Part 5—What You Need to Know About the New Repayment Assistance Plan (RAP)

In the previous blog, we covered how the recent federal legislation simplifies student loan repayment by eliminating most existing plans and replacing them with just two options. In this post, we will dive into the Repayment Assistance Plan (RAP)—the new income-driven repayment option that is designed to be simpler and more predictable. The RAP goes into effect starting July 1, 2026.

What Is the Repayment Assistance Plan (RAP)?

RAP is the new standard income-driven repayment plan. It is designed to replace or simplify the confusing array of IDR plans (like PAYE, REPAYE, IBR, and ICR). It bases your monthly payments on your income and family size, not your total loan balance.

Feature	Details
Payment Range	1% to 10% of your income, depending on how much you earn
Minimum Monthly Payment	$10
Child Deduction	$50 off your calculated payment for each dependent child claimed on the tax return
Interest Waiver	If you make your required payment, any unpaid interest is waived
Principal Reduction Bonus	Up to $50/month of your payment goes directly to reducing your loan balance
Loan Forgiveness	After 30 years (360 qualifying payments), any remaining balance is forgiven

How Will Monthly Payments Be Calculated?

The new system is straightforward. Your payment is based on a percentage of your total income, not complex formulas. Here is the simple breakdown:

Annual Adjusted Gross Income (AGI)	Payment Percentage of AGI
$10,000 or less	$10 minimum
$10,001 to $20,000	1%
$20,001 to $30,000	2%
$30,001 to $40,000	3%
$40,001 to $50,000	4%
$50,001 to $60,000	5%
$60,001 to $70,000	6%
$70,001 to $80,000	7%
$80,001 to $90,000	8%
$90,000 to $100,000	9%
$100,000+	10%

What You Need to Know

Some Rules About Eligibility

• RAP is available for borrowers who take out loans on or after July 1, 2026.

• If you already have federal student loans, you will not be auto-enrolled in RAP unless you consolidate into a new loan.

What Happens to Old Plans?

• The current IDR plans will no longer be available beginning July 1, 2026.

• The goal is to encourage simplification and limit confusion by phasing in RAP as the primary repayment option.

Qualifying Payments

• Must be made on time and in full

• Annual income verification required

• Previous payments under old plans still count toward forgiveness

The Bottom Line

This means you will always know what you owe each month, get help if you have children, and see your balance decrease regardless of your payment size. The 30-year maximum ensures there is a clear end to your payments.

For many borrowers, this represents a more manageable path to becoming debt-free, with built-in protections that were not available in previous repayment plans. The simplified structure makes it easier to understand your obligations and plan your financial future.

Questions about how these changes affect your financial plan? Contact us today to discuss how the new repayment options fit into your broader financial strategy.

Stay tuned for the next blog, where we will dig into the New Standard Repayment Plan.