The SAVE plan for federal student loans has ended. Starting July 1, 2026, servicers began notifying former SAVE enrollees that they need to pick a new repayment plan, and borrowers who do not choose within the notice window can be placed in a plan automatically, often with a higher payment. For many people, the main option is the new Repayment Assistance Plan (RAP), created by the 2025 tax and spending law.
This post explains how RAP payments are calculated, with examples. Rules can change and details depend on your loans, so confirm your numbers in the official Loan Simulator before you decide.
Who RAP is for
- Direct Loan borrowers (other than Parent PLUS) can choose RAP.
- New loans made on or after July 1, 2026 are limited to two plans: RAP or the new Tiered Standard plan.
- Existing borrowers in plans that are being phased out generally have until July 1, 2028, to move to RAP, Tiered Standard or, for older loans, Income-Based Repayment (IBR).
- Parent PLUS loans made after July 1, 2026, are limited to the Tiered Standard plan.
How the RAP payment is calculated
RAP sets your payment as a percentage of your adjusted gross income (AGI). The percentage rises with income, starting at 1% and reaching 10% for incomes above $100,000.
| AGI | Annual payment | Monthly payment |
|---|---|---|
| $10,000 or less | $120 | $10 |
| $10,001 – $20,000 | 1% of AGI | AGI × 1% ÷ 12 |
| $20,001 – $30,000 | 2% of AGI | AGI × 2% ÷ 12 |
| … each additional $10,000 adds 1 point … | ||
| $90,001 – $100,000 | 9% of AGI | AGI × 9% ÷ 12 |
| Over $100,000 | 10% of AGI | AGI × 10% ÷ 12 |
Then two adjustments apply:
- $50 less per month for each dependent you claim.
- A floor of $10 a month.
Examples
| Borrower | AGI | Dependents | Bracket | Monthly payment |
|---|---|---|---|---|
| Single, early career | $45,000 | 0 | 4% | $150.00 |
| Same income, two children | $45,000 | 2 | 4% | $50.00 |
| Mid-career, one child | $75,000 | 1 | 7% | $387.50 |
| Part-time income | $9,000 | 0 | — | $10.00 |
The Department of Education has used the first case, a borrower earning $45,000 with $35,000 of debt, to show a RAP payment of $150 a month.
The interest waiver and the principal match
Two features are designed to stop balances from growing, a common complaint under older income-driven plans:
- Unpaid interest is waived. If your on-time payment does not cover the month’s interest, the unpaid interest is canceled instead of added to your balance.
- Principal match. If your payment would reduce principal by less than $50 in a month, the Department contributes up to $50 so the balance still falls.
Take the $45,000 borrower with $35,000 of loans at 6.5%. Monthly interest is about $189.58, more than the $150 payment. Under RAP, the unpaid $39.58 of interest is waived and the principal match helps make sure the balance goes down rather than up. Under the older rules, that gap would have accrued.
Forgiveness takes longer
Remaining balances under RAP are forgiven after 360 qualifying payments, or 30 years. Older income-driven plans forgave balances after 20 or 25 years. For borrowers who expect to pay their loans off in full, this matters less. For borrowers with large balances relative to income, it is a significant change.
RAP vs. Tiered Standard vs. paying it off faster
- RAP ties the payment to income, which protects you if earnings fall, and offers the interest waiver.
- Tiered Standard sets a fixed payment over 10 to 25 years depending on your balance. It works like a normal installment loan.
- Paying extra is always allowed. If your income is high relative to your debt, a fixed payment plus extra principal may cost less in total than staying on an income-based plan. Model a fixed payoff in the loan amortization calculator by entering your balance, your weighted average rate and a target term.
What to do now
- Open your servicer notice and note the deadline to choose a plan.
- Run the Loan Simulator at StudentAid.gov with your current tax information.
- Compare total cost and monthly payment under each available plan, not just the payment.
- Consider PSLF if you work for a government or eligible nonprofit employer; RAP payments count.
- Keep your income information updated every year so your payment is accurate.