Key Points
- Borrowers with federal loans issued after July 1, 2026, will choose between the new Standard Plan or a new income-based option called the Repayment Assistance Plan (RAP).
- Existing borrowers must transition by July 1, 2028, from plans like SAVE or PAYE into either RAP or Income-Based Repayment (IBR).
- Parent PLUS borrowers remain excluded from RAP and amended IBR, locking many into the Standard Plan without income-based options.
The final version of the One Big Beautiful Bill is going to reshape the future of student loan repayment.
Starting July 1, 2026, all new federal student loan borrowers will only have two options: the revised Standard Plan or the newly introduced Repayment Assistance Plan (RAP). For current borrowers, the transition comes between 2026 and 2028, when legacy plans like SAVE, PAYE, and ICR will be phased out and borrowers will be forced to move into either the RAP plan, or the IBR plan.
The RAP plan calculates monthly payments on a sliding scale, ranging from 1% to 10% of adjusted gross income. A key feature is that unpaid interest is forgiven, and a $50 monthly principal match helps chip away at the balance. Loans are forgiven after 30 years of payments.
IBR, the other remaining option for existing borrowers, retains most of the features of Old and New IBR, depending on loan origination date. Those with loans from before July 1, 2014, pay 15% of discretionary income and receive forgiveness after 25 years. Borrowers with loans after July 1, 2014 will pay 10% of discretionary income, with forgiveness at 20 years. Discretionary income is defined as earnings above 150% of the federal poverty level.
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What Borrowers Should Know
Borrowers with existing loans have time to evaluate which option makes more sense. However, between July 1, 2026 and July 1, 2028, everyone on legacy income-driven plans will need to transition to either RAP or IBR.
The law requires that all loans eligible for income-based repayment be paid under the same plan, though exceptions remain for loans like Parent PLUS.
RAP can offer more flexibility on monthly payment amounts, especially for borrowers with children. IBR remains more familiar to current borrowers and offers slightly faster forgiveness for many, especially those with moderate incomes.
You can see our Repayment Assistance Plan Calculator here. You can see your IBR payment on our regular Student Loan Calculator here.
Sample Scenarios: IBR vs. RAP
To better understand the differences between RAP and IBR, consider three typical borrower profiles.We're assuming the borrowers all have $40,000 in student loans and live in the lower 48 states.
1. Single borrower, $50,000 income, no children
- IBR: $228/month
- RAP: $167/month
In this scenario, the RAP plan offers a lower monthly payment.
2. Married borrower, $100,000 income, two children
- IBR: $443/month
- RAP: $650/month
In this scenario, the IBR plan would be a better option.
3. Single borrower, $80,000 income, one child
- IBR: $411/month
- RAP: $417/month
In this scenario, the monthly payments are nearly identical, but IBR is slightly lower (and since it would also offer 20 year forgiveness, versus 30, it's a better option).
Other Scenarios
We ran some other scenarios as well, and you can see that RAP typically has a lower monthly payment for borrowers earning less than $80,000 per year. However, once you cross about $90,000 in AGI, IBR starts to generally become the lowest monthly payment plan.
But every situation is different: marriage status, dependents, income. You need to run the RAP calculator and see your payment to know for sure.
Parent PLUS Loans Left Out
While the bill rewrites repayment options for most borrowers, Parent PLUS loans remain excluded. New Parent PLUS borrowers after July 1, 2026, will only be eligible for the Standard Plan. Existing Parent PLUS borrowers have narrow pathways to ICR/IBR via student loan consolidation.
If a borrower consolidates a Parent PLUS loan before June 30, 2026, they become eligible for ICR and later transition to IBR. Those who have already double-consolidated can move to IBR before the July 1, 2028, deadline.
However, these strategies are complex have strict timelines.
Final Thoughts
It's frustrating to have to navigate new student loan repayment plan options. However, the new Repayment Assistance Plan (RAP) may be better for some borrowers than the current IBR options available.
For new borrowers, the decision on repayment plans will be easier - less plans means less confusion.
But for existing borrowers, having to migrate and decide on a new repayment plan option will be confusing. It's essential that you run the numbers and see which plan may work best for you depending on your financial situation.
Common Questions
What is the Repayment Assistance Plan (RAP)?
The Repayment Assistance Plan(RAP) is the new income-driven repayment plan that will be available for new borrowers after July 1, 2026.
How does RAP differ from the revised Income-Based Repayment (IBR)?
RAP bases monthly payments as a percentage of AGI, with a $10 minimum. It also has a principal and interest subsidy. IBR bases monthly payments on discretionary income, with a minimum payment of $0 per month. It does not have any subsidies.
Who must transition to RAP or amended IBR?
Any borrow current in ICR, PAYE, or SAVE will have to transition to amended IBR or RAP after July 1, 2026.
Are Parent PLUS loans eligible for RAP or amended IBR?
Parent PLUS Loans are NOT eligible for RAP. Parent PLUS loans can be eligible for IBR, if the loan is consolidated on being repaid under an income driven repayment plan by June 30, 2026.
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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.