RAP vs. SAVE: Which Plan Disappears Under OBBBA and What Replaces It

What Got Eliminated — and for Whom

OBBBA eliminated four income-driven repayment (IDR) plans for borrowers who take out their first federal student loan on or after July 1, 2026. Those plans are:

This is a critical distinction: these plans are only eliminated for new borrowers — people whose first disbursement of a federal Direct Loan comes on or after July 1, 2026. If you already have federal student loans and are currently enrolled in SAVE, IBR, PAYE, or ICR, your access to those plans is protected through a transition period ending July 1, 2028.

Existing borrowers are classified as "legacy borrowers" for repayment purposes — an entirely separate determination from the legacy borrower status that affects new borrowing caps for undergraduates and Parent PLUS loans. Repayment legacy status applies to anyone who had federal loans disbursed before July 1, 2026.

What SAVE Was — and Why It's Gone

SAVE — Saving on a Valuable Education — was the Biden administration's revision of REPAYE (Revised Pay As You Earn), introduced in 2023 as the most generous IDR plan ever offered. SAVE calculated payments at 10% of discretionary income (5% for undergraduate loans) using a threshold of 225% of the federal poverty level — meaning borrowers with incomes below that threshold paid $0 per month.

SAVE also included an interest subsidy that prevented balances from growing when payments didn't cover accruing interest, and offered forgiveness timelines of 10–20 years depending on original balance size. It was immediately challenged in federal courts, and as of 2026, SAVE had been in and out of judicial holds for over a year before OBBBA formally eliminated it for new borrowers.

For borrowers currently on SAVE, the plan remains available through the July 1, 2028 transition deadline. After that date, borrowers still enrolled in SAVE will be automatically transitioned into RAP by the Department of Education if they haven't made an active plan selection.

How RAP Works: The New Formula Explained

The Repayment Assistance Plan (RAP) uses a fundamentally different formula than every prior IDR plan. Where old plans calculated payments as a percentage of discretionary income (income above a poverty-level threshold), RAP calculates payments as a percentage of Adjusted Gross Income directly — with no income-protection floor for payments, only a statutory payment minimum of $10/month.

The RAP rate scales with income in flat brackets:

The rate applies to your full AGI — not to income above any threshold. A borrower with $45,000 AGI pays 4% of $45,000 annually, divided by 12. That's $150/month, regardless of loan balance. Loan balance affects when forgiveness is triggered, not the monthly payment amount.

Each dependent child reduces the monthly payment by $50, down to a floor of $0. A borrower with $45,000 AGI and two children pays $150 − $100 = $50/month.

RAP's Two Key Protections

RAP includes two important borrower protections that address the interest capitalization problems that plagued earlier IDR plans:

1. Interest Subsidy

If a borrower's monthly RAP payment does not fully cover accrued interest for that month, the government waives the remaining unpaid interest. The borrower's balance does not grow due to unpaid interest while they are making their required monthly payments. This directly addresses the "negative amortization" problem where borrowers on older IDR plans would see their balances grow despite making consistent on-time payments.

2. Principal Guarantee

If a borrower's RAP payment is less than $50, the government contributes the difference to ensure at least $50 in principal reduction occurs each month. This guarantees that borrowers making payments in the lower income tiers are always making meaningful progress toward paying off their balance — eliminating the scenario where years of payments result in no debt reduction.

Together, these protections make RAP structurally more favorable than most prior IDR plans for borrowers in middle and lower income brackets, even though the percentage-of-AGI formula produces higher payments for some mid-income borrowers than the old discretionary-income-based formulas did.

RAP vs. SAVE: A Direct Comparison

For borrowers with very low incomes (below 225% FPL), SAVE was more favorable because it allowed $0 monthly payments. RAP's $10/month minimum means the lowest-income borrowers pay more under RAP — but they also receive the principal guarantee and interest waiver protections. For borrowers with moderate incomes, RAP's AGI-based formula can produce higher monthly payments than SAVE's 5% of discretionary income did for undergraduate borrowers.

The July 1, 2028 Deadline: What Legacy Borrowers Must Do

If you took out federal student loans before July 1, 2026, you are a legacy borrower for repayment purposes. Your current IDR plan (SAVE, IBR, PAYE, or ICR) remains available to you through July 1, 2028. After that date, any legacy borrower still enrolled in an eliminated plan will be automatically transitioned into RAP by the Department of Education.

The automatic transition to RAP may or may not result in a payment change, depending on your income and family size. Before the transition deadline, you should:

1. 1 Log in to your loan servicer and verify which IDR plan you are currently enrolled in
2. 2 Use the RAP vs. Legacy IDR Comparator on this site to estimate your monthly payment under RAP vs. your current plan based on your actual AGI
3. 3 If RAP results in a lower or equivalent payment, the automatic transition may be fine for you — but verify this before the deadline
4. 4 If your current plan results in lower payments (particularly if you're below 225% FPL on SAVE), contact your servicer before July 1, 2028 to understand your options
5. 5 If you are enrolled in PSLF (Public Service Loan Forgiveness), verify with your servicer how the plan transition affects your qualifying payment count

Who Benefits Most From RAP

RAP tends to be more favorable than prior IDR plans for borrowers in specific situations:

Borrowers with high balances and moderate incomes

Because RAP payments are based entirely on AGI rather than balance, borrowers with $80,000+ in debt but only $45,000 in income pay the same as a borrower with $20,000 in debt at the same income level. High-balance borrowers get the principal guarantee and interest waiver benefits while making a payment scaled only to their earnings.

Graduate and professional degree borrowers

With Grad PLUS eliminated for new borrowers, many graduate students will accumulate significant federal debt through the remaining Direct Unsubsidized Loan program. RAP's structure is relatively well-suited for high-balance borrowers in professional careers who expect income growth — the rate stays proportional to income, capped at 10%.

Borrowers with dependent children

The $50/month per-dependent-child reduction is a meaningful benefit for families. A household with three children and $60,000 AGI would have their $300/month RAP payment reduced by $150 to $150/month — a 50% reduction not available under any prior IDR plan formula.