2026 RAP Repayment Plan Complete Guide: SAVE Plan Transition & Everything You Need to Know
Introduction: The Biggest Student Loan Change Since 2023
The 2026 academic year brought the most significant restructuring of federal student loan repayment since the original introduction of income-driven repayment. The SAVE plan — which had been the Department of Education's flagship IDR option since 2023 — has been terminated and replaced by the new RAP (Replacing SAVE) income-driven repayment plan.
If you were enrolled in SAVE, you are being automatically transitioned to RAP. If you're entering repayment for the first time, RAP is one of your primary IDR options alongside IBR, PAYE, and the Standard 10-year plan.
This guide covers everything you need to know: how RAP works, how it differs from SAVE, who benefits most, and how to calculate your new payment. Use our free RAP calculator to see your estimated monthly payment.
Key Takeaway: RAP retains the core structure of income-driven repayment but adjusts the payment percentages and interest subsidy mechanics. Most borrowers will see changes in their monthly payment — some higher, some lower — depending on their loan mix.
How RAP Works: The Formula
RAP is fundamentally different from older income-driven plans. Instead of charging a percentage of your discretionary income (AGI minus a multiple of the poverty line), RAP charges a flat percentage of your entire adjusted gross income (AGI) across 11 income brackets. The rate rises from 1% (lowest incomes) to 10% (AGI of $100,000 or more). Household size and loan type do not change the rate.
Step 1: Find Your AGI Bracket Rate
Your payment rate is set purely by your AGI:
| AGI Range | RAP Rate |
|---|---|
| At or below $10,000 | Flat $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% |
| Above $100,000 | 10% |
Step 2: Calculate the Base Monthly Payment
Base Monthly Payment = (AGI × Bracket Rate) ÷ 12
Step 3: Subtract the Dependent Deduction
RAP reduces your payment by $50 per month for each dependent child you claim on your tax return. This is a dollar-for-dollar reduction, not a percentage.
Step 4: Apply the $10 Minimum
If the calculation falls below $10/month, your payment is set to $10. (This replaces the $0 floor used by older IDR plans.) AGI at or below $10,000 is simply charged the $10 flat amount.
Example Calculation
Borrower: Single, no dependents, AGI $45,000, $35,000 in undergraduate loans at 6.39%
- AGI $45,000 falls in the $40,001–$50,000 bracket → 4% rate
- Annual payment: $45,000 × 4% = $1,800
- Monthly payment (no dependents): $1,800 ÷ 12 = $150.00
- Standard 10-year payment on $35,000 at 6.39% ≈ $395/month — RAP is much lower for this income level
A borrower with two dependent children would deduct $100/month, dropping the RAP payment to $50/month.
RAP vs. SAVE: What Changed?
The transition from SAVE to RAP includes several material changes. Here's a side-by-side comparison:
| Feature | SAVE (Old) | RAP (New, 2026) |
|---|---|---|
| Payment Basis | % of discretionary income (AGI − 225% of poverty line) | % of full AGI across 11 brackets (1%–10%) |
| Undergrad Payment Rate | 5% of discretionary income | 1%–10% of full AGI by bracket |
| Grad Payment Rate | 10% of discretionary income | 1%–10% of full AGI by bracket |
| Dependent Benefit | None | $50/month reduction per dependent child |
| Minimum Payment | $0 floor | $10/month floor |
| Interest Treatment | 100% subsidy of unpaid interest | No negative amortization — government covers unpaid interest |
| Forgiveness Term | 20–25 years | 30 years (10 years if original principal < $12,000) |
| Married Borrower Rule | Excludes spouse income if filing separately | MFJ counts combined AGI; MFS counts borrower's AGI only |
Who Benefits Most from RAP?
RAP is most advantageous for:
- Lower-income borrowers: Those with low AGI land in the 1%–3% brackets and pay only $10–$100/month
- Undergraduate-only borrowers: The 5% payment rate is the lowest among all IDR plans
- Borrowers expecting long-term income below their loan balance: Significant forgiveness after 30 years (or 10 years if the original principal was under $12,000)
- Public service workers: RAP qualifies as an eligible plan for PSLF
Who Should Consider Other Plans?
