The final version of the One Big Beautiful Bill is going to reshape the future of student loan repayment.
Starting July 1, 2026, all new federal student loan borrowers will only have two choices: the updated Standard Plan or the new Repayment Assistance Plan (RAP). Between 2026 and 2028, current borrowers will have to switch to either the RAP plan or the IBR plan. This period period is when legacy programmes like SAVE, PAYE, and ICR will no longer be available. RAP vs. IBR
The RAP plan uses a sliding scale to figure out monthly payments, which can be anywhere from 1% to 10% of adjusted gross income. One important thing is that unpaid interest is forgiven, and a $50 monthly principal match contributes to funding down the balance. After 30 years of payments, the loan is forgiven.
IBR, the last option for current borrowers, keeps most of the features of Old and New IBR, depending on when the loan was taken out. People who took out loans before July 1, 2014, have to pay 15% of their discretionary income and they will have their loans erased after 25 years. After July 1, 2014, anyone who owe money will have to pay back 10% of their discretionary income, and loans will be forgiven after 20 years. Discretionary income is money you make that is more than 150% of the federal poverty threshold. RAP vs. IBR
What Borrowers Should Know
Borrowers with existing loans have time to evaluate which option makes more sense. However, between July 1, 2026 and July 1, 2028, everyone on legacy income-driven plans will need to transition to either RAP or IBR.
The law requires that all loans eligible for income-based repayment be paid under the same plan, though exceptions remain for loans like Parent PLUS.
RAP can offer more flexibility on monthly payment amounts, especially for borrowers with children. IBR remains more familiar to current borrowers and offers slightly faster forgiveness for many, especially those with moderate incomes. RAP vs. IBR
You can see our Repayment Assistance Plan Calculator here. You can see your IBR payment on our regular Student Loan Calculator here.
Sample Scenarios: IBR vs. RAP
To better understand the differences between RAP and IBR, consider three typical borrower profiles.We’re assuming the borrowers all have $40,000 in student loans and live in the lower 48 states.
1. Single borrower, $50,000 income, no children
- IBR: $228/month
- RAP: $167/month
In this scenario, the RAP plan offers a lower monthly payment.
2. Married borrower, $100,000 income, two children
- IBR: $443/month
- RAP: $650/month
In this scenario, the IBR plan would be a better option.
3. Single borrower, $80,000 income, one child
- IBR: $411/month
- RAP: $417/month
In this scenario, the monthly payments are nearly identical, but IBR is slightly lower (and since it would also offer 20 year forgiveness, versus 30, it’s a better option). RAP vs. IBR
Other Scenarios
We ran some other scenarios as well, and you can see that RAP typically has a lower monthly payment for borrowers earning less than $80,000 per year. However, once you cross about $90,000 in AGI, IBR starts to generally become the lowest monthly payment plan.
But every situation is different: marriage status, dependents, income. You need to run the RAP calculator and see your payment to know for sure.
Parent PLUS Loans Left Out
While the bill rewrites repayment options for most borrowers, Parent PLUS loans remain excluded. New Parent PLUS borrowers after July 1, 2026, will only be eligible for the Standard Plan. Existing Parent PLUS borrowers have narrow pathways to ICR/IBR via student loan consolidation.
If a borrower consolidates a Parent PLUS loan before June 30, 2026, they become eligible for ICR and later transition to IBR. Those who have already double-consolidated can move to IBR before the July 1, 2028, deadline. RAP vs. IBR
However, these strategies are complex have strict timelines.
Final Thoughts
It’s frustrating to have to navigate new student loan repayment plan options. However, the new Repayment Assistance Plan (RAP) may be better for some borrowers than the current IBR options available.
For new borrowers, the decision on repayment plans will be easier – less plans means less confusion.
But for existing borrowers, having to migrate and decide on a new repayment plan option will be confusing. It’s essential that you run the numbers and see which plan may work best for you depending on your financial situation. RAP vs. IBR
Common Questions
What is the Repayment Assistance Plan (RAP)?
The Repayment Assistance Plan (RAP) is the new income-driven repayment plan that will be available for new borrowers after July 1, 2026.
How does RAP differ from the revised Income-Based Repayment (IBR)?
RAP bases monthly payments as a percentage of AGI, with a $10 minimum. It also has a principal and interest subsidy. IBR bases monthly payments on discretionary income, with a minimum payment of $0 per month. It does not have any subsidies. RAP vs. IBR
Who must transition to RAP or amended IBR?
Any borrower currently in ICR, PAYE, or SAVE will have to transition to amended IBR or RAP after July 1, 2026.
Are Parent PLUS loans eligible for RAP or amended IBR?
Parent PLUS Loans are NOT eligible for RAP. Parent PLUS loans can be eligible for IBR if the loan is consolidated on being repaid under an income driven repayment plan by June 30, 2026. RAP vs. IBR