Published by Finology Software · For financial advisors
On July 1, 2026, the Repayment Assistance Plan (RAP) becomes the default income-driven plan, SAVE/PAYE/ICR begin sunsetting, and new borrowing limits take effect. For the borrower sitting across from you, this isn’t abstract policy — it changes their actual payment, and in several cases it creates hard deadlines that hit before July 1. The advisors who re-model the right clients now are the ones who will guide them well, and win the relationship.
New to the mechanics of RAP? Start with our full breakdown: RAP Is Here: What the New Default Repayment Plan Means. Then work the checklist below.
Here’s who to pull up first.
1. Married borrowers — the filing-status decision just got sharper
RAP bases payments on adjusted gross income (AGI) with no poverty-line offset, which makes married-filing-jointly vs. married-filing-separately a live lever again. The nuance most people miss: under RAP, filing separately counts only the borrower’s own AGI and own claimed dependents, while filing jointly counts combined AGI. The worst case — and the strongest argument for filing separately — is when only one spouse carries the loans but the couple files jointly: RAP uses the full combined AGI with no offset for the non-borrowing spouse. Any married client with federal debt should be modeled both ways before they file. This is also the natural hand-off point with their CPA.
2. Anyone currently on SAVE, PAYE, or ICR
These plans are winding down, and your clients on them will move to RAP or IBR — the right destination is rarely obvious. Two things to surface:
- RAP’s interest waiver can beat IBR for low-payment borrowers. When a borrower makes a full, on-time RAP payment, any unpaid interest that month is waived and the balance doesn’t grow — even at the $10 minimum. For a client who was watching their balance balloon under an older plan, that can make RAP the better path despite the AGI-based formula.
- SAVE-forbearance limbo is costing some clients. Borrowers parked in forbearance during the SAVE litigation are accruing interest, and those months count toward nothing — not forgiveness, not PSLF. Flag anyone sitting in that status and get them into an active, qualifying plan.
3. Borrowers close to IDR forgiveness — do NOT disturb the clock
If a client is within a few years of 20/25-year IDR forgiveness, the move is often to leave them where they are. Consolidating restarts the forgiveness clock, and switching to RAP doesn’t carry their prior months backward into IBR if they ever switch back. Re-model these clients specifically to confirm staying put — and to make sure no one “simplifies” their loans into a reset.
4. Anyone considering consolidation — mind the July 1 line
This is the trap that will catch well-meaning advisors. Any Direct loan first disbursed on or after July 1, 2026 — including a new Direct Consolidation Loan — locks the borrower’s entire Direct portfolio out of IBR, leaving only RAP or the new tiered Standard plan. So a post-July-1 consolidation done “to tidy things up” can strip IBR access from a client’s older loans. If a client benefits from keeping IBR on the table, get any needed consolidation disbursed before July 1.
5. FFEL and Perkins loan holders
FFEL, Perkins, and HEAL loans cannot be repaid under RAP or the tiered Standard plan. To get into RAP/IBR, the borrower must consolidate them into a Direct Consolidation Loan — and to preserve IBR access, that consolidation has to be disbursed before July 1, 2026. Same urgency as the Parent PLUS deadline below; flag these clients now.
6. Parent PLUS families — the June 30 deadline is days away
Parent PLUS borrowers who want to keep income-driven repayment access generally need a Direct Consolidation Loan disbursed (not just applied for) before June 30, 2026. Miss it and IDR access can disappear permanently. Looking further out: when ICR sunsets in 2028, Parent PLUS consolidators are usually better served by IBR than RAP, because IBR retains a 150%-of-poverty-line offset that RAP doesn’t have. And for families still borrowing, Parent PLUS is now capped — model the private-loan gap before they sign for next year.
7. PSLF and public-service clients
Good news worth confirming: on-time RAP payments count toward the 120 needed for Public Service Loan Forgiveness. Two planning notes: make sure a client transitioning off a sunsetting plan doesn’t break their payment count, and remember that PSLF forgiveness is tax-free — unlike RAP/IDR forgiveness, which is federally taxable again for discharges after December 31, 2025. For a 30-year RAP borrower, that argues for a tax-bomb sinking fund; for a PSLF client, it doesn’t.
8. Grad and professional students entering this fall
With Grad PLUS eliminated and annual Direct limits now capped (roughly $20,500 for most graduate programs and $50,000 for professional programs, under a student-side lifetime cap), high-debt students — physicians, attorneys, dentists — face a structural private-loan gap their predecessors didn’t. These are also some of the highest-value planning clients you can land, which is exactly why this conversation matters.
A few traps to keep clients out of
- Don’t tell a RAP borrower to “pay a little extra.” Payments above the billed amount are applied to interest first and can void that month’s interest waiver and the up-to-$50 principal match. Clients optimizing on RAP should redirect surplus cash elsewhere; clients who genuinely want to retire the debt fast belong on an amortized Standard plan, not RAP.
- Don’t consolidate a near-forgiveness client. It resets the clock.
- Don’t assume one ineligible loan poisons everything. A borrower can keep Parent PLUS debt on its own track while putting eligible loans on RAP.
Turn the checklist into a client conversation
Re-modeling these clients isn’t just service — it’s growth. Student loan strategy is one of the most effective front doors there is for engaging younger, high-earning clients and deepening relationships with existing ones. Advisors using Finology Software tell us the same thing again and again: clients who see a clear, personalized loan analysis go on to engage the firm for additional services.
You don’t have to build this math yourself. Finology Software imports a client’s federal loans directly from NSLDS, models RAP against IBR and PSLF on monthly and lifetime cost, runs both filing statuses across the whole household, and produces a branded, audit-ready report you can hand over at the meeting.
Pick three clients from the list above and run them this week. It’s the work that earns trust right when borrowers need it most.
Start a free 7-day trial at finology.tech, or book 10 minutes and we’ll model one of your real cases together.
This article is for educational purposes and is not legal, tax, or financial advice. Some implementation details of the new rules are still being finalized; model each client’s specific situation before acting.
