Last updated: May 2026 | Reading time: 11 min | Sources: Federal Student Aid, SoFi, NerdWallet, The College Investor, Congress.gov
The student loan landscape just changed dramatically. The Repayment Assistance Plan — known as RAP — launches July 1, 2026, and for millions of borrowers, it will be the only income-driven repayment option available going forward.
If you have federal student loans and haven’t heard of RAP yet, you need to read this now. Whether RAP is good or bad for your situation depends entirely on your income, your family size, and what you’re trying to accomplish with your loans.
This guide breaks down exactly how RAP works, who it affects, how to calculate your payment, and whether you should switch to it or stick with IBR.
Table of Contents
- What Is the RAP Repayment Plan?
- When Does RAP Start?
- Who Is Eligible for RAP?
- How Are RAP Payments Calculated?
- RAP Payment Examples by Income
- RAP Interest Subsidy and Principal Match
- Loan Forgiveness Under RAP
- RAP vs. IBR: Which Is Better for You?
- Does RAP Qualify for PSLF?
- How to Enroll in RAP
- Frequently Asked Questions
What Is the RAP Repayment Plan? {#what-is-rap}
The Repayment Assistance Plan (RAP) is a new federal income-driven repayment (IDR) plan created by the One Big Beautiful Bill Act (OBBBA), signed by President Trump in 2025.
Like other IDR plans, RAP ties your monthly payment to your income rather than your loan balance. The more you earn, the more you pay — but your payment is always capped as a percentage of your income, making it more manageable than a fixed repayment schedule.
What makes RAP different from older IDR plans like IBR or PAYE:
- It uses your Adjusted Gross Income (AGI) directly — not a “discretionary income” formula based on the federal poverty level
- Payments range from 1% to 10% of your AGI, depending on your income bracket
- Forgiveness comes after 30 years — longer than IBR’s 20 or 25 years
- It includes two unique protections: an interest subsidy and a $50 principal match
Starting July 1, 2026, RAP and the new Tiered Standard Plan will be the only two options for new federal borrowers. The era of six different IDR plans is over.
When Does RAP Start? {#when-does-rap-start}
RAP officially launches on July 1, 2026.
Here’s the timeline every borrower needs to know:
| Date | What Happens |
|---|---|
| Before July 1, 2026 | Existing IDR plans remain available (except SAVE, which ended) |
| July 1, 2026 | RAP becomes available. New borrowers are placed in Standard Repayment unless they opt into RAP |
| July 1, 2026 | Borrowers who took out any new loan after this date can only access RAP or Standard Repayment going forward |
| Through June 30, 2028 | Existing borrowers can stay in IBR, PAYE, or ICR — or switch to RAP |
| July 1, 2028 | PAYE and ICR end. Borrowers still in these plans move to RAP or IBR. IBR closes to new enrollees |
If you were on SAVE: You need to act now. SAVE is already over. Every month you stay in SAVE administrative forbearance is a month that does not count toward forgiveness or PSLF. Switch to IBR or prepare to enroll in RAP on July 1.
Who Is Eligible for RAP? {#who-is-eligible}
RAP is available to most federal student loan borrowers, but not all loans qualify.
Eligible loans
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct Graduate PLUS Loans
- Direct Consolidation Loans (that do not include a Parent PLUS loan)
NOT eligible for RAP
- Parent PLUS Loans — not eligible for RAP under any circumstances
- Direct Consolidation Loans that include a Parent PLUS Loan — ineligible
- FFEL loans — cannot be repaid under RAP (must stay on existing plans or consolidate into a Direct Loan first)
- Perkins Loans — not eligible
The July 1, 2026 rule
This is the most important eligibility rule: if you take out any new federal loan on or after July 1, 2026, RAP becomes your only IDR option — even for older loans you already have.
It doesn’t matter if you borrowed $80,000 before 2026 and only take out a $5,000 loan after. That new loan locks all your federal debt into RAP as the only income-driven path.
