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Student loan borrowers on new RAP plan can lose key benefits if they pay even one day late
The U.S. Department of Education's new Repayment Assistance Plan, or RAP, offers certain benefits to student loan borrowers â but only if their bill is paid on time.
"Being late with a payment, by even just one day under the RAP repayment plan, will cost you," said higher education expert Mark Kantrowitz. "You will lose valuable benefits that save you money."
RAP is the government's latest income-driven repayment plan, meaning its bills are capped at a share of your income. Under the plan, which became available July 1, monthly payments will typically range from 1% to 10% of a borrower's earnings; the more they make, the bigger their required payment. RAP culminates in loan forgiveness after 30 years.
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Legal challenges, differing timelines spur confusion for federal student loan borrowers
The countdown clock has begun ticking for some federal student loan borrowers.
July 1, loan service providers started the process of reaching out to borrowers to start their 90-day deadline to switch from the SAVE repayment plan.
“The only thing I can do is tighten the budgets more, and somehow come up with the money,” Cameron Green told 5 on Your Side.
He said his student loan balance is sitting at about $135,000. That number, he says, has hardly moved over the last decade of repayment.
“It's the only…debts we can't escape,” Green said. “Being a lawyer is not a high paying job like people expect anymore. It's solidly middle class, so I'm sitting here with a third of a house, and I can never really pay it back, because there's no way I can never come up with $135,000 just to pay it off.”
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