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The Department of Education has implemented new adjustments to how student loan repayments are managed, specifically affecting eligibility for loan forgiveness credits.
These adjustments focus on income-driven repayment plans, which are designed to tailor monthly payments according to a borrower’s income and family size. After making payments for 20 or 25 years, borrowers may qualify to have any remaining loan balance forgiven.
Previously, under the Trump administration’s One Big Beautiful Bill Act, there were up to six different income-driven repayment options available to borrowers.
Going forward, the options will be streamlined to just two: the existing Income-Based Repayment (IBR) plan and a newly introduced Repayment Assistance Plan (RAP).
The traditional IBR plan will remain an option only for those who have completed their borrowing prior to July 1, 2026. All other borrowers will be required to use the RAP.
While both plans offer student loan forgiveness, RAP requires 30 years in repayment before a loan is eligible for discharge, compared to 20 or 25 years for IBR. However, for some borrowers, RAP may have lower payments than IBR.
RAP also has an interest subsidy intended to limit balance growth from excess interest accrual, which IBR does not have.
In the past, payments credited toward student loan forgiveness transferred between plans. That way, switching plans would not reset the clock on getting student loans discharged.
However, new regulations state that RAP payment credits will not transfer.
For borrowers, that works out like this: If someone is making payments under IBR and switches to RAP, those IBR payments will still count toward the student loan forgiveness term.
But if that borrower wanted to switch back to IBR from RAP for any reason (like IBR’s cap on payments or the shorter loan forgiveness term), those payments made under the RAP plan will not count toward the timeline for student loan forgiveness.
The longer a borrower remains in RAP, the more it could cost them if they decide to switch back to IBR.
The change comes as the Education Department has been pressuring borrowers enrolled in income-driven repayment plans that are being eliminated to choose a different plan.
If borrowers whose current plan is ending don’t choose between IBR and RAP, they will automatically be placed in a standard plan, which may have unaffordable payments and doesn’t qualify for student loan forgiveness.