The Repayment Assistance Plan, explained properly
RAP took effect on 1 July 2026 and works unlike any income-driven plan before it. Two of its features are genuinely generous. Three of them will catch people out.
The Repayment Assistance Plan was created by the 2025 reconciliation law and implemented at 34 CFR 685.209, effective 1 July 2026. For loans first disbursed on or after that date it is the only income-driven option available.
It is not a rebadged version of what came before. The payment formula, the minimum payment, the treatment of interest and the treatment of family are all different, and several of the differences run in opposite directions. RAP is dramatically better than the old plans for some borrowers and dramatically worse for others.
The payment formula
Set out in full, in the order the regulation applies it:
- Take the applicable base payment for your AGI band, from the table below
- Divide by 12
- Subtract $50 for each dependent claimed on your federal return
- If your spouse's loan debt is included, multiply by your share of the combined balance
- If the result is below $10, the payment is $10
The ordering in steps three to five is fixed by 34 CFR 685.209(f)(5) and (g)(3), and it matters. The floor is applied last, after the proration, not before it.
The band table
| Adjusted gross income | Applicable base payment | Monthly payment |
|---|---|---|
| Not more than $10,000 | $120 flat | $10.00 at $10,000 |
| More than $10,000, up to $20,000 | 1% of AGI | $16.67 at $20,000 |
| More than $20,000, up to $30,000 | 2% of AGI | $50.00 at $30,000 |
| More than $30,000, up to $40,000 | 3% of AGI | $100.00 at $40,000 |
| More than $40,000, up to $50,000 | 4% of AGI | $166.67 at $50,000 |
| More than $50,000, up to $60,000 | 5% of AGI | $250.00 at $60,000 |
| More than $60,000, up to $70,000 | 6% of AGI | $350.00 at $70,000 |
| More than $70,000, up to $80,000 | 7% of AGI | $466.67 at $80,000 |
| More than $80,000, up to $90,000 | 8% of AGI | $600.00 at $90,000 |
| More than $90,000, up to $100,000 | 9% of AGI | $750.00 at $100,000 |
| More than $100,000 | 10% of AGI | $1,250.00 at $150,000 |
The percentage applies to your entire adjusted gross income, not to the portion above a threshold, and there is no poverty-guideline deduction anywhere in RAP. This is not how income tax brackets work and it is not how IBR works. A borrower earning $95,000 pays nine percent of all $95,000, not nine percent of the amount above $90,000.
The cliffs
Because each band applies its rate to the whole of your income, the band edges are hard cliffs rather than gentle steps. Crossing one by a single dollar raises your payment for the year.
| At this AGI | Monthly payment | One dollar more | Costs you |
|---|---|---|---|
| $20,000 | $16.67 | $33.34 | $16.67/mo ($200.04/yr) |
| $30,000 | $50.00 | $75.00 | $25.00/mo ($300.00/yr) |
| $40,000 | $100.00 | $133.34 | $33.34/mo ($400.08/yr) |
| $50,000 | $166.67 | $208.34 | $41.67/mo ($500.04/yr) |
| $60,000 | $250.00 | $300.01 | $50.01/mo ($600.12/yr) |
| $70,000 | $350.00 | $408.34 | $58.34/mo ($700.08/yr) |
| $80,000 | $466.67 | $533.34 | $66.67/mo ($800.04/yr) |
| $90,000 | $600.00 | $675.01 | $75.01/mo ($900.12/yr) |
| $100,000 | $750.00 | $833.34 | $83.34/mo ($1,000.08/yr) |
The largest is at $100,000, where one extra dollar of AGI costs about a thousand dollars a year. Because RAP is calculated on adjusted gross income, and AGI is reducible by traditional 401(k), traditional IRA and HSA contributions, a borrower sitting just above a band edge has a real and legal lever. Whether using it is sensible depends on the rest of your finances, which this page knows nothing about.
The two genuinely generous features
The interest waiver
Under 34 CFR 685.209(h)(4)(i), accrued interest not covered by your on-time payment isnot charged to your account. Not deferred, not capitalized later. Not charged.
This applies to all loan types in RAP with no three-year limit, unlike the narrower subsidy on IBR and PAYE. It means a borrower whose payment is far below the accruing interest does not watch the balance grow, which is the single most demoralising feature of the older plans.
The matching principal payment
Under 34 CFR 685.209(o)(2)(i), where an on-time payment reduces principal by less than fifty dollars, the Department makes up the difference, up to the lesser of fifty dollars and your monthly payment.
Together with the waiver this means a RAP balance declines every month for a borrower who pays on time, which the Department states as the design intent. Any calculator that shows a RAP balance ballooning has not implemented these two provisions, and will make refinancing look far better than it is.
