If you have federal student loans, your repayment situation is about to change, and you need to pay attention now rather than wait until it affects your bank account. The US Department of Education is modifying and phasing out several existing income driven repayment plans as part of recent legislation, and introducing a new one. Here is what is happening and what you need to do.
What Is Changing and Why
The government is restructuring how federal student loan repayment works. Several income based repayment plans that many borrowers have been using are being phased out, and a new plan called the Repayment Assistance Plan (RAP) is being introduced.
If you are currently on the SAVE payment plan, you will have 90 days after July 1, 2026 to select a new repayment plan, including RAP. If you are on other income based repayment plans that are being phased out, you have until 2028 to choose a new plan.
Here is the critical part: if you do not actively choose a new plan, you will be automatically enrolled in the Standard Repayment Plan or the new Tiered Standard Plan. This could mean a significant change in your monthly payment amount, potentially higher than what you are currently paying.
What the New Repayment Assistance Plan (RAP) Looks Like
RAP is the new income driven repayment option being introduced. Like other income driven plans, it calculates your monthly payment based on your income and family size rather than your loan balance. If you are currently on an income driven plan because your payments are more manageable that way, RAP may be worth exploring as a replacement.
The key is to not wait and get automatically defaulted into a plan that may not fit your budget. Take the time to compare your options and choose intentionally.
What You Should Do Right Now
1. Contact your student loan servicer. This is the most important step. Call or log into your servicer's website to find out what plans you are currently on, what is changing, and what your options are. Do not wait for them to contact you.
2. Research the Repayment Assistance Plan. Visit studentaid.gov to learn about RAP and whether it might be a better fit for your income and financial goals than the Standard Repayment Plan.
3. Update your budget. If your monthly payment is going to change, you need to know now so you can adjust your budget before the change hits. A surprise increase in your loan payment can throw off your entire financial plan.
4. Consider your long term strategy. If you are working toward Public Service Loan Forgiveness (PSLF) or another forgiveness program, make sure any plan change does not disqualify you. Check the eligibility requirements for your forgiveness program before switching plans.
Your Student Loans Are Not Your Whole Story
Student loan debt can feel overwhelming, but it is manageable with the right plan and the right information. The worst thing you can do is ignore these changes and let the government put you on a plan that does not work for your budget. Stay proactive, stay informed, and keep building. You have got this.