Key Points
- The Repayment Assistance Plan (RAP) is set to replace current income-driven repayment options for federal student loans.
- Monthly payments under RAP scale with income, ranging from $10 minimum up to 10% of adjusted gross income, with reductions for dependents.
- The plan caps loan forgiveness at 30 years and avoids negative amortization through monthly interest subsidies and principal support.
Check out our new student loan calculator that helps borrowers estimate monthly payments under the Repayment Assistance Plan (RAP), a key provision of the recently passed bill set to reshape student loan repayment.
The plan replaces existing income-driven plans like IBR, PAYE, and ICR for future borrowers and introduces a standardized approach that ties payments directly to adjusted gross income (AGI).
The new RAP formula departs from the current method of calculating discretionary income, replacing it with an income-tiered structure. Borrowers pay a set percentage of their AGI, with payments capped at 10% for those earning above $100,000 annually. Unlike earlier plans, RAP introduces a flat $10 monthly payment for borrowers earning $10,000 or less.
The RAP is only one of two plans available for future borrowers (with loans after July 1, 2026). The other is a new Standard Repayment Plan.
To make these changes easier to understand, our new calculator allows borrowers to see their estimated monthly payments under RAP. See our other student loan calculator here.
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Repayment Assistance Plan (RAP) Calculator
Here is the RAP calculator:
Student Loan RAP Calculator
How The RAP Formula Works
RAP payments are based on annual income brackets (based on adjusted gross income or AGI):
- AGI ≤ $10,000: Flat payment of $120/year ($10/month)
- $10,001–$20,000: 1%
- $20,001–$30,000: 2%
- $30,001–$40,000: 3%
- $40,001–$50,000: 4%
- $50,001–$60,000: 5%
- $60,001–$70,000: 6%
- $70,001–$80,000: 7%
- $80,001–$90,000: 8%
- $90,001–$100,000: 9%
- AGI > $100,000: 10% of AGI
To determine a borrower’s monthly payment, the base payment is divided by 12 and adjusted by subtracting $50 for each dependent claimed on the borrowers' tax return.
If the calculation ends up less than $10 per month, the borrower would pay a minimum of $10/month.
Married Borrowers: Your AGI will be based on your tax filing status. If you file jointly, it's your combined AGI. If you both have loans, it's pro-rated to each of your loan balances.
If you file separately, if you're MFS AGI. For dependents and MFS, the dependent must be claimed on your tax return. Be aware that the new bill imposes a LOT of other penalties on MFS. Please run this through a tax professional before changing your tax filing status.
Examples:
- A borrower with an AGI of $25,000 and two children would pay $10/month.
- A borrower with an AGI of $60,000 and no dependents would pay $250/month.
- A borrower with an AGI of $120,000 and one child one pay $950/month.
Comparing RAP To Current IDR Plans
Unlike RAP, existing income-driven repayment (IDR) plans such as IBR, PAYE, and ICR rely on a borrower's discretionary income, which is calculated using federal poverty guidelines. For example, PAYE requires 10% of discretionary income over 150% of the poverty level. This method can produce lower monthly payments for low-income borrowers, but the calculations can be confusing.
RAP simplifies this process with income tiers and automatic interest forgiveness for some borrowers. While it imposes a longer maximum repayment term (30 years), it eliminates the risk of negative amortization by canceling unpaid interest each month.
IBR and PAYE offer forgiveness after 20 or 25 years, depending on the borrower’s loan type and when they entered repayment. RAP standardizes forgiveness at 360 monthly payments, or 30 years, but offers a consistent structure across income levels.
From a monthly payment perspective, using the above examples, a borrower on IBR today would pay (new IBR):
- A borrower with an AGI of $25,000 and two children would pay $0/month on IBR.
- A borrower with an AGI of $60,000 and no dependents would pay $312/month on IBR.
- A borrower with an AGI of $120,00 with one child would pay $745/month on IBR.
As you can see, RAP would benefit the lower income borrowers, but would be more costly for the higher income borrower. That's why there are winners and losers in this proposal.
See the full RAP vs. Amended IBR breakdown.
What Borrowers Need To Know
Our RAP calculator is designed to help borrowers anticipate their payments under the new structure, which will go live July 1, 2026. Those earning less than $30,000 may see minimal changes, while middle and high income borrowers could see larger monthly payments.
Borrowers who begin repayment before July 1, 2026, can still access the existing old and new IBR plan, and the amended version removes the financial hardship test. Those in the SAVE forbearance will be transitioned into the RAP plan sometime in the near future.
Although the RAP proposal offers consistency, it may not provide the lowest possible payment for every borrower. The loss of other IDR options narrows flexibility.
Hopefully, the calculator helps borrowers understand these trade-offs and make comparisons based on their specific income and family circumstances.
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Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.