinquent, with defaults projected to reach 10 million by 2026.

The Congressional Budget Office estimates RAP will save the federal government $270.5 billion over a decade but warns of increased borrower defaults. While the administration frames RAP as a streamlined solution, financial experts caution that its affordability risks could exacerbate the student debt crisis, particularly for public service workers reliant on income-driven plans for Public Service Loan Forgiveness (PSLF) eligibility.

Borrowers are advised to use tools like studentaid.gov to model payments and consider transitioning to the remaining IDR option, Income-Based Repayment (IBR), ahead of RAP's implementation. The shift underscores the ongoing debate over balancing fiscal responsibility with borrower accessibility in federal student loan policy.