RAP student loans,
the entire system just changed.

Field guide

RAP, the new default federal student loan plan, explained.

The 2025 reconciliation law rebuilt federal student loan repayment from the ground up. SAVE and PAYE — the income- driven plans millions of borrowers relied on — are gone entirely. In their place: the Repayment Assistance Plan (RAP), the new default for every federal Direct Loan borrower starting July 1, 2026, alongside a grandfathered version of IBR for older loans.

The payment formula

RAP payments are calculated directly off your adjusted gross income:

• AGI $10,000 or less: a flat $10/month
• AGI $10,001-$20,000: 1% of AGI ÷ 12
• Each additional $10,000 of AGI adds another percentage point
• AGI over $100,000: capped at 10% of AGI ÷ 12

Subtract $50 for every dependent you claim, and the result is floored at $10/month no matter how low your calculated payment would otherwise be. Payments recalculate every year based on your updated income and dependents.

Three real protections

RAP builds in guarantees the old plans didn't have. First, a guaranteed principal-reduction floor: if your payment doesn't cover $50 of principal, the government matches the shortfall — though precisely, that guarantee is capped at whatever your own required payment actually is, so a borrower at the $10 minimum is guaranteed a $10 reduction, not $50; the full $50 floor only applies once your own payment is at least that much. Second, unpaid interest is waived outright each month, never added to your balance — your balance can only go down. Third, after 360 qualifying payments (30 years), whatever remains is forgiven — a longer timeline than the 20-25 years under the plans it replaced, a real tradeoff for the payment protections above.

The tax bomb

The detail that surprises the most people: unlike Public Service Loan Forgiveness, which is completely tax-free, RAP forgiveness after 30 years is taxable as ordinary income in the year it's forgiven under current law. A borrower with a large forgiven balance could face a genuinely large tax bill in that one year — this calculator projects your likely forgiven balance given your current payment trajectory and estimates that tax hit using today's income tax brackets and AGI as a stand-in for your income three decades from now. Treat it as a reasonable planning estimate, not a guarantee — your actual income and the tax code itself will almost certainly look different by year 30.

Which loans qualify for which plan

The eligibility line is the loan's disbursement date, not when you apply for a repayment plan. Disbursed before July 1, 2026? You can choose RAP or IBR — the only other income- driven plan still standing — and compare which is actually cheaper for your income and balance. Disbursed on or after July 1, 2026? RAP is your only income-driven option; PAYE, SAVE, and IBR are all off the table for that loan.

Disclaimer

This calculator is for informational planning purposes only and does not constitute financial or tax advice. The 30-year projection holds your AGI, dependents, and interest rate constant across the entire timeline, which real life won't do — treat the payoff/forgiveness projection and the tax-bomb estimate as directional, not exact. Consult StudentAid.gov or a financial advisor for guidance specific to your loans.