- The Repayment Assistance Plan (RAP) is designed to replace current income-based repayment options for federal student loans.
- Monthly payments under RAP with income ranging from a minimum of $10 to 10% of adjusted gross income, with reductions for dependents.
- The plan sets a maximum loan forgiveness at 30 years and avoids negative amortization by subsidizing monthly interest and supporting the loan principal.
Check out a new student loan calculator that helps borrowers estimate monthly payments under the Repayment Assistance Plan (RAP), a key provision in the recently passed bill that is set to reshape student loan repayment.
The plan replaces income-based plans such as IBR, PAYE and ICR for future borrowers and offers a standardized approach that links payments directly to adjusted gross income (AGI).
The new RAP formula departs from the current method of calculating discretionary income, replacing it with a multi-tiered structure. Borrowers pay a set percentage of their overall gross income, with payments capped at 10% for those who earn more than $100,000 per year. Unlike previous plans, RAP offers a fixed monthly payment of $10 to borrowers who earn $10,000 or less.
The RAP is only one of two plans available to future borrowers (with loans after July 1, 2026). The other is the new standard payment plan.
To make these changes easier to understand, a new calculator allows borrowers to see their estimated monthly payments within the RAP. See other student loan calculators here.
Repayment Assistance Plan (RAP) Calculator.
Here’s the RAP calculator:
How does the RAP formula work?
RAP payments are based on annual income brackets (based on adjusted gross income or AGI):
- Artificial General Intelligence ≥ $10,000: Fixed payment of $120 per year ($10 per month)
- $10,001 – $20,000: 1%
- $20,001 – $30,000: 2%
- $30,001 – $40,000: 3%
- $40,001 – $50,000: 4%
- $50,001 – $60,000: 5%
- $60,001 – $70,000: 6%
- $70,001 – $80,000: 7%
- $80,001 – $90,000: 8%
- $90,001 – $100,000: 9%
- General Artificial Intelligence > $100,000: 10% of AGI
To determine a borrower’s monthly payment, the principal payment is divided by 12 and adjusted by subtracting $50 for each dependent claimed on the borrowers’ tax return.
If the account ends up being less than $10 per month, the borrower will pay at least $10 per month.
Married borrowers: Your AGI will depend on your tax filing status. If you file jointly, this is your combined AGI. If you file separately, if you are an MFS AGI. For dependents and a direct financial services company, you must claim the dependent on your tax return. Be aware that the new draft law imposes many other penalties on Mubasher Financial Services Company. Please do this with a tax professional before changing your tax filing status.
Examples:
- A borrower with an AGI of $25,000 and two children would pay $10 per month.
- A borrower with an AGI of $60,000 and no dependents would pay $250 per month.
- A borrower with an AGI of $120,000 and one child pays $950 per month.
Compare RAP to existing IDR plans
In contrast to the RRP, income-driven repayment (IDR) plans such as IBR, PAYE, and ICR are based on the borrower’s discretionary income, which is calculated using federal poverty guidelines. For example, PAYE requires 10% of discretionary income over 150% of the poverty level. This method can produce lower monthly payments for low-income borrowers, but the calculations can be confusing.
The RAP program simplifies this process through income levels and automatic interest waivers for some borrowers. While it imposes a longer repayment period (30 years), it eliminates the risk of negative amortization by eliminating unpaid interest each month.
IBR and PAYE offer forgiveness after 20 or 25 years, depending on the borrower’s loan type and repayment date. The RAP standardizes the exemption over 360 monthly payments, or 30 years, but offers a consistent structure across income levels.
From a monthly payment perspective, using the examples above, a borrower would pay on today’s IBR (the new IBR):
- A borrower with an AGI of $25,000 and two children would pay $0 per month on the IBR.
- A borrower with an AGI of $60,000 and no dependents would pay $312 per month on IBR.
- A borrower with an AGI of $120.00 with one child would pay $745 per month on IBR.
As you can see, the resettlement program will benefit low-income borrowers, but will be more expensive for the high-income borrower. That’s why there are winners and losers in this proposal.
See the full RAP vs. Modified IBR breakdown.
What borrowers need to know
Our RAP calculator is designed to help borrowers project their payments under the new structure, which will take effect in 2026. Those earning less than $30,000 may see minimal changes, while middle- and upper-income borrowers could see larger monthly payments.
Borrowers who start repayment before July 1, 2026, can still access the existing old and new IBR plan, and the revised version removes the financial distress test. People in the SAVE range will be moved to the RAP plan at some point in the near future.
Although the RRP proposal provides consistency, it may not provide the lowest possible payment for each borrower. Losing other IDR options narrows flexibility.
We hope the calculator helps borrowers understand these trade-offs and make comparisons based on their specific income and family circumstances.
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