The three things that will catch people out
1. Paying extra can cost you both subsidies
Under 34 CFR 685.209(o)(3)(i), paying more than the amount due automatically advances your next due date, and a borrower is not eligible for the matching principal payment or the interest waiver for periods without a due date.
This inverts everything people are taught about debt. To pay extra and keep the subsidies you must affirmatively opt out of advancing the due date, which servicers are required to offer both for electronic payments and by phone.
2. One late payment forfeits both, for that month
"On time" means received on or before the current month's due date and after the previous month's due date, under 34 CFR 685.209(o)(3). A payment that misses that window earns no waiver and no match, and the uncovered interest is charged.
3. RAP is worse than IBR for large families and low earners
RAP uses dependents, not family size, and gives a flat fifty dollars a month per dependent. IBR protects 150 percent of the poverty guideline for your family size, which scales with household. Because RAP has no poverty shield at all, a low-earning borrower with several children can pay substantially more under RAP than under IBR.
A spouse is not a dependent under 34 CFR 685.209(b)(3) and produces no reduction.
Forgiveness, and a one-way door
RAP forgives the remaining balance after 360 qualifying payments over at least thirty years, under 34 CFR 685.209(k)(7). That is five years longer than the longest legacy plan and ten years longer than PAYE.
34 CFR 685.209(k)(4)(i)(A) gives PAYE, ICR and IBR forgiveness credit for a payment made under any income-driven plan except the Repayment Assistance Plan. But 34 CFR 685.209(k)(8)(i)(C)(4) counts IBR payments toward RAP's 360, including IBR's minimum payment months.
So the credit runs one way. Time spent in IBR carries over to RAP. Time spent in RAP doesnot carry over to IBR, PAYE or ICR. A borrower who spends six years in RAP and then switches to IBR starts IBR's twenty or twenty-five year clock from zero.
Months in RAP do still count toward PSLF's 120 either way, so this asymmetry matters most to borrowers whose fallback is income-driven forgiveness rather than public service forgiveness.
Forgiveness under RAP is taxable federally in the year it is granted. The American Rescue Plan provision that excluded discharged student debt from gross income expired on 31 December 2025 and was not extended. PSLF forgiveness remains tax free. Over a thirty-year horizon that difference is large, and it is one reason a public-service borrower should think hard before treating RAP forgiveness and PSLF as interchangeable.
Which loans can use RAP
Eligible under 34 CFR 685.209(d)(4): Direct Subsidized, Direct Unsubsidized, Direct PLUS made to a graduate or professional student, and Direct Consolidation Loans that are not excepted consolidation loans. The regulation says these are eligibleincluding defaulted loans.
Not eligible: all Parent PLUS loans, any consolidation loan that repaid a Parent PLUS, all FFEL loans, and Perkins loans that have not been consolidated into a Direct Consolidation Loan.
If you hold a mix, 34 CFR 685.210(a)(3)(iii)(A) requires the ineligible loans to repay separately from the ones in RAP. You run two plans at once.
Compare RAP against a refinance offer, or readwhy taking any new federal loan after July 2026 matters.
Common questions
How is the RAP payment calculated?
Take the applicable base payment for your adjusted gross income band, divide by twelve, subtract fifty dollars for each dependent you claim on your federal return, apply the spousal proration if your spouse’s loan debt is included, and then apply a ten dollar floor. The floor comes last. The percentage applies to your entire AGI, not to income above a threshold.
Is there a $0 payment under RAP?
No. 34 CFR 685.209(g)(3)(ii) sets a ten dollar monthly minimum, except that the final payment may be less. This differs from IBR and PAYE, where a computed payment below five dollars becomes zero. A borrower with no income owes ten dollars a month under RAP and nothing under IBR.
Does RAP count for PSLF?
Yes. RAP is listed as a qualifying repayment plan at 34 CFR 685.219(b). Months paid under RAP count toward the 120 payments PSLF requires.
Does RAP use family size?
No, and this is a common error. 34 CFR 685.209(b)(9) defines family size for all income-driven plans except RAP. RAP uses dependents, meaning individuals qualifying under section 152 of the Internal Revenue Code who were claimed on your federal return. A spouse is not a dependent and produces no reduction.
Can paying extra under RAP cost me money?
Yes, and this is genuinely counterintuitive. Under 34 CFR 685.209(o)(3)(i), paying more than the amount due automatically advances your next due date, and you cannot receive the matching principal payment or the interest waiver for a period with no due date. To pay extra without losing them, you must affirmatively opt out of advancing the due date. Servicers are required to offer that opt-out.