The Repayment Assistance Plan (RAP) is the new income-based repayment plan created by the One Big Beautiful Bill Act. For loans disbursed on or after July 1, 2026, it is one of only two repayment options — and for millions of existing borrowers on SAVE, PAYE, or ICR, it is one of two places they can land by July 1, 2028.
If your family is borrowing for college now, RAP's math will shape your monthly reality for decades. Here is how it actually works.
Where RAP fits in the new system
The OBBBA collapses the federal repayment menu. For new loans, borrowers choose between:
- The revised Standard plan — fixed payments over 10, 15, 20, or 25 years depending on balance.
- RAP — payments tied to income, with subsidies that protect struggling borrowers from balance growth.
Older income-driven plans are being wound down. SAVE, PAYE, and ICR borrowers must move to IBR or RAP by July 1, 2028, and anyone who does not choose is assigned to RAP automatically. For the broader context on how this fits with the new borrowing caps and Grad PLUS elimination, see our One Big Beautiful Bill Act overview.
How RAP payments are calculated
RAP works off adjusted gross income (AGI) — not discretionary income, which is the big mechanical difference from the plans it replaces.
The income brackets
- AGI of 10,000 dollars or less: the minimum payment of 10 dollars per month.
- Above 10,000 dollars, the annual payment rate starts at 1 percent of AGI and rises one percentage point for each additional 10,000 dollars of income.
- Incomes above 100,000 dollars pay the cap: 10 percent of AGI, divided into monthly payments.
The dependent deduction
Payments are reduced by 50 dollars per month for each dependent claimed on your tax return. For a family with two kids, that is 100 dollars off the formula payment every month — a meaningful feature for parents who are also still repaying their own loans.
A quick example
A borrower with a 60,000 dollar AGI falls in the 6 percent bracket: 3,600 dollars per year, or 300 dollars per month. With one dependent, that drops to 250 dollars. The same borrower under the old discretionary-income plans might have paid less or more depending on family size and the poverty-line deduction — which is why anyone facing the 2028 switch should run their own numbers rather than assume.
The two subsidies that make RAP unusual
RAP includes two borrower protections that did not exist together in any prior plan:
The interest waiver
If your monthly payment does not cover the interest that accrues that month, the unpaid interest is waived — it is not added to your balance. Borrowers on low incomes will not watch their loan grow while making every required payment, which was the defining misery of older plans.
The principal guarantee
If your payment does not reduce your principal by at least 50 dollars in a month, the government applies a subsidy so that your principal still drops by 50 dollars. Even minimum-payment borrowers see their balance move in the right direction every month.
Forgiveness: the 30-year trade-off
RAP's biggest drawback is its timeline. Forgiveness arrives after 360 qualifying payments — 30 years — regardless of whether the debt funded undergraduate or graduate study. The plans being phased out forgave balances at 20 or 25 years. Families should treat RAP as a long-haul commitment with strong protections, not a fast path out of debt.
RAP payments do count toward Public Service Loan Forgiveness, so public-sector workers can still reach forgiveness at 10 years through PSLF.
RAP versus the revised Standard plan
A useful way to frame the choice for new borrowers:
- Choose Standard if the fixed payment is comfortably affordable. You will pay the loan off sooner and pay less interest overall.
- Choose RAP if income is uncertain, early-career earnings are low, or you need the payment to flex with life. The interest waiver and principal guarantee make it a safe harbor, at the cost of a much longer timeline.
Parents should note one restriction: Parent PLUS loans issued on or after July 1, 2026 are not eligible for RAP — they are limited to the Standard plan. The details, including what existing Parent PLUS borrowers can still do, are in our Grad PLUS and Parent PLUS guide.
What to do before the deadlines
- On SAVE, PAYE, or ICR? Compare your projected IBR payment to your projected RAP payment now. The right answer depends on your income, family size, and how many qualifying payments you have already banked toward forgiveness. Do not let the July 1, 2028 auto-assignment make the choice for you.
- Borrowing new loans after July 1, 2026? Decide between Standard and RAP deliberately — if no plan is selected, new borrowers are placed on the Standard plan by default.
- Planning for a student starting college soon? Repayment terms are now predictable enough to model before you borrow. Run your numbers with our free affordability assessment and borrow with the monthly payment — not just the sticker price — in view.
Frequently asked questions
How are RAP payments calculated?
RAP payments are based on adjusted gross income. Borrowers with AGI of 10,000 dollars or less pay the 10 dollar monthly minimum. Above that, the payment rate starts at 1 percent of AGI and rises one percentage point per 10,000 dollar income bracket, capping at 10 percent of AGI for incomes above 100,000 dollars. Payments are then reduced by 50 dollars per month for each dependent.
Who has to switch to RAP?
Borrowers on SAVE, PAYE, or ICR must move to IBR or RAP by July 1, 2028; anyone who has not chosen by then is moved into RAP automatically. New loans disbursed on or after July 1, 2026 can only use RAP or the revised Standard plan.
Does RAP offer loan forgiveness?
Yes. Any remaining balance is forgiven after 360 qualifying monthly payments — 30 years — regardless of whether the loans funded undergraduate or graduate study. That is longer than the 20-25 year timelines under the plans RAP replaces.
This article is for general education, not individualized financial advice. Verify current rules at studentaid.gov before making repayment decisions.
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