The New RAP Student Loan Plan Explained

If you've been following the fallout from the SAVE plan's court-ordered termination, you already know that millions of borrowers are being pushed off their current plans. What's coming in to replace them is called the Repayment Assistance Plan — and how it calculates your payment is fundamentally different from every income-driven plan that came before it.

Here's what RAP actually does, who it applies to, and whether it's likely to cost you more or less than your current plan.

What Congress Designed RAP to Do

The One Big Beautiful Bill Act, signed into law on July 4, 2025, created RAP as the single income-driven repayment option going forward. Starting July 1, 2026, any new Direct Loan borrower is limited to two repayment choices: the Standard Repayment Plan (fixed monthly payments over 10 years) or RAP.¹

For current borrowers who are already on SAVE, PAYE, or ICR, nothing changes yet — but those plans will be phased out by July 1, 2028. After that date, borrowers who haven't switched will be automatically moved to either RAP or an Amended Income-Based Repayment plan.²

How RAP Calculates Your Monthly Payment

This is the most important thing to understand: RAP is based on your total adjusted gross income (AGI), not discretionary income.

Every other income-driven repayment plan — IBR, PAYE, SAVE — calculated payments as a percentage of discretionary income, which meant subtracting a poverty-line amount from your income before calculating what you owed. RAP skips that step entirely.

Instead, RAP uses a sliding scale:

• If your AGI is $10,000 or less, you pay a minimum of $10 per month
• For every additional $10,000 in income, the percentage rises by one point
• The rate caps at 10% once your AGI exceeds $100,000
• Each dependent on your tax return reduces your monthly payment by $50

One important feature RAP does carry over from SAVE: if your required monthly payment doesn't cover your accruing interest, the government forgives the difference. Your balance cannot grow as long as you make required payments.

Parent PLUS loans are not eligible for RAP. If you're repaying Parent PLUS debt, the new plan does not apply to you — check with your servicer about your current options before the July 2028 transition deadline.

The Forgiveness Timeline Is Longer

Under previous income-driven plans, undergraduate borrowers could have remaining balances forgiven after 20 years of payments, and graduate borrowers after 25 years. RAP extends that clock to 30 years for everyone, regardless of loan type.

That's an additional five to ten years for many borrowers — meaning 60 to 120 more monthly payments before any forgiveness kicks in. The Congressional Budget Office estimates the complete set of repayment changes in the law will reduce federal outlays by $270.5 billion over the 2025–2034 period.¹

Whether RAP ends up costing you more or less than your current plan depends heavily on your income and your loan balance. Borrowers with lower incomes and large balances may benefit from the interest subsidy and eventual forgiveness. Borrowers with higher incomes and smaller balances may find the Standard Plan cheaper overall.

Public Service Loan Forgiveness Still Works Under RAP

If you're working toward Public Service Loan Forgiveness, you can use RAP and still qualify for forgiveness after 120 qualifying payments — the same 10-year track as before. PSLF rules did not change under the One Big Beautiful Bill Act.

If you have existing loans and take out any new Direct Loan on or after July 1, 2026, RAP becomes your only IDR option for all of your loans — not just the new one. That means you'd lose any IDR plan benefits currently tied to your existing loans. Talk to your servicer before borrowing anything new.

Who Needs to Act Now

New borrowers starting July 1, 2026 or later: Your only income-driven option is RAP. Understand the payment structure before you borrow.

Current borrowers on SAVE: Your plan was terminated in March 2026. You need to enroll in a new plan before servicers start sending 90-day notices in July. Waiting for the notice means waiting until the last minute.

Current borrowers on PAYE or ICR: These plans continue until July 1, 2028, giving you roughly two years to evaluate RAP against your other options. Use that time intentionally rather than letting the automatic transition happen.

Current borrowers on IBR: Amended IBR will continue beyond 2028 as an alternative to RAP. You will not be forced onto RAP if IBR still applies to your loans.

Next Steps

1. Log into studentaid.gov and confirm which repayment plan you're currently on
2. Use the loan simulator tool to model your monthly payment under RAP at your current income
3. Compare that number to what you'd pay on Standard Repayment — sometimes the standard plan costs less over time
4. If you're chasing PSLF, confirm your employer qualifies before switching to any new plan
5. Review all your federal loan repayment options before the July 2026 transition begins

For deeper context on the other loan changes taking effect at the same time, see our coverage of Grad PLUS loans ending in July 2026 and the full picture of how student loan oversight is shifting to Treasury. Understanding the difference between federal and private loan options is also worth revisiting as the federal program changes shape.

Footnotes

1. Congressional Research Service. (2025). The Repayment Assistance Plan (RAP) in P.L. 119-21, the FY2025 Reconciliation Law (IF13075). Congress.gov. https://www.congress.gov/crs-product/IF13075 ↩ ↩²

2. The Institute for College Access & Success. (2026). Upcoming Changes to Income-Driven Repayment Plans. TICAS. https://ticas.org/affordability-2/upcoming-changes-to-income-driven-repayment-plans/ ↩