Blog Post | February 12, 2026

New Student Loan Repayment Plan Won’t Save Borrowers

Affordability Breaking (F)Ed Federal Budget and Tax Policy Legislative Action Loan Repayment Student Debt

Author: Michele Zampini

Income-based plans are the best tool we have to keep borrowers out of delinquency and default. But if payments aren’t actually affordable, borrowers fall behind.

Student loan borrowers are in trouble, and looming changes to their repayment options will only make things worse. The Federal Reserve Bank of New York’s quarterly Household Debt and Credit Report for the fourth quarter of 2025, released in February 2026, shows that tens of millions of borrowers are falling—and staying—behind on their payments. Nearly 10 percent of federal loan balances are now 90+ days behind. The administration is claiming that its new repayment plan, set to roll out in July, will help. It won’t.  

What’s at Stake

Borrowers are losing access to the far-more-affordable SAVE Plan. Current borrowers will be left with fewer, more expensive income-based plans, while new borrowers will only have one income-based option, the new “Repayment Assistance Plan,” or RAP, which requires higher monthly payments and a longer repayment term than prior plans.  

RAP also gives more benefits to higher-income borrowers and removes provisions meant to protect borrowers from having to choose between covering their basic needs and paying their student loans. Borrowers in RAP will also see unpredictable payment spikes whenever their income crosses certain arbitrary thresholds, meaning they could be penalized for even small cost-of-living raises. 

While proponents of the new plan have focused on its interest subsidies, they don’t usually note that the SAVE Plan included the same subsidies. And while RAP does include one additional “principal match” subsidy, it forces borrowers to make significantly higher monthly payments to get it, putting it out of reach for many. RAP proponents also claim that it will “enable” people to pay down their debt more quickly, but this is misleading, because borrowers have always had this option.  

RAP requires even the lowest-income borrowers to make much higher monthly payments than SAVE. Take a borrower representing the breadwinner of the median U.S. household: a family of four with a household income of $81,000. Their monthly payment will spike from $36 under SAVE to $440 under RAP. 

Without changes to make RAP truly affordable, millions more may fall into default. We urge Congress to make changes to the plan to make it work for borrowers, including: 

  • Revising the formula for determining monthly payment amounts so that monthly payments are actually affordable for struggling borrowers and to restore the $0 payment option for the lowest-income borrowers.
  • Reducing the maximum repayment term to no longer than 20 years for all borrowers. 
  • Restoring borrowers’ ability to pause their payments due to acute financial hardship or unemployment. 

For a deep dive on why RAP will make it harder for borrowers to keep up, check out our pieces below: