Repayment Assistance Plan (RAP) 2026: Everything You Need to Know
The Repayment Assistance Plan (RAP) is the biggest overhaul to federal student loan repayment in decades. Here’s a complete breakdown of how it works, who it affects, how payments are calculated, and what steps you need to take before the July 2026 deadline.
What Is the Repayment Assistance Plan (RAP)?
The Repayment Assistance Plan, commonly called RAP, is a new federal income-driven repayment (IDR) plan created by the “One Big Beautiful Bill Act” (P.L. 119-21), signed into law by President Trump on July 4, 2025. It officially launches on July 1, 2026.
RAP was created to replace a fragmented system of income-driven plans — including SAVE, PAYE, and ICR — with a single, simpler option. For new borrowers taking out federal student loans after July 1, 2026, RAP will be the only income-driven repayment option available.
How RAP Payments Are Calculated
This is the most important difference between RAP and older income-driven plans. Previous plans like SAVE calculated your payment based on discretionary income — the portion of your earnings above a poverty-level threshold. RAP is different: it uses your total Adjusted Gross Income (AGI).
Subtract $50 per dependent from your monthly calculated payment.
The percentage rate applied to your AGI follows a sliding scale based on your income level:
| Annual AGI Range | % of AGI Used | Example Monthly Payment |
|---|---|---|
| $0 – $10,000 | $10 minimum | $10/month |
| $10,001 – $20,000 | 1% of AGI | ~$13–$17/month |
| $20,001 – $30,000 | 2% of AGI | ~$33–$50/month |
| $30,001 – $40,000 | 3% of AGI | ~$75–$100/month |
| $40,001 – $60,000 | 5% of AGI | ~$167–$250/month |
| $60,001 – $80,000 | 7% of AGI | ~$350–$467/month |
| $80,001 – $100,000 | 8% of AGI | ~$533–$667/month |
| $100,001+ | 10% of AGI | Varies |
Note: These ranges are approximate. The exact sliding scale is determined by the Department of Education based on the legislation. Use our RAP calculator for a personalized estimate.
The Dependent Deduction
RAP provides a $50 monthly payment reduction for each dependent you claim on your tax return. For example, a borrower with 2 dependents would have their calculated payment reduced by $100/month.
The Interest Subsidy — RAP’s Best Feature
Like the SAVE plan, RAP includes a full interest subsidy: if your monthly payment doesn’t cover all the interest that accrues on your loans, the unpaid interest is waived. Your balance will never grow because of unpaid interest while you’re on RAP.
Loan Forgiveness Under RAP
RAP still offers loan forgiveness, but the path is longer than previous plans:
- 30 years of qualifying payments for all borrowers (undergraduate and graduate alike)
- Under SAVE/IBR, undergraduate loans were forgiven after 20 years; graduate after 25 years
- Public Service Loan Forgiveness (PSLF) still applies after 120 qualifying payments (10 years) while working full-time for a qualifying government or nonprofit employer
For most borrowers, the move from a 20-year to 30-year forgiveness timeline means paying significantly more in total over the life of the loan — even if monthly payments are more manageable.
RAP vs. SAVE vs. IBR: Full Comparison
| Feature | RAP | SAVE | IBR |
|---|---|---|---|
| Income Basis | Total AGI | Discretionary income (225% FPL) | Discretionary income (150% FPL) |
| Payment Rate | 1–10% of AGI | 5–10% of discretionary | 10–15% of discretionary |
| Minimum Payment | $10/month | $0/month | $0/month |
| Forgiveness Timeline | 30 years | 20–25 years | 20–25 years |
| Interest Subsidy | Yes — 100% | Yes — 100% | No |
| Principal Subsidy | Yes — up to $50/mo | No | No |
| PSLF Eligible | Yes | Yes (blocked) | Yes |
| Parent PLUS Eligible | No | No | Yes (if consolidated before Jul 2026) |
| Availability | July 1, 2026+ | Eliminated 2025/2026 | Available — ends July 2028 |
Who Is Most Affected by RAP?
Borrowers Who May Pay More Under RAP
RAP will likely mean higher monthly payments for many borrowers because it uses total AGI rather than discretionary income. The groups most impacted include:
- Current SAVE plan borrowers with low-to-moderate income who benefited from the 225% poverty guideline shield
- Borrowers who were making $0 payments under SAVE — they’ll now owe at least $10/month
- Graduate and professional degree borrowers whose 25-year forgiveness timeline extends to 30 years
Borrowers Who May Benefit from RAP
- Borrowers with very high debt-to-income ratios who benefit from the 100% interest subsidy
- PSLF-seekers for whom the $50 principal guarantee accelerates forgiveness
- Borrowers currently on ICR, which had less generous terms than RAP
Key Deadlines and Action Steps
Here’s a complete action checklist based on your situation:
- If you’re on SAVE: You’ve been in forbearance since 2024. You can stay in forbearance until July 2026, then evaluate switching to IBR (if no new loans) or RAP.
- If you’re on IBR: No immediate action needed. You can keep IBR through July 2028, then choose IBR or RAP.
- If you’re on ICR or PAYE: These plans end July 2028. Review your options and proactively choose IBR or RAP before that deadline.
- If you’re taking new loans after July 1, 2026: You’ll only have access to RAP (income-driven) or Standard Repayment.
- If you’re planning graduate school: Know that the Grad PLUS loan program is also eliminated after July 1, 2026.
Should You Consider Refinancing?
For some borrowers, private refinancing may be worth comparing against RAP — especially if your income is high enough that RAP payments approach or exceed standard repayment amounts, and you’re not pursuing PSLF.
However, refinancing federal loans to private loans means permanently losing access to: income-driven repayment, loan forgiveness programs, forbearance and deferment protections, and PSLF eligibility. This is a major trade-off that requires careful calculation.
Current Private Refinancing Rates (2026)
As of early 2026, well-qualified borrowers can find fixed refinancing rates starting around 3.71%–4.29% APR. The most widely used lenders include:
- Earnest — Fixed APR from 3.71%, flexible repayment terms from 5 to 20 years, no origination fees. Allows borrowers to pick any custom monthly payment. Strong option for borrowers with stable income and good credit.
- SoFi — Fixed APR from 4.24%, includes membership perks like financial planning access and career support. One of the largest refinancing lenders by volume. Offers 5, 7, 10, 15, and 20-year terms.
- ELFI (Education Loan Finance) — Fixed APR from 4.29%, pairs every borrower with a dedicated student loan advisor. Strong Trustpilot ratings. Good for graduate and professional degree borrowers.
- Credible — Not a direct lender, but a marketplace that lets you compare personalized prequalified rates from Earnest, SoFi, Citizens, ELFI, and others in a single form, with no impact to your credit score.
- Splash Financial — Marketplace connecting borrowers to banks and credit unions. Often surfaces competitive rates not available directly. No origination fees.
- LendKey — Specializes in connecting borrowers with community banks and credit unions, which sometimes offer rates below the major fintech lenders.
Who Should Seriously Consider Refinancing Over RAP
Refinancing makes the most mathematical sense when: your current federal loan interest rate is significantly higher than available private rates; your income is stable and high enough that income-driven plans offer little benefit; and you have no intention of pursuing PSLF or other forgiveness programs. A borrower earning $120,000/year with $40,000 in loans paying 6.5% federal interest could potentially refinance to 4.5% with Earnest or SoFi and save thousands in total interest — while also paying off the loan faster than RAP’s 30-year timeline.