Just got the email about the SAVE plan ending, and now they’re introducing the RAP plan or whatever. How are we feeling about this?
The email says “, under RAP, and unlike some of the other IDR plans, your balance can never go up as long as you make your required monthly payments” how true is this?
Tbh, there’s so too much going on in the world and these loans are like the least of my priorities sadly, but need thoughts and opinions if this new plan is going to hold the standards that they say they will
Posted by 13434022
2 Comments
RAP is set by law, so it can’t change without another law passing to change it. RAP has a small interest and principal subsidy IF your monthly payment doesn’t cover the set amounts of each. So yes, your balance will not grow on RAP. The biggest disadvantages of RAP are that it uses a percentage of AGI rather than the smaller discretionary income for its calculation. That means larger payments compared to other IDR plans. It also has a 30 year timeline for forgiveness which is 5 years longer than the current longest IDR term.
When the RAP plan was first introduced, I looked it over and immediately saw tons of red flags that I can’t recall off the top of my head right now. I just remember thinking YIKES 30 years in repayment without the traditional payment options and deferments is terrifying. I also think they use a very strange formula to determine payments. I didn’t like the looks of it, plus 30 years is a lifetime. I remember thinking it was an even worse form of debt slavery.