What Trump’s new student loan repayment plan means for your wallet |
What Trump’s new student loan repayment plan means for your wallet
The new RAP plan is overhauling federal student loan plans beginning in July. Here's how the new formula works—and how to prepare
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Millions of federal student loan borrowers are about to see a major change to how their monthly payments are calculated. The Trump administration’s “One Big Beautiful Bill Act” (OBBB) introduced the Repayment Assistance Plan, or RAP — a new income-driven repayment (IDR) option that replaces most of the existing plans federal student loan borrowers use.
However, financial aid experts caution that RAP will likely make many borrowers’ payments unaffordable due to how it calculates repayment. This could add even more strain to a system already under pressure.
As of the fourth quarter of 2025, 9.6% of all federal student loans were seriously delinquent (90 days or more late), according to the latest Household Credit and Debt Report from the Federal Reserve Bank of New York. The flow rate of accounts moving into that stage has accelerated over the past year, from just 0.70% at the end of 2024 to a high of 16.2% by the end of 2025, the report found.
Here's a look at how the new plan works and what borrowers need to know before it goes into effect on July 1.
RAP’s payment formula is more straightforward than previous plans, said Jack Wang, a college financial aid advisor at Innovative Advisory Group and host of the Smart College Buyer podcast.
The new........