The student loan tool has been doing a solid job of comparing plans side by side. But there were a few things it was leaving on the table -- things that could mean thousands of dollars in difference for people making real decisions. This update fixes that.
The tax rate is no longer a guess
This was the big one. The old tool had a slider that defaulted to 20% for the tax on forgiven amounts. That is a fine middle-ground number, but it was a guess. And when you are staring at a potential $20,000 tax bill decades from now, “roughly 20%” is not super comforting.
Now the tool does the math for you. It takes your current income, grows it by your expected annual increase over the full repayment term, and then stacks the forgiven balance on top -- because that is exactly what the IRS does. It treats the forgiven amount as income in the year it happens. The tool runs all of that through the 2025 federal tax brackets and calculates the actual effective marginal rate on your forgiven amount.
So instead of guessing, you see something like: “Projected AGI at forgiveness: ~$168k + $12k forgiven = ~$2.9k federal tax (24% effective).” That is a real number you can plan around. And if you disagree with it -- maybe you live in a state with income tax, or you expect brackets to change -- just uncheck the auto box and set it yourself.
The government is paying part of your bill. Now you can see how much.
RAP has a feature that a lot of people do not fully appreciate: when your payment does not cover the interest, the government waives what is left over. They also kick in extra principal reduction if your payment is under $50 a month. That is real money flowing in your direction, and until now the tool did not make it visible.
There is now a “RAP Subsidy” column in the detailed payment schedule that shows exactly how much the government is covering for you each year. And a running total in the RAP Analysis section. For lower-income borrowers, this number can be surprisingly large over 20–30 years.
The tax bomb is scary. But maybe you do not owe it.
When you have a forgiven balance and the tool shows a tax number, there is now an info box that pops up explaining the insolvency exception. In plain English: if your total debts are higher than your total assets when the forgiveness happens, the IRS might let you off the hook for some or all of that tax using Form 982. A lot of people do not know this exists, and for someone with significant debt, it can be the difference between panic and relief. We are not tax advisors -- but we can at least point you in the right direction.
Your plan might have an expiration date
If you are currently on PAYE, REPAYE, or ICR, those plans are scheduled to sunset in July 2028. The tool now shows a clear warning when one of those plans is selected, and the year-by-year schedule highlights the transition year in yellow with a “forced switch” label. No more finding out the hard way that your plan is going away.
Your budget and your loan tool now talk to each other
If you have already entered income in the Budget Tracker, the student loan tool will pull that number in automatically on your first visit. No re-entering. It uses your recurring income if you have set that up, or your most recent month’s income data as a fallback. One less thing to type, and it means your loan projections start from a number you have already confirmed is real.
Everything still works the same way
No accounts. No data sent anywhere. Everything runs in your browser. The tools just got better at working together and showing you numbers that actually matter.
Try the updated Student Loan tool and see how the numbers look with your inputs.