What Is the RAP Student Loan Plan?

Congress created RAP in the budget reconciliation law signed on July 4, 2025 (P.L. 119-21 — the same law that created Trump Accounts and rewrote federal loan limits). The law tore down the old menu of income-driven plans — SAVE, PAYE, and ICR are being phased out entirely — and replaced them with a two-plan world: RAP for anyone who wants payments tied to income, and a new Tiered Standard plan with fixed payments over 10 to 25 years.

For anyone who takes out a federal student loan on or after July 1, 2026, those two plans are the entire universe. For the roughly 7.5 million borrowers being pushed off the terminated SAVE plan, RAP is one of three landing zones — the others being IBR and Tiered Standard — and the choice has to be made on a deadline that is already running.

How the payment works

RAP breaks with forty years of income-driven design in one fundamental way: it charges a percentage of your entire adjusted gross income, not the slice above a protected poverty-line amount. The percentage slides with income:

• AGI of $10,000 or less → flat $10/month
• Each $10,000 of AGI above that adds one percentage point: 1% up to $20,000, 2% up to $30,000, and so on
• Capped at 10% of AGI for incomes over $100,000
• Minus $50 per month for every dependent on your tax return (details)
• Never below the $10 floor — the $0 payment is gone (why that matters)

A single borrower earning $45,000 pays about $150 a month. A married couple with $85,000 joint AGI and two kids pays about $467. Run your own numbers in the RAP calculator — it shows IBR, Standard, and your old SAVE payment next to it.

The two benefits that make RAP genuinely new

Those two features attack the single most hated experience in student lending: paying for years while the balance climbs. Under the old plans, a borrower could pay $176 a month and watch the loan grow $15 a month anyway. Under RAP that arithmetic is impossible — as long as payments are on time.

The costs the press releases skip

The Department's fact sheet leads with affordability. The full picture has four hard edges:

Forgiveness moves to 30 years. SAVE, PAYE, and IBR forgave remaining balances after 20 or 25 years. RAP requires 360 qualifying payments. For a borrower in their 30s, that is retirement-age debt — and the forgiven amount is currently taxable as income when it lands.

Low-income borrowers lose the $0 payment. Unemployed? On SAVE you owed $0 and the months counted toward forgiveness. On RAP you owe at least $10.

Many payments go up. Because RAP taxes the first dollar of AGI, most borrowers above roughly $30,000–$40,000 in income pay more than they did on SAVE — sometimes triple. The RAP vs SAVE autopsy quantifies it by income level.

Parent PLUS is locked out. Parent PLUS loans — and any consolidation containing one — cannot use RAP at all. That's a trap with a countdown attached, covered in the Parent PLUS exclusion guide.

Enrollment requires an IRS handshake

You cannot enroll in RAP without authorizing the Department of Education to pull your tax data directly from the IRS — income and dependent counts — and to keep pulling it annually to adjust your payment. That authorization is mandatory, it automates your yearly recertification, and it has privacy implications worth understanding before you click. We break down exactly what you're signing on the IRS data authorization page.

Where RAP fits in your decision

If you're a new borrower after July 1, 2026, there is no decision — RAP is your only income-driven option, and it's the only plan in your set that counts toward PSLF. If you're an existing borrower leaving SAVE, RAP competes with IBR (shorter forgiveness clock, poverty-line-protected formula, often higher payment) and Tiered Standard (fixed payments, no forgiveness track, no PSLF). That three-way choice — including when making no choice hurts you — is the subject of Switch Now or Wait and the SAVE exit guide.

How RAP compares to every plan it replaced

The structural break is the payment basis. Every plan since 2009 shielded a poverty-line multiple of income before charging anything; RAP charges from the first dollar and compensates with lower percentages at the bottom, the dependent deduction, and the strongest balance protection ever attached to a federal plan. Whether that trade helps or hurts you is almost entirely a function of where your income sits — which is why the calculator shows the legacy plans alongside RAP for the same inputs.

The five numbers that define RAP

$10 — the monthly floor; the $0 payment no longer exists anywhere in RAP. $50 — both the per-dependent monthly deduction and the guaranteed minimum monthly balance reduction from the principal match. 10% — the top bracket, applied to every dollar of AGI above $100,000, with no cap at the standard payment. 360 — on-time payments to forgiveness, the longest runway in IDR history. 120 — the PSLF count, unchanged and fully compatible with RAP, still tax-free.

Common misconceptions, corrected

• "RAP is just SAVE renamed." No — the formula, the forgiveness horizon, the floor, and the legal foundation are all different. SAVE was regulation and died in court; RAP is statute.
• "RAP payments are 10% of income for everyone." Only above $100,000 AGI. A $45,000 earner pays 4% — the Department's own example puts that teacher at $150/month.
• "My balance will balloon like it did on IBR." The opposite, by design: on-time RAP payments waive unpaid interest and force the balance down at least $50/month.
• "I have until 2028 to think about it." Only if you're on PAYE or ICR. SAVE borrowers get a 90-day window from their notice, and notices started July 1, 2026.
• "Applying costs money or requires a company's help." Never. The application is free at StudentAid.gov and takes about 10 minutes. Anyone charging for RAP enrollment is running a scam.