New Federal Student Loan Repayment Plan Traps Borrowers, Resets Forgiveness Progress

Borrowers who enroll in the new Repayment Assistance Plan (RAP) for federal student loans will forfeit accumulated forgiveness credit if they later transfer to another income-driven repayment plan, the Department of Education confirmed. RAP launched in July 2026 with a 30-year forgiveness timeline, compared with 20 to 25 years under existing income-driven plans. Payments made under RAP do not carry over to other plans, effectively restarting the borrower's forgiveness clock, except for payments equal to or greater than the 10-year standard plan amount. The restriction creates urgency for millions of borrowers still enrolled in the defunct Saving for a Valuable Education (SAVE) plan. The first cohort must exit SAVE by September 30, 2026, or be automatically placed in the potentially costlier standard repayment plan. RAP offers an interest waiver and a $50 monthly principal contribution for lower-income borrowers. Borrowers in RAP remain eligible for Public Service Loan Forgiveness but cannot access the PSLF Buyback program.