Starting July 1st, 2026, new student loan borrowers will have only one option outside of the standard fixed-payment plan for their student loans: the Repayment Assistance Plan (RAP). This plan replaces the previous Income-Driven Repayment (IDR) plans, substituting a system of varied rules and benefits with a no-frills, one-size-fits-all, approach. Borrowers with older loans will still be able to qualify for some of the previous IDR plans (SAVE not included), but new borrowers will have no other option. While existing IDR borrowers will also be able to choose RAP, they should have all the facts first, as switching to RAP may have undesired consequences.
Whereas the old IDR plans were based on borrowers’ discretionary income, RAP will be based solely on a borrower’s adjusted gross income (AGI) from the previous year’s taxes. Discretionary income is calculated by looking at a borrower’s family size and income, then subtracting their state’s poverty guideline. IDR plans take that figure and calculate 10 or 15% of the discretionary income and divide it by 12, which equals your monthly payment. RAP, instead, is based directly on a borrower’s AGI. If a borrower makes less than $10,000/year, their monthly payment is $10. Beyond that, it’s 1% of your income if you make $10-20k; 2% if you make $20-30k; and so on up to 10% for $100k and above.
RAP will also have an interest subsidy, akin to SAVE, which will waive any interest accrued each month if it exceeds your monthly payment. It will, however, extend the length of repayment to 30 years before the remaining balance is forgiven, unlike existing IDR plans which forgive the balance after 20 or 25 years. For borrowers in the public service sector, however, RAP will be a qualifying payment plan for PSLF, which allows their loans to be forgiven after 10 years of repayment.
While RAP will potentially save money for many borrowers, it also has some significant downsides. In addition to extending the repayment window to 30 years, RAP will not have a payment cap, which prevents borrowers’ payments from ballooning beyond the standard 10-year fixed payment amount. Since the new fixed-payment plans will no longer qualify for PSLF, new public service borrowers with high incomes will have no choice but to enroll in RAP and pay potentially enormous monthly payments. Existing borrowers who switch to RAP will also have a hard time switching out of RAP later. Although payments under the current IDR plans will be applied to their RAP forgiveness count when they switch over, any payments on RAP will not count towards IDR forgiveness if they should return to PAYE, IBR, or ICR.
RAP should be available for borrowers starting on July 1st, 2026. Borrowers who are already enrolled in IDR plans don’t have to switch, unless they want to, but should give us a call so we can run their numbers and go through the potential consequences before they lock in.
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