RAP may not be optimal for:
- High-income borrowers: If your IDR payment exceeds the Standard 10-year amount, PAYE's payment cap may be beneficial
- Borrowers close to paying off their loans: Extended forgiveness timelines mean you might pay more total interest on IDR
- Pre-2014 IBR borrowers: If you're grandfathered into older IBR terms, compare carefully before switching
No Negative Amortization: A Critical Detail
One of the most important features of RAP is that it prevents negative amortization. If your monthly payment doesn't cover the full interest accruing on your loans, the government covers the difference so your balance never grows. This is a structural guarantee for the entire life of the plan — not a temporary subsidy that expires after a few years.
By contrast, most other IDR plans allow unpaid interest to capitalize (accrue and be added to your principal), which can leave you owing more than you started with. RAP's no-negative-amortization design protects borrowers from that trap for the full 30-year term.
SAVE → RAP Transition: What to Expect
If you were previously enrolled in SAVE, here's what happens:
- Automatic Conversion: You do not need to apply — your servicer will transition your account
- Payment Count Preservation: All qualifying months under SAVE count toward RAP forgiveness
- Recertification Required: You will need to recertify your income at your next scheduled recertification date
- Payment Change: Your new RAP payment may differ from your SAVE payment — use our calculator to estimate the difference
Use our RAP payment calculator to estimate your new monthly payment and compare it to your old SAVE amount.
Tax Implications of RAP Forgiveness
Under current law, IDR loan forgiveness is generally considered taxable income by the IRS (with the notable exception of PSLF forgiveness, which is explicitly tax-free). If you receive RAP forgiveness after 30 years (or 10 years for small balances under $12,000), the forgiven amount may be treated as taxable income in that tax year. At a 22% federal marginal rate, for example, $50,000 in forgiveness could result in an $11,000 tax bill.
We strongly recommend consulting a tax professional and planning ahead for this potential "tax bomb." The American Rescue Plan Act of 2021 temporarily made all student loan forgiveness tax-free through 2025, but that provision has expired. Whether Congress extends this treatment to future IDR forgiveness remains uncertain.
How to Enroll in RAP
- Log in to your account at studentaid.gov
- Use the Loan Simulator to compare plans
- Submit an IDR plan request through your loan servicer
- Provide income documentation (tax return or pay stubs)
- Recertify your income annually to maintain your payment amount
References
- U.S. Department of Education. Federal Student Aid — Repayment Plans
- Federal Register. RAP (Replacing SAVE) Final Rule, 2026. federalregister.gov
- U.S. Department of Health & Human Services. 2026 Poverty Guidelines
- Internal Revenue Code §108(f) — Student loan forgiveness exclusion
- 34 CFR §685 — Federal Direct Loan Program regulations
- Federal Student Aid. SAVE Plan Updates and Transition
Frequently Asked Questions: RAP
RAP (the Repayment Assistance Plan) is the new income-driven repayment plan for federal student loans, available to borrowers beginning in 2026. It replaces the SAVE plan, which was blocked in federal court and is being wound down.
Your RAP payment is a flat percentage of your full adjusted gross income (AGI) from your tax return — 1% to 10% across 11 income brackets — minus $50 per month for each dependent child, with a $10/month minimum. Higher earners pay a larger share of AGI. The exact brackets are set by the U.S. Department of Education.
Yes. RAP includes a forgiveness pathway after 30 years (360 qualifying monthly payments) for most borrowers. Any remaining balance is forgiven, though you should confirm current tax treatment with the IRS.
No. SAVE is being discontinued, and borrowers must transition to RAP or another eligible plan. Under RAP the interest-accrual rules change, so review your new payment carefully before enrolling.
Enroll through your loan servicer or studentaid.gov. Keep your income and family-size information current so your payment stays accurate.
Yes. If you work full-time for a qualifying employer (federal, state, local government, or a 501(c)(3) nonprofit), your RAP payments count toward Public Service Loan Forgiveness after 120 qualifying payments.
The student loan interest deduction may reduce your taxable income up to the annual IRS limit, subject to income phase-outs. Confirm current limits with IRS.gov.