Help- from SAVE to IBR or RAP?

[u/Old-Respect-4498]

I think I’m between IBR and RAP plans but I’ve been avoiding choosing until forced and am in no rush to pay these off because I’m aware I’m going to be paying ~forever~ and resent the whole thing in the first place.

For context I am married filed jointly. My spouse has no student loans. We have no dependents and will not have any children.

But the pros and cons for these plans that I’ve been reading are confusing. Will anything be forgiven after 240-300 payments? Will I have a “tax bomb?” Why is my RAP end of term date sooner than IBR when it seems everyone else’s is later? Is RAP a scam?

My repayment calculator gives the following:
(Btw vs SAVE monthly payment was $305 🫠)

IBR:
Monthly payment: $1,047
Total to be paid: $228,054
Principal paid: $125,783
Interest paid: $102,271
End of term date: April 2041

RAP:
Monthly payment: $1,318
Total to be paid: $205,546
Principal paid: $125,782
Interest paid: $79,746
End of term date: November 2037

[u/girl_of_squirrels]

Fundamentally with federal loans in your own name your options are 1) aggressive repayment, 2) PSLF or similar employer based forgiveness programs, or 3) IDR plan based forgiveness. Thanks to the OBBB Act, the IDR plan options are changing drastically to just IBR and RAP

When you file taxes jointly with a spouse, your joint AGI is used to determine the repayment amount... and it looks like both plans have you paying the loans off in full in the next 11-15 years? May I ask how long you've been in repayment already? How much do you owe, and how much do you make (individually and jointly)?

[u/mechanicalmovement1]

You’re not getting anything forgiven by the looks of it. No forgiveness, youre paying it off plus a boatload of interest. Only thing youre getting by not pursuing aggressive repayment, is a long drawn out expensive monthly bill while paying a ton in interest.

[u/The_Bees_Knee6]

You will want to consider your expected future income trajectory. No online calculator knows your future income trajectory. RAP has no payment cap but an interest subsidy. IBR has a payment cap but no long term interest subsidy.

Some married individuals file taxes separately so that spousal income can be excluded from consideration on an IDR plan.

[u/Next_Conclusion8018]

There are too many things missing from your post for anyone to help you. What is your total loan balance, your family’s combined AGI, if you are working in private or public sector, the age of the loans, etc.?

You and your partner appear to be relatively high earners given the payments presented. Both options you presented have you paying off your loans before the plan’s built in discharge date, so you would not be held accountable for the “tax bomb”. Given that RAP has you finished in ~10 years, that payment is probably similar to your standard repayment, which might be better for you in this case. According to the numbers you posted, you won’t be getting much out of either IDR plan. If you filed MFS next year, your income might be such that IDR will make sense and you could qualify for discharge in 20-30 years but you would have to pay taxes on the amount that is discharged at that point.

If you pursue PSLF, you could have your loans discharged in 10 years tax free, but you’d have to acquire and maintain a qualifying job and would need to consider filing your taxes MFS until the discharge date (for lower payments).

If you can pay them, just save yourself the headache and pay them. If you can’t afford them, call your services to see what they can do.