Economic and Political Insights

Economic and Political Insights

Economic Policy

Inflation and the RAP Trap: How Rising Prices Undermine Loan Affordability

How inflation erodes the promise of Trump’s new Repayment Assistance Plan for affordable loan repayment.

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David Bernstein
Oct 08, 2025
∙ Paid

Introduction

The purpose of income-driven repayment (IDR) is to make education loans affordable relative to a borrower’s ability to pay. By tying payments to income, IDR plans aim to avoid repayment burdens that crowd out essential living costs.

However, the Repayment Assistance Plan (RAP) introduced in the 2025 Tax Bill departs from prior IDR designs. It…

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