Student Borrowers Face Major July Deadline: What To Know
Summary
Millions of student loan borrowers must choose a new repayment plan by July 1 after a court ended the Biden administration’s SAVE plan. The new option, called the Repayment Assistance Plan (RAP), will start in July 2026 and offers payments based on income with some protections against rising loan balances.Key Facts
- The Biden-era SAVE plan helped reduce monthly payments and speed up loan forgiveness for 7 million borrowers.
- A federal appeals court ruled the SAVE plan must end due to legal challenges from Republican state officials.
- Borrowers enrolled in SAVE must pick a new repayment plan by July 1 or be moved to another plan automatically.
- The Repayment Assistance Plan (RAP) is set to start July 1, 2026, and will be the main income-driven plan for new federal loans.
- RAP payments will range from $10 per month to 10% of income, depending on how much the borrower earns.
- RAP includes rules to stop loan balances from growing because of unpaid interest.
- Borrowers with Grad PLUS and direct federal loans qualify, but Parent PLUS loans do not.
- Current borrowers who don’t take out new loans can stay on some older repayment plans for a limited time.
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