RAP vs IBR: How to Choose
With SAVE ending, millions of borrowers must pick a new repayment plan. The new Repayment Assistance Plan (RAP) is live for Direct Loans from 1 July 2026 — but it isn't automatically better than IBR. Here's how to decide.
RAP charges a sliding 1–10% of your AGI (a flat $10/month at or below $10,000 AGI), minus $50 per dependent with a $10 floor, and forgives after 30 years. IBR charges 10% of discretionary income (first loan on/after 1 July 2014) or 15% (before), never more than the 10-year Standard payment, and forgives after 20–25 years. RAP often has the lower payment at higher incomes; IBR forgives sooner.
How RAP is calculated
RAP (created by P.L. 119-21) charges a percentage of your adjusted gross income: a flat $10/month at or below $10,000 of AGI, then 1% from $10,001–$20,000, rising one percentage point per $10,000 bracket, capped at 10% above $100,000. That result is divided by 12, reduced by $50 per dependent, with a $10/month floor.
RAP also subsidises unpaid interest and matches principal by up to $50/month, so even a small payment shrinks your balance. Any remainder is forgiven after 30 years (360 qualifying payments).
How IBR differs — and the traps
IBR charges 10% of discretionary income (first loan on/after 1 July 2014) or 15% (before), where discretionary income is AGI minus 150% of the federal poverty guideline for your family size, and it never exceeds the 10-year Standard payment. IBR forgives after 20 or 25 years.
The traps most calculators skip: Parent PLUS loans (and consolidations that repaid one) can't use RAP; RAP's and IBR's forgiveness are currently treated as taxable income, while PSLF forgiveness is tax-free; and if your first federal loan is dated on/after 1 July 2026, IBR is closed to you — your only choices are RAP or the new Tiered Standard plan. Time already spent in IBR may count toward RAP's clock, but RAP months don't count toward IBR forgiveness.
Should you refinance instead?
Refinancing federal loans into a private loan can lower your rate, but it permanently forfeits income-driven plans, PSLF, forgiveness, and federal deferment/forbearance protections. It usually only makes sense for high earners with stable income who won't use forgiveness.
Try Free Web Tools Mentioned in This Guide
Frequently Asked Questions
Is RAP better than IBR?↓
It depends. RAP often has a lower payment at higher incomes and always shrinks your balance via its interest subsidy and principal match, but takes 30 years to forgive versus IBR's 20–25. For PSLF, pick whichever qualifying plan has the lowest payment — forgiveness at 120 payments is tax-free either way.
Can Parent PLUS loans use RAP?↓
No. Parent PLUS loans are excluded from RAP, and a consolidation loan that repaid a Parent PLUS loan is also excluded.
Is student-loan forgiveness taxable?↓
Under current federal law, RAP's 30-year and IBR's 20/25-year forgiveness are taxable in the year granted. Only PSLF forgiveness is tax-free. Confirm before relying on it.