How The RAP Formula Works
RAP payments are based on annual income brackets (based on adjusted gross income or AGI):
- AGI ≤ $10,000: Flat payment of $120/year ($10/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%
- AGI > $100,000: 10% of AGI
To determine a borrower’s monthly payment, the base payment is divided by 12 and adjusted by subtracting $50 for each dependent claimed on the borrowers’ tax return.
If the calculation ends up less than $10 per month, the borrower would pay a minimum of $10/month.
Married Borrowers: Your AGI will be based on your tax filing status. If you file jointly, it’s your combined AGI. If you file separately, if you’re MFS AGI. For dependents and MFS, the dependent must be claimed on your tax return. Be aware that the new bill imposes a LOT of other penalties on MFS. Please run this through a tax professional before changing your tax filing status. Repayment Assistance Plan
Comparing RAP To Current IDR Plans
Unlike RAP, existing income-driven repayment (IDR) plans such as IBR, PAYE, and ICR rely on a 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.
RAP simplifies this process with income tiers and automatic interest forgiveness for some borrowers. While it imposes a longer maximum repayment term (30 years), it eliminates the risk of negative amortisation by canceling unpaid interest each month.
IBR and PAYE offer forgiveness after 20 or 25 years, depending on the borrower’s loan type and when they entered repayment. RAP standardises forgiveness at 360 monthly payments, or 30 years, but offers a consistent structure across income levels. Repayment Assistance Plan
From a monthly payment perspective, using the above examples, a borrower on IBR today would pay (new IBR):
- A borrower with an AGI of $25,000 and two children would pay $0/month on IBR.
- A borrower with an AGI of $60,000 and no dependents would pay $312/month on IBR.
- A borrower with an AGI of $120,00 with one child would pay $745/month on IBR.
As you can see, RAP would benefit the lower-income borrowers, but would be more costly for the higher income borrower. That’s why there are winners and losers in this proposal.
See the full RAP vs. Amended IBR breakdown. Repayment Assistance Plan
What Borrowers Need To Know
Our RAP calculator is designed to help borrowers anticipate their payments under the new structure, which will go live in 2026. Those earning less than $30,000 may see minimal changes, while middle and high income borrowers could see larger monthly payments. Repayment Assistance Plan
Borrowers who begin repayment before July 1, 2026, can still access the existing old and new IBR plan, and the amended version removes the financial hardship test. Those in the SAVE forbearance will be transitioned into the RAP plan sometime in the near future.
Although the RAP proposal offers consistency, it may not provide the lowest possible payment for every borrower. The loss of other IDR options narrows flexibility. Repayment Assistance Plan
Hopefully, the calculator helps borrowers understand these trade-offs and make comparisons based on their specific income and family circumstances.