RAP vs. IBR: A Plain-English Repayment Comparison

Why OBBBA Replaced the Existing IDR Plans

Before OBBBA there were four income-driven repayment plans — IBR, PAYE, ICR, and SAVE — each with different payment percentages, income thresholds, forgiveness timelines, and eligibility rules. SAVE was blocked in court and ended by court order on March 10, 2026.

Under OBBBA, anyone with a federal student loan first disbursed on or after July 1, 2026 — including a consolidation loan — has exactly one income-driven option for all of their Direct Loans: the Repayment Assistance Plan (RAP). Borrowers whose loans were all disbursed before that date can choose RAP too, and they keep access to IBR; ICR and PAYE close to them by July 1, 2028.

How RAP Works: Flat AGI-Based Percentage

RAP calculates your monthly payment as a flat percentage of your total Adjusted Gross Income (AGI) — not a percentage of discretionary income, and not relative to the Federal Poverty Level. The applicable rate is determined by which $10,000 AGI bracket you fall into, starting at 1% and increasing by one percentage point for every additional $10,000, capped at 10% for AGI above $100,000.

This is fundamentally different from legacy IDR plans like IBR, which first subtract an FPL-based exemption before calculating your payment. Under RAP, your entire AGI is subject to the applicable rate — but the rate itself is lower for most income levels. Borrowers with AGI at or below $10,000 pay a statutory minimum of $10 per month.

Because the rate applies to your full AGI rather than a discretionary-income remainder, RAP can cost more than IBR at higher incomes (in the table below, from $85,000 AGI) and less at lower and middle incomes. RAP also adds the interest subsidy and principal match, which keep your balance from growing as long as you pay in full and on time.

A Worked Example: Single Borrower, $40,000 AGI

Here is a side-by-side comparison for a single borrower (no dependents) with an AGI of $40,000. Under RAP, this borrower falls in the 3% bracket ($30,001–$40,000), so their payment is 3% × $40,000 ÷ 12. IBR still exempts a portion of income based on the Federal Poverty Level (FPL = $15,960 for a family of one).

At $40,000 AGI, RAP produces the lower monthly payment ($100 vs. $134 for IBR). The monthly payment is only part of the picture: RAP also covers unpaid interest and matches principal, which IBR doesn't, so the total cost over the life of the loan can differ from what the monthly numbers suggest. The calculator models both.

For borrowers with very low incomes (AGI at or below $10,000), RAP's $10/month minimum comes with the interest subsidy, so the balance doesn't grow as long as each payment is made in full and on time. Under IBR or PAYE, a $0 payment lets unpaid interest build up; those plans cover some of it, but only for the first three years.

Monthly Payment Comparison: Three Income Levels

The table below extends the worked example across three income levels — $30,000, $55,000, $85,000 AGI — for a single borrower with no dependents. SAVE is omitted because it has ended. IBR (for borrowers who first borrowed after July 1, 2014) and PAYE share the same payment formula (10% of discretionary income above 150% FPL), so they appear together. The lowest payment in each row is highlighted. Figures use 2026 HHS FPL for a family of one ($15,960).

★ Lowest monthly payment at this income level · FPL (family of 1, 2026): $15,960 · IBR shown at 10% / 20 years (first borrowed after July 1, 2014; borrowers from before then pay 15% over 25 years) · Estimates only. Forgiveness timelines: IBR/PAYE 20 yr; ICR 25 yr; RAP 30 yr (studentaid.gov).

Two patterns stand out. First, RAP and IBR trade places depending on income: at $30,000 AGI RAP is lower ($50.00 for RAP vs. $50.50 for IBR), at $55,000 RAP is lower ($229.17 vs. $258.83), and at $85,000 IBR is lower ($566.67 vs. $508.83). Second, ICR is the most expensive at every income level shown. The monthly payment is only part of the picture: RAP's interest subsidy and principal match keep the balance from growing when payments are made in full and on time, which IBR does not guarantee.

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 IBR, PAYE, and ICR, if your monthly payment is less than the interest accruing on your loan, the unpaid interest can build up and eventually be added to your principal, causing your balance to grow — even while you make payments. IBR and PAYE cover some of it for the first three years only; SAVE covered it before it ended. RAP covers any interest a full, on-time payment doesn't, for as long as you're on the plan.

2. The Principal Match (up to $50)

If an on-time payment would not reduce your principal by at least $50 — or by the full payment amount, if your payment is under $50 — the government makes a matching principal payment for the difference. This ensures that even at very low income levels, your loan balance keeps shrinking rather than staying flat.

Together, according to studentaid.gov, if every payment is on time and in full and you don't take a deferment or forbearance, your balance never goes higher than it was when you entered RAP. The older plans offer no such guarantee.

What Are the Options for Existing Borrowers?

If all of your loans were disbursed before July 1, 2026, your options depend on your current plan. IBR stays available to you as long as you don't take out a new loan. ICR and PAYE close by July 1, 2028; under ED's final rule, borrowers still in them who haven't chosen another plan are moved to RAP, or to IBR for loans RAP doesn't cover. SAVE has already ended — SAVE borrowers have 90 days from their servicer's notice to choose a new plan, or they are placed in a Standard or Tiered Standard plan (see what to do before your SAVE deadline). To see which plans your loans qualify for, with a payment estimate for each, use the repayment plan chooser.

Existing borrowers generally have three choices:

• 1. Move to (or stay on) IBR — the older income-driven plan that does not close, unless you take out a new loan
• 2. Switch to RAP to get the interest waiver and principal match
• 3. Stay on ICR or PAYE for now — knowing you will have to choose again before they close

The right choice depends on your income, balance, and how far along you are toward forgiveness. Switching to RAP doesn't erase your progress — studentaid.gov says earlier income-driven payments count toward RAP's discharge — but RAP's repayment period is 30 years, so someone 18 years into a 20-year plan would have more years to go. Payments made under RAP also don't count toward IBR, PAYE, or ICR forgiveness if you switch back. Use the RAP vs. IDR Comparator to model your situation before making any changes.

RAP Forgiveness Timeline

RAP forgives any remaining balance after 360 qualifying monthly payments over at least 30 years, whatever your balance. Progress you earned under other income-driven plans counts toward those 360 payments, and payments generally need to be made in full and on time to qualify.

Any remaining balance at the end is discharged. According to studentaid.gov, except for Public Service Loan Forgiveness, you might have to pay federal or state income tax on the discharged amount, and you'll get 21 days' notice to opt out of the discharge.