If you have existing loans and don’t borrow anything new after July 1, 2026, you can still choose IBR — but only until July 1, 2028.
How Are RAP Payments Calculated? {#how-payments-calculated}
RAP uses a simpler formula than older IDR plans. There’s no federal poverty level calculation, no “discretionary income” math — just a straightforward percentage of your AGI.
The formula
Monthly Payment = (AGI × Bracket Rate ÷ 12) − ($50 × number of dependents)
Minimum payment: $10/month regardless of income.
Income brackets and rates
| Annual AGI | RAP Rate | Monthly Payment (no dependents) |
|---|---|---|
| $10,000 or less | Flat $10/month | $10 |
| $10,001 – $20,000 | 1% of AGI | ~$8 – $17 |
| $20,001 – $30,000 | 2% of AGI | ~$33 – $50 |
| $30,001 – $40,000 | 3% of AGI | ~$75 – $100 |
| $40,001 – $50,000 | 4% of AGI | ~$133 – $167 |
| $50,001 – $60,000 | 5% of AGI | ~$208 – $250 |
| $60,001 – $70,000 | 6% of AGI | ~$300 – $350 |
| $70,001 – $80,000 | 7% of AGI | ~$408 – $467 |
| $80,001 – $90,000 | 8% of AGI | ~$533 – $600 |
| $90,001 – $100,000 | 9% of AGI | ~$675 – $750 |
| Over $100,000 | 10% of AGI | $833+ |
Each dependent you claim on your tax return reduces your monthly payment by $50.
The dependent deduction
For each dependent child you claim on your taxes, subtract $50 from your monthly payment.
For example: a borrower earning $75,000 with two children would pay:
- Base payment: $75,000 × 7% ÷ 12 = $437.50
- Dependent deduction: 2 × $50 = $100
- Final monthly payment: $337.50
Your payment recertifies annually based on your most recent tax return.
RAP Payment Examples by Income {#payment-examples}
Here are real-world examples to show what RAP means for your wallet:
Example 1: Recent graduate, single, no dependents
- AGI: $38,000/year
- RAP rate: 3%
- Monthly payment: $38,000 × 3% ÷ 12 = $95/month
Example 2: Mid-career professional, married, 1 child
- AGI: $55,000/year
- RAP rate: 5%
- Base payment: $55,000 × 5% ÷ 12 = $229.17
- Dependent deduction: −$50
- Monthly payment: $179/month
Example 3: Higher earner, no dependents
- AGI: $101,000/year
- RAP rate: 10%
- Monthly payment: $101,000 × 10% ÷ 12 = $842/month
Example 4: Very low income borrower
- AGI: $18,000/year
- RAP rate: 1%
- Calculated payment: $18,000 × 1% ÷ 12 = $15/month
- Monthly payment: $15/month (above the $10 minimum)
Key tip: If your AGI is close to a bracket boundary, maximizing pre-tax contributions to your 401(k) or IRA reduces your AGI — which could drop you into a lower RAP bracket and meaningfully lower your monthly payment.
RAP Interest Subsidy and Principal Match {#interest-subsidy}
RAP includes two borrower protections that older plans like IBR don’t have. These are often overlooked but can make a real difference over 30 years.
Interest subsidy
If your monthly RAP payment doesn’t fully cover the interest that accrued since your last payment, the Department of Education waives the unpaid interest. This prevents your balance from growing while you’re making on-time payments — a problem known as negative amortization.
As long as you make every payment on time and in full, your loan balance should never be higher than when you entered RAP.
$50 principal match
When your monthly payment is too small to reduce your principal by at least $50, the Department of Education adds a matching payment to bring your principal reduction up to $50 for that month.
This matters most for very low-income borrowers whose payments are close to the $10 minimum. It ensures that even the smallest payments are making a real dent in the actual loan balance — not just covering interest.
Together, these two features mean RAP is designed so that consistent, on-time payments always move you forward — never backward.
