For the last several months, we've been waiting for additional guidance on the new Repayment Assistance Plan (RAP) scheduled to launch on July 1.
While there are still some unanswered questions, we've finally received more clarity on two issues that could significantly impact how borrowers approach their repayment strategy moving forward.
If you've been considering RAP, these are two updates you'll want to understand before making any decisions.
Update #1: RAP Will Not Count Toward IBR Forgiveness
This is probably the biggest surprise we've seen so far.
Historically, income-driven repayment plans have largely played well together when it came to long-term forgiveness. A borrower could spend time in one plan, switch to another, and generally maintain progress toward forgiveness.
RAP changes that.
According to recently released guidance:
"with the clarification that RAP payments will not count towards forgiveness under IBR."
Months spent in RAP will not count toward forgiveness under the Income-Based Repayment (IBR) plan.
To be clear, RAP time will still count toward:
- Public Service Loan Forgiveness (PSLF)
- RAP's own 30-year forgiveness timeline
However, RAP months will not count toward:
- New IBR's 20-year forgiveness timeline
- Old IBR's 25-year forgiveness timeline
Why is this important?
Prior to this guidance, many borrowers were considering a strategy that looked something like this:
Use RAP for most of your repayment journey, benefit from the interest subsidies and potentially lower payments, and then switch into IBR near the end to finish under IBR's shorter forgiveness timeline.
Based on what we're seeing now, that strategy appears to be gone.
If you spend 20 years in RAP and then switch into IBR, those RAP years would not help you reach IBR forgiveness.
That's a major shift from how borrowers have historically thought about moving between repayment plans.
If you're pursuing PSLF, this may not be a huge issue since both RAP and IBR remain PSLF-eligible, though the RAP does not have a cap on how high it's payment can go like IBR does.
But if you're pursuing what we call "Path 2" forgiveness—the long-term taxable forgiveness route—this becomes a very important planning consideration.
Three Student Loan Repayment Paths
The decision between RAP and IBR may no longer be a question of "Which one should I use right now?"
Instead, it may become "Which forgiveness path am I committing to long term?"
Update #2: Can Borrowers Actually Leave RAP Later?
The second update is creating a fair amount of confusion.
Based on current guidance from StudentAid.gov, borrowers who remain eligible for both RAP and IBR should be able to move between the plans.
"There will be no restriction on enrolling in the IBR, ICR, or PAYE Plans on or after July 1, 2026, unless you receive a disbursement on a new loan on or after July 1, 2026."
That's the good news.
The concern is that we're already hearing reports of some loan servicers telling borrowers that once they enter RAP, they may not be able to leave it.
Now, that appears to conflict with the guidance we've seen so far.
But if you've followed federal student loans for any length of time, you know there's often a difference between what the regulations say and how quickly loan servicers implement those regulations.
The law can change overnight.
The systems, training, forms, and processing procedures often take much longer.
As a result, we're approaching RAP cautiously.
Even if the regulations ultimately allow borrowers to move between RAP and IBR, there may be delays, confusion, or implementation issues as servicers work through the transition.
The last thing we'd want to see is a borrower enter RAP expecting flexibility, only to discover that their servicer is unable to process a requested change for months.
Could that get sorted out eventually? Probably.
Could it create headaches in the meantime? Also probably.
That's why we think borrowers should go into RAP understanding exactly what they're signing up for and not simply assume they'll be able to switch plans smoothly later.
One More Reminder: July 1 Is Still a Huge Deadline
We've talked about this in previous updates, but it's worth repeating.
If preserving access to IBR is important to your strategy, be extremely careful about taking out any new federal loans or initiating any new federal consolidations from this point forward.
A consolidation loan is considered a new loan and any new consolidations started, will now be most certainly completed after the July 1st date.
And a new loan after July 1 could permanently eliminate eligibility for IBR.
That's a much bigger deal than many people realize.
Losing IBR could mean losing:
- Access to a capped payment option for PSLF
- Access to a shorter long-term forgiveness timeline
- Additional flexibility in your future repayment strategy
We've already spoken with borrowers who are considering consolidation simply because they want to clean up their loan history or make their account look simpler.
We'd encourage caution.
After July 1, convenience may not be worth the tradeoff.
Before creating any new loan, make sure you understand exactly what repayment options you may be giving up.
Our Thoughts
RAP may still be a great fit for many borrowers.
The interest subsidies are attractive. Some borrowers will likely benefit from lower payments. And RAP remains fully eligible for PSLF.
But these recent updates reinforce something we've been saying for a while:
The decision to enter RAP shouldn't be made casually.
The fact that RAP time won't count toward IBR forgiveness—and the uncertainty around how easily borrowers will be able to move between plans—means the stakes are higher than many initially expected.
For some borrowers, RAP may be the obvious choice.
For others, preserving access to IBR may end up being far more valuable.
As always, the answer depends on your repayment path, forgiveness goals, income trajectory, and overall strategy.
We'll continue monitoring guidance as it comes out and will keep sharing updates as we learn more.
Need help thinking through your student loans? We're here for you. Shoot us an email or schedule a quick call with our team so we can get you connected with the best resources on our team to help your specific situation.
This material is provided for informational and educational purposes only and should not be construed as individualized financial, tax, or legal advice. The information presented is based on current understanding of federal student loan programs and may be subject to change without notice. Changes in law, regulation, or administrative implementation may impact the availability, terms, or outcomes of repayment and forgiveness programs. Student loan repayment strategies, including participation in programs such as the Repayment Assistance Plan (RAP), Income-Based Repayment (IBR), and Public Service Loan Forgiveness (PSLF), involve complex eligibility requirements and may produce different results based on individual circumstances. There is no guarantee that any borrower will qualify for or achieve loan forgiveness or benefit from any specific repayment strategy. References to third-party sources, including government publications and websites, are believed to be reliable but are not guaranteed for accuracy or completeness. You should consult with a qualified financial professional, tax advisor, or legal professional before making decisions regarding your student loans or financial situation.