Weighing student loan repayment plans: RAP launching, others ending
Experts offered advice to federal student loan borrowers as the Repayment Assistance Plan is set to take effect on July 1.
RAP is a 30-year income-driven repayment plan that will become the default option for new borrowers once it’s introduced in the summer, according to a news article from Action News 5. The experts explained that borrowers on RAP will be required to pay 1% to 10% of their adjusted gross income monthly. Although RAP is five to 10 years longer than other existing plans, the experts emphasized that because of the features included in the new plan, borrowers will continue to make progress on paying off their student debt. For instance, their loans won’t be subject to negative amortization and borrowers will have access to a $50 monthly subsidy to reduce the principal balance.
The experts stressed that because many repayment plans are ending, including the Saving on a Valuable Education plan, borrowers should consider switching to the Income-Based Repayment plan or RAP.
Read more: Action News 5
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