Loan Forgiveness Under RAP {#forgiveness}
RAP leads to forgiveness, but on a longer timeline than most existing IDR plans.
Standard RAP forgiveness: 30 years
After making 360 qualifying payments over at least 30 years, any remaining balance is forgiven. That’s 10 years longer than IBR for “new” borrowers (who get forgiveness at 20 years).
This is the biggest downside of RAP compared to IBR. For borrowers who entered “new” IBR before July 2026, staying in IBR gets you to forgiveness a full decade sooner.
Shorter forgiveness for smaller balances
Borrowers with a smaller original principal balance may qualify for forgiveness sooner. The exact thresholds are based on your original loan balance when you first entered repayment — check with your servicer or the studentaid.gov loan simulator for your specific situation.
Is RAP forgiveness taxable?
The tax treatment of RAP forgiveness is currently unsettled at the federal level beyond 2025. Some state income taxes may apply to forgiven amounts. Consult a tax professional well before your expected forgiveness date.
RAP vs. IBR: Which Plan Is Better? {#rap-vs-ibr}
This is the most important decision for current borrowers. Here’s a clear comparison:
| Feature | IBR (New) | RAP |
|---|---|---|
| Payment basis | 10% of discretionary income | 1–10% of AGI |
| Forgiveness timeline | 20 years | 30 years |
| Interest subsidy | Partial (subsidized loans only, first 3 years) | Full — balance never grows on-time payments |
| Principal match | No | Yes — up to $50/month |
| Dependent deduction | Family size reduces discretionary income | $50/month per dependent |
| Availability | Must enroll before July 1, 2028 | Available July 1, 2026 |
| PSLF eligible | Yes | Yes |
| Parent PLUS eligible | Yes (via consolidation) | No |
When RAP is better than IBR
- You have very low income — RAP’s 1–3% rate at the lowest brackets can mean smaller payments than IBR’s 10% of discretionary income formula
- You want interest protection — RAP’s full interest subsidy prevents your balance from ever growing
- You borrow after July 1, 2026 — RAP will be your only IDR option
When IBR is better than RAP
- You want forgiveness in 20 years instead of 30 — a 10-year difference is enormous in total interest paid
- You earn a moderate to high income — IBR’s discretionary income formula often produces lower payments than RAP’s AGI percentage for middle earners
- You’re pursuing PSLF — both qualify, but IBR gets you to forgiveness in 10 years either way, so the 20 vs. 30 year difference becomes irrelevant
- You are a Parent PLUS borrower — IBR is available (after consolidation), RAP is not
Bottom line: For most current borrowers with existing loans who have not yet borrowed after July 2026, IBR remains the better deal — primarily because of the 10-year shorter forgiveness timeline. The window to enroll in IBR closes July 1, 2028. If you can still access IBR, evaluate it seriously before defaulting to RAP.
Does RAP Qualify for PSLF? {#pslf}
Yes. RAP is a qualifying repayment plan for Public Service Loan Forgiveness (PSLF).
If you work full-time for a qualifying government or nonprofit employer and make 120 qualifying monthly payments under RAP, your remaining balance is forgiven — in just 10 years, regardless of whether RAP’s standard forgiveness timeline is 30 years.
For PSLF borrowers, the 20 vs. 30 year forgiveness difference between IBR and RAP becomes irrelevant — both lead to forgiveness at 120 payments. In that case, choosing between IBR and RAP comes down to which gives you the lower monthly payment, since both paths end at the same 10-year mark.
Important: Starting July 1, 2026, new PSLF employer eligibility rules apply. The Department of Education can now disqualify employers found to have a “substantial illegal purpose.” Verify your employer’s PSLF status using the PSLF Help Tool at studentaid.gov before assuming your payments are qualifying.
