What is RAP – and What Does it Mean for Your Federal Student Loans

The new Income Driven Plan (“IDR”) set to roll out next summer on July 1, 2026 is called the Repayment Assistance Plan (“RAP”) for federal student loans.

The administration’s goal is to eliminate the choices and complexity of the present federal student loan repayment system.  The old IBR, new IBR, ICR, PAYE and SAVE plans are all being terminated.  Those legacy plans will exist for three more years until July 1, 2028.  Thereafter, only those borrowers enrolled in non-RAP IDRs can remain in those plans.  It appears that forgiveness will only occur for those enrolled in IBR or RAP.  For instance, someone could remain in PAYE or ICR, but would need to switch to IBR or RAP for forgiveness.

What is RAP?  RAP is an income driven plan going into effect next summer based upon a borrower’s adjusted gross income (“AGI”).  It will offer a tiered payment plan:

Up to $10k = $10

$10,000.01 – $20k = 1% of AGI

Up to $30k – 2% of AGI

Up to $40k – 3% of AGI

Up to $50k – 4% of AGI

Up to $60k – 5% of AGI

Up to $70k = 6% of AGI

Up to $80k = 7% of AGI

Up to $90k = 8% of AGI

Up to $100k = 9% of AGI

Over $100k + = 10% of AGI

 

Borrowers can subtract $50 per month, per dependent child claimed on their tax return.  A spouse and other people do not count, nor do children living outside the household.  Accordingly, family size is much more restrictive than present.

Estimated monthly payment snapshots show that RAP will be higher than SAVE but could be less than IBR:

 

Yearly income             SAVE             RAP

25k                              0                      $42

40k                              $40                  $133

60k                              $207                $300

$90k                            $457                $675

$200k                          $1373              $1667

 

AGI	IBR Single	IBR Married	RAP
$ 25,000	$   39	$    –	$   42
$ 50,000	$   352	$   255	$   167
$ 75,000	$   664	$   568	$   438
$ 100,000	$   977	$   880	$   750

 

AGI	IBR single w/ 1child	RAP single w/ 1child
$ 25,000	$         –	$        10
$ 50,000	$        255	$        117
$ 75,000	$        568	$        378
$ 100,000	$        880	$        700

 

AGI	IBR married w/1child	RAP married w/1child
$ 25,000	$         –	$         10
$ 50,000	$        159	$         117
$ 75,000	$        443	$         378
$ 100,000	$        651	$         700

 

Presently, the various IDR plans have a cost of living adjustment keyed to the poverty level.  RAP does not.  Neither RAP nor the existing IDRs allow for high mortgage payments, or high medical or child costs – something only a bankruptcy plan payment can take into account when determining disposable income.

Forgiveness under RAP moves up to 30 years versus the 25 years presently available under IBR.  The 20 year term of PAYE or SAVE forgiveness has already been eliminated.  Consistent with SAVE, RAP will allow for waiver of unpaid interest.

Basically, RAP offers simplicity at the cost of flexibility.  There will be a minimum payment of $10 so borrowers will maintain contact with their loan servicer, a sliding scale based upon income, waiver of accruing interest which created huge balances, and complete forgiveness in three decades.

For new loans after July 1, 2026, RAP will be the sole IDR option available to borrowers.

While RAP has been signed into law, there still remains the rule making process for working out the finer details.