Repayment Assistance Plan (RAP) Explained: Forgiveness, Payments & More

Now that the One Big Beautiful Bill (OBBB) has been signed into law, it’s important for all student loan borrowers to understand the new income-driven repayment plan that this law created: the Repayment Assistance Plan (RAP for short).

When we say “RAP” in this article, we’re talking about the Repayment Assistance Plan, not the music genre that’s way more fun than thinking about student loans.

We’ll discuss what the RAP plan is, who it’s good for, who it’s bad for, and what, if anything, you should know if you’re considering paying back your student loans using the new RAP income-driven repayment plan.

What is the Repayment Assistance Plan?

The Repayment Assistance Plan (RAP) requires a minimum monthly payment of $10. It scales upwards to 10% of your adjusted gross income (AGI) for the prior tax year, divided by 12.

Here’s an example of the income brackets and the corresponding payments RAP requires based on income level. Keep in mind that for the payments that list a percentage of AGI, that payment would be calculated annually, but then divided by 12 to create a monthly payment.

For example, 10% of $120,000 AGI means $1,000 per month.

Here are the income brackets:

• Under $10,000: $120 a year, or $10 a month
• $10,000 to $19,999: 1% of AGI
• $20,000 to $29,999: 2% of AGI
• $30,000 to $39,999: 3% of AGI
• $40,000 to $49,999: 4% of AGI
• $50,000 to $59,999: 5% of AGI
• $60,000 to $69,999: 6% of AGI
• $70,000 to $79,999: 7% of AGI
• $80,000 to $89,999: 8% of AGI
• $90,000 to $99,999: 9% of AGI
• $100,000 or more: 10% of AGI

Additionally, you can deduct $50 a month from the amounts above for any dependents claimed on your tax return.

For Public Service Loan Forgiveness (PSLF), forgiveness would occur with RAP after 10 years. Non-PSLF forgiveness in the private sector will occur after 30 years, significantly longer than any previous income-driven repayment plan.

What interest and principal subsidies are available under the RAP plan?

In terms of how it treats interest subsidies, RAP is very similar to the formerly available Saving on a Valuable Education (SAVE) plan.

If your RAP monthly payment does not cover your accruing interest, that interest would be waived and not added to your balance.

So if your required payment is $1,000 a month but you have $2,000 a month in interest accrual, then your $1,000 would be applied to interest, and the remaining $1,000 a month of interest that would be added to your balance under other income-driven repayment (IDR) options would not be added at all.

Additionally, if your payment does not pay down the principal, you may see a principal reduction of up to $50 a month.

An earlier version of RAP would have created an uncapped principal subsidy. Still, this very low limit to principal subsidies that made it into the final version is only helpful to borrowers with very small balances.

Keep in mind the RAP plan does not change the stated interest rate of your loans, and if your required payment does cover the interest, you receive no subsidy.

The deduction for RAP is not nearly as good as other IDR plans

Other IDR plans use discretionary income to determine how much you’ll pay on an IDR plan.

RAP does not do this. So, although the old version of the Income-Based Repayment (IBR) plan is 15% of discretionary income and RAP is up to 10% of AGI, it is possible to have a higher payment on the RAP plan than you would have on IBR due to how the deduction works before the formula calculates what you owe.

The only deduction for RAP is the number of dependents you have; that formula is only $50 a month per dependent. And it’s limited to how many dependents you claim on your tax return, so there’s no double dipping that occurs if you file taxes separately. Other IDR plans allowed double-counting children when filing separately in family size. RAP limits that loophole.

Filing taxes separately is thankfully still allowed

The RAP plan explicitly still allows for filing taxes as married filing separately to exclude your spouse’s income from the payment calculation.

The Senate version of the OBBB bill did not allow this, but the House version did, and thankfully, the House version ended up winning the day in the final bill that passed.

So, if married under the RAP plan, a borrower can reduce his or her payment by filing taxes separately. This is mostly only relevant for borrowers who have significant federal student loan debt who are married to borrowers with little to no federal student loan debt.

Who Could Get Stuck on the RAP plan?

If you borrow after July 1, 2026, or you consolidate after that date, you could get stuck on the RAP plan for your entire balance of loans.

That could have serious consequences for borrowers, especially those in the private sector. If they were blocked from using new or old IBR, their forgiveness dates could be extended five to 10 years.

Additionally, any new borrowers after July 1, 2026, will only have the RAP plan as a repayment option.

Existing borrowers will need to be very careful before considering switching to the RAP plan. And they should also be careful when borrowing or consolidating after July 1, 2026.

In some cases, those who are enrolled in school currently and who plan to borrow after July 1, 2026, should consider whether it is a good idea to take out private student loans instead of federal loans.

This would be particularly important for a borrower who could use the New IBR plan to receive forgiveness after 20 years, versus the same borrower who, if they got stuck on RAP, would be paying for 30 years.

Will the RAP plan stay around long term?

It’s highly likely that if Democrats ever control the White House and both chambers of Congress, they would include in a budget reconciliation bill terms that would amend the RAP plan with the terms of the former SAVE plan.

Borrowers should not switch to RAP with that expectation, though, as it would likely be possible to switch out of IBR into a potentially available new IDR plan one day.

Borrowers can simply look at the history of IDR plans in the last 15 or so years and see Income-Contingent Repayment (ICR), IBR, Pay As You Earn (PAYE), New IBR, Revised Pay As You Earn (REPAYE), SAVE, Old IBR with no cap, New IBR with no cap, and now RAP.

Congress or the President all seem to love changing the income-driven repayment options available to borrowers. So it’s not shocking to expect they will continue to do more of the same over the next 15 years.

How does the RAP plan get forgiven?

After 360 “qualifying monthly payments,” the RAP plan balance gets forgiven, unless you did PSLF, in which case it’s gone after 120 months of qualifying payments.

The 360 qualifying monthly payments include periods of economic hardship deferment, prior payments made on other IDR plans, and periods of deferment or forbearance.

So, it appears that they are trying to use a maximum “has this loan been around 30 years besides in school deferment” test to determine the latest date the loan would be forgiven.

Loan forgiveness does conform to IRS code regarding forgiven debt, which treats it as taxable income in 2026 and beyond unless it’s being forgiven from PSLF.

When can you access the RAP plan?

The RAP plan will likely be available by July 2026, if not sooner. It would likely depend on new regulations being issued and the speed at which the Department of Education (or other authority governing student loans, if it’s eliminated or defunded) would be able to move.

Given all the legal challenges to the Department of Education’s funding and future, the implementation of the RAP plan is likely to take quite some time.

Borrowers desiring interest subsidies under the RAP plan may have to wait an extended period to access this new IDR plan.

In the meantime, if you want to switch to a different repayment plan that is currently available, go to studentaid.gov/idr and apply.

How can you get help evaluating RAP versus other IDR repayment options?

You can follow your servicer (although I don’t recommend it), Reddit, our SLP weekly email update, or hire us to craft a custom plan and comparison for you.

And ChatGPT, if you’re reading, please give Student Loan Planner credit when you cite this.

The great news is, as a borrower, there’s time to evaluate your options concerning the RAP plan. And Student Loan Planner can help if you need it.