The Rap Form is Live, but is it the Right Move for Your Loans?

The New Income-Driven Repayment Plan Form Is Here. If You’re Filing for RAP, There’s More to Consider

After months of waiting, borrowers can finally move forward with the new Repayment Assistance Plan (RAP).

For many SDS borrowers, this is good news.

Some of you have been waiting specifically for this option. Others have been sitting in SAVE, waiting to understand what your next payment might look like. And for some borrowers, RAP may offer one of the most affordable monthly payments available.

But now that the form is here, I want borrowers to understand something important:

Having access to RAP does not automatically mean RAP is the best plan for you.

Before submitting the form, I would look at more than just the payment you can get today.

When RAP Can Be a Great Option

There are several reasons I may recommend RAP to a borrower.

RAP bases the monthly payment on income and family size. Depending on income, payments generally range from 1% to 10% of adjusted gross income, with an additional $50 reduction for each dependent. The minimum payment is $10.

That can make RAP especially attractive when:

• your student loan debt is high compared with your income;

• RAP gives you meaningful monthly-payment relief;

• you have dependents who reduce the calculated payment;

• or you are concerned about your loan balance continuing to grow because of unpaid interest.

One of RAP's biggest benefits is how it treats interest. As long as you make your required monthly payment, unpaid interest that exceeds that payment is waived. That means borrowers making their required RAP payments should not watch their balance continue growing simply because their payment does not cover all of the monthly interest.

For the right borrower, that is a very meaningful benefit.

RAP can also lead to forgiveness after 30 years of qualifying payments, and RAP is a qualifying repayment plan for borrowers working toward Public Service Loan Forgiveness.

But there is another side to this decision.

Your Payment Today Isn't the Only Thing I Look At

When I review repayment options for an SDS borrower, I don't just ask:

“Which plan has the lowest payment?”

I also look at where you have already been.

Some borrowers have spent many years making qualifying payments toward forgiveness under an older income-driven repayment plan.

Those years matter.

Federal rules allow qualifying repayment history from certain older IDR plans to count when a borrower moves into RAP.

But the rules do not work the same way in reverse.

Federal Student Aid specifically warns that if you earn IDR forgiveness progress while enrolled in RAP and later switch back to IBR, ICR or PAYE, the time you spent making RAP payments will not count toward forgiveness under those older plans.

Here is a simple example.

Imagine you already have 100 months of qualifying IDR payments.

You move into RAP and make another 36 months of payments.

Three years later, your income or family circumstances change and another repayment plan becomes more attractive.

Your original qualifying history isn't simply erased.

But those 36 months you spent in RAP do not become 36 additional months toward forgiveness under IBR, PAYE or ICR if you move back to one of those plans.

That is something I want borrowers to understand before they make the switch, not three years afterward.

When I Would Take a Closer Look Before Choosing RAP

RAP deserves extra consideration if you already have substantial progress toward forgiveness under another income-driven repayment plan.

I would also compare your options carefully if you are eligible to remain in IBR or another legacy repayment plan and your current payment is manageable.

And RAP is not automatically cheaper for everyone.

Unlike some older IDR plans, RAP does not have a payment cap tied to what you would have paid under the traditional 10-year Standard Plan. Federal Student Aid specifically notes that some higher-income borrowers could actually have a RAP payment that is higher than a Standard or Tiered Standard payment.

So there isn't one answer that works for every borrower.

For one person, RAP may mean a dramatically lower payment, protection from growing interest and a clear path forward.

For someone else, staying on IBR or another available repayment strategy may preserve valuable forgiveness progress or produce a better long-term outcome.

This Is Where Your SDS Analysis Matters

If you have already used Student Debt Solutions, you know that we don't look at repayment plans in isolation.

We look at your loans, your income, your repayment history and what you are ultimately trying to accomplish.

With RAP, that means we can help you compare:

• what your RAP payment may be;

• what you would pay under the other plans still available to you;

• how much qualifying forgiveness progress you have already earned;

• whether RAP's interest benefits are valuable in your situation;

• and what choosing RAP today could mean if your circumstances change later.

And once the right plan is identified, we can help make the next steps clear, preparing the appropriate request, understanding the documentation you need, submitting it correctly and knowing what you should expect from your servicer afterward.

That last part matters.

Choosing RAP is one decision. Getting RAP successfully implemented is another.

Before You Submit the New Form

I'm happy that borrowers finally have the application they've been waiting for.

RAP is going to be a very good repayment option for many people.

I simply don't want borrowers choosing it because it is new, because it produces the lowest payment today, or because it is the first option presented to them.

Before you submit the form, look at the bigger picture.

What have you already earned toward forgiveness? What will RAP save you today? What benefits will it give you over time? And if your circumstances change later, what choices will you still have?

If you've already completed an SDS analysis and have been waiting for RAP, now is the time to return to your plan, review the recommendation and make sure the next step still fits your long-term strategy.