How to Enroll in RAP {#how-to-enroll}
RAP enrollment opens July 1, 2026. Here’s the process:
Step 1: Go to studentaid.gov and log in with your FSA ID
Step 2: Navigate to the repayment plan section and select “Repayment Assistance Plan (RAP)”
Step 3: Authorize the Department of Education to pull your income and dependent data from the IRS — or submit your own documentation if you prefer
Step 4: Review your estimated monthly payment before confirming enrollment
Step 5: Your payment will recertify automatically each year based on your updated income
If you were on SAVE
If your loans are in SAVE administrative forbearance, you have two options:
- Switch to IBR now (recommended for most borrowers) — application processing forbearance counts toward forgiveness
- Wait for RAP on July 1 — but those extra months in SAVE forbearance will not count toward forgiveness or PSLF
Do not stay in SAVE forbearance longer than necessary. Contact your servicer today.
Frequently Asked Questions {#faq}
When does RAP start? RAP officially launches July 1, 2026. Before that date, you can prepare by reviewing your current plan and running your numbers through the Department of Education’s Loan Simulator at studentaid.gov.
Who qualifies for RAP? Most borrowers with Direct Loans qualify. Parent PLUS borrowers and FFEL loan holders do not. If you take out any new federal loan after July 1, 2026, RAP becomes your only income-driven option.
Is RAP better than IBR? For most current borrowers, IBR is better — mainly because forgiveness comes in 20 years vs. RAP’s 30 years. RAP may offer lower payments for very low-income borrowers and includes better interest protections. Run your numbers using the loan simulator at studentaid.gov before deciding.
Do RAP payments count toward PSLF? Yes. RAP is a PSLF-qualifying plan. If you work for a qualifying public service employer, you still reach forgiveness after 120 payments (10 years) regardless of RAP’s 30-year standard forgiveness timeline.
Can I switch from RAP back to IBR? You can switch from RAP to IBR, but only if you haven’t borrowed any new loans after July 1, 2026, and only before the IBR deadline of July 1, 2028. Critically, the time and payments you made under RAP do not transfer credit toward IBR’s 20-year forgiveness clock.
What happens if I miss my RAP payment? Missing a payment means that month does not count as a qualifying payment toward forgiveness or PSLF. Contact your servicer immediately if you expect to miss a payment — income recertification or a deferment may be available.
Is RAP forgiveness tax-free? PSLF forgiveness under RAP is federally tax-free. The tax treatment of standard 30-year RAP forgiveness is currently unsettled at the federal level. Consult a tax professional before your expected forgiveness date.
Can I refinance my loans and use RAP? No. Refinancing federal loans with a private lender converts them to private loans, which permanently removes them from all federal programs including RAP, IBR, and PSLF. Never refinance federal loans if you plan to pursue any forgiveness program.
Bottom Line
RAP is the future of federal student loan repayment — like it or not. Starting July 1, 2026, it becomes the only income-driven option for new borrowers, and over time it will be the main plan for nearly all federal student loan holders.
The good news: RAP’s interest subsidy means your balance will never grow as long as you make on-time payments. For very low earners, the 1–3% payment tiers can be genuinely affordable.
The catch: forgiveness at 30 years is 10 years longer than “new” IBR. That’s a significant tradeoff for borrowers who aren’t pursuing PSLF.
What to do right now:
- If you have existing loans and haven’t borrowed anything new after July 2026 → seriously evaluate IBR before that window closes in July 2028
- If you work in public service → verify your PSLF eligibility and enroll in either IBR or RAP before July 2026
- If you’re currently in SAVE forbearance → switch to IBR immediately, every month counts
- If you’re a new borrower after July 2026 → RAP is your only IDR path, plan your payments accordingly
Use the official Loan Simulator at studentaid.gov to compare your monthly payment and total cost under RAP vs. IBR before making any decisions.
Sources: Federal Student Aid (studentaid.gov), SoFi, NerdWallet, The College Investor, Fidelity, Congress.gov (P.L. 119-21 One Big Beautiful Bill Act), Congressional Research Service. Last updated May 2026.