New Student Loan Repayment Plans: What Borrowers Need to Know
Millions of student loan borrowers need to choose a new plan — here’s everything you need to know
Image: New York Post
Starting July 1, millions of student loan borrowers must choose new repayment plans, transitioning from the Biden-era SAVE program. The options include the Income-Based Repayment (IBR) plan and the new Repayment Assistance Plan (RAP), which could significantly affect monthly payments.
- 01Approximately 7 million borrowers from the now-defunct SAVE program will need to select new repayment plans by July 1.
- 02The new Repayment Assistance Plan (RAP) features tiered payments based on income, potentially increasing monthly payments for some borrowers.
- 03Borrowers with incomes just above certain thresholds may see significant jumps in their monthly payments under RAP.
- 04The IBR plan allows for $0 payments for extremely low-income borrowers, while RAP requires a minimum payment of $10.
- 05Borrowers are advised to stay current on payments and negotiate with lenders if they face difficulties.
Advertisement
In-Article Ad
Starting July 1, millions of student loan borrowers in the United States will need to transition to new repayment plans as the Biden-era SAVE program comes to an end. Approximately 7 million individuals will be affected, with two primary options available: the Income-Based Repayment (IBR) plan and the newly introduced Repayment Assistance Plan (RAP). The IBR plan requires borrowers to pay 10% of their discretionary income over 10 to 25 years, while the RAP plan features tiered payments ranging from 1% to 10% of adjusted gross income, with the potential for payments to extend up to 30 years. This change has raised concerns among borrowers, as monthly payments could increase by approximately $350. The IBR plan allows for $0 payments for those with very low incomes, whereas RAP imposes a minimum payment of $10. Borrowers are encouraged to carefully evaluate their financial situations and stay on top of their payments to maintain good credit. Failure to select a new plan will result in automatic enrollment in the standard IBR plan.
Advertisement
In-Article Ad
The changes in repayment plans will directly affect millions of borrowers' financial obligations, potentially increasing their monthly payments significantly.
Advertisement
In-Article Ad
Reader Poll
Which repayment plan do you think is better for student loan borrowers?
Connecting to poll...
Read the original article
Visit the source for the complete story.