RAP vs. SAVE vs. IBR: A Plain-English Repayment Comparison
The Repayment Assistance Plan is OBBBA's replacement for four income-driven repayment programs. For new borrowers after July 1, 2026, it's the only income-driven option. Here is exactly how it works — and how it stacks up against the plans it replaced.
By Moises Lopez, Independent Researcher · Sourced from P.L. 119-21, OBBBA §4101
Why OBBBA Replaced the Existing IDR Plans
By 2025, the federal student loan repayment landscape had become genuinely confusing. There were four separate income-driven repayment plans — IBR, PAYE, ICR, and SAVE/REPAYE — each with different payment percentages, different income thresholds, different forgiveness timelines, and different eligibility rules depending on when you borrowed and what type of degree you pursued. Borrowers routinely chose suboptimal plans simply because they could not compare them effectively.
OBBBA's stated goal was consolidation and simplification. For anyone who takes out a federal student loan on or after July 1, 2026, there is now exactly one income-driven option: the Repayment Assistance Plan (RAP). The four eliminated plans — IBR, PAYE, SAVE, and ICR — remain temporarily available to borrowers with pre-July-2026 loans until a transition deadline of 2028.
How RAP Works: The Marginal Bracket Formula
RAP calculates your monthly payment using a marginal bracket system — similar in structure to how federal income tax brackets work, but applied to the ratio of your income to the Federal Poverty Level (FPL) for your family size.
Rather than calculating payment as a flat percentage of your total discretionary income (as IBR and SAVE do), RAP applies different rates to each segment of your income:
The word "marginal" is key. You only pay the higher rate on income above each threshold — not on your entire income. Income up to 150% of FPL is effectively exempt. Income between 150% and 300% FPL is taxed at just 1%. The 5% rate only applies to income above 400% FPL.
A Worked Example: Single Borrower, $40,000 AGI
To make the bracket formula concrete, here is a worked comparison for a single borrower (family size 1) with an AGI of $40,000. The FPL for a family of one is $15,060.
Monthly Payment Comparison — $40K AGI, Family Size 1
FPL (family of 1): $15,060 · Estimates only. Use the RAP vs. IDR Calculator for your specific inputs.
In this example, SAVE produces a lower payment than RAP, while IBR produces a higher one. This illustrates an important point: RAP is not automatically better or worse than legacy plans for every borrower — the comparison depends heavily on income relative to FPL and loan balance.
For borrowers with incomes significantly below the FPL (part-time workers, recent graduates, early-career income), RAP's 0% rate below 150% FPL produces a $0 monthly payment — and critically, the government waives all interest that would otherwise accrue.
RAP's Two Government Subsidy Features
RAP includes two explicit protections against balance growth that no legacy IDR plan fully replicates:
1. The Interest Waiver
Under every legacy IDR plan, if your monthly payment was less than the interest accruing on your loan, the unpaid interest would capitalize (be added to your principal), causing your balance to grow over time — even while making payments. SAVE introduced a partial fix, but RAP eliminates this problem entirely: the government waives any interest your payment does not cover. Your balance cannot grow due to interest while on RAP.
2. The $50 Principal Guarantee
If your computed monthly payment is so low that it would not reduce your principal by at least $50, the government contributes the difference. This ensures that even at very low income levels, your loan balance is actively shrinking — by at least $600 per year — rather than staying flat.
These two features combined mean that under RAP, a borrower's outstanding balance will always trend down over time, regardless of income. Legacy IDR plans offered no such guarantee for all borrowers.
What Happens to Existing SAVE, IBR, and ICR Borrowers?
If you borrowed before July 1, 2026 and are currently on a legacy IDR plan — SAVE, IBR, PAYE, or ICR — your plan does not disappear overnight. You can remain on your current plan temporarily. However, all legacy IDR plans have a transition deadline: borrowers who have not selected a plan by 2028 are automatically enrolled in RAP.
Between now and 2028, legacy borrowers have three options:
- 1. Stay on your current plan until the deadline, then evaluate
- 2. Proactively move to IBR (the most comparable income-driven plan that will persist)
- 3. Opt into RAP early to access the interest waiver and $50 principal guarantee
The right choice depends on your income trajectory, loan balance, and forgiveness timeline. If you are close to the 20- or 25-year forgiveness threshold on a legacy plan, switching to RAP resets that clock — a potentially costly mistake. Use the RAP vs. IDR Comparator to model your specific situation before making any changes.
RAP Forgiveness Timeline
RAP includes loan forgiveness after a set number of years of qualifying payments. The forgiveness timeline is tied to your original loan balance at the time of repayment:
Any remaining balance at the end of the forgiveness period is discharged. Note that forgiven amounts may be treated as taxable income depending on future IRS guidance — this was a significant policy question still open as of April 2026.
Model Your Specific Numbers
Enter your loan balance, income, family size, and interest rate into the RAP vs. IDR Comparator to see your projected monthly payment, government subsidy, and 20- or 30-year cost under every plan — sorted by total lifetime cost.
Open RAP vs. IDR Calculator →Sources: OBBBA §4101, FSA Dear Colleague Letter (Jul 18, 2025), FSA FAFSA Processing Updates (Mar 9, 2026). Payment calculations use 2026 HHS FPL guidelines. Estimates only — verify at studentaid.gov.