Trump's 'big beautiful bill' created a new student loan repayment plan: Here's what borrowers need to know

The analysis demonstrates When Congress passed the "big beautiful bill" earlier this month, it created a new student loan repayment plan

Here's what to know the option (an important development), in today's financial world

Furthermore, Brandon Bell | Getty ImagesWhen Congress passed the "big beautiful bill" earlier this month, and President Donald Trump signed it into law, it created a new student loan repayment plan

Next year, millions of borrowers will have access to that new option, called the "Repayment Assistance Plan," or RAP (an important development)

Because the legislation also phases out a number of the U (noteworthy indeed)

Conversely, Department of Education's existing repayment plans, RAP may be the only affordable choice for some

Here's what to know RAP (something worth watching)

What are the new repayment plan's terms

RAP is what the Education Department calls an "income-driven repayment plan. " Congress created the first IDR plans back in the 1990s to make student loan borrowers' bills more affordable, considering recent developments

Historically, the plans cap people's monthly payments at a of their discretionary income and cancel any remaining debt after a certain period, typically 20 years or 25 years, given the current landscape

RAP is different in a few significant ways

For one, it doesn't shield a portion of a borrower's income other IDR plans do, but rather calculates their bill based on so-called adjusted gross income

On the other hand, (AGI is your total earnings before taxes, minus certain deductions (something worth watching)

When will RAP be available

In contrast, RAP should be available by July 1, 2026, according to the Education Department

Borrowers with existing loans will maintain access to some existing repayment plans, including Income-Based Repayment, or IBR

Furthermore, They can pick between RAP or a standard repayment plan, under which their debt is divided into fixed payments over a period ranging from 10 years to 25 years, depending on their balance

An important point to keep in mind: Even borrowers with old loans who take out a new one after July 1, 2026, will lose the existing options for that loan, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers (this bears monitoring), amid market uncertainty

This will affect students partway through their degree, for example. "If you borrow again, you will be in the world of two choices," Buchanan said

What benefits does RAP offer

RAP comes with a few perks (an important development), given current economic conditions

Those who are keeping up with their bills but aren't making gress paying down their principal will also get a small subsidy by the Education Department

Nevertheless, Plus, payments made under RAP will give borrowers credit on the decade-long timeline to debt relief under the Public Service Loan Forgiveness gram

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