New RAP Repayment Plan Launches in July 2026: What It Means for Student Loans

If you use SAVE, PAYE or ICR, your reimbursement landscape is about to change dramatically.

The Repayment Assistance Plan (RAP) – part of the Big Beautiful Bill signed on July 4, 2025 – will become available on July 1, 2026. It will ultimately be the only income-driven repayment option for most new borrowers. Here’s what you need to know.

RAP Payment Structure: The New Math

Unlike SAVE, which ignored income up to about $35,000, RAP calculates payments based on your income whole income:

Payment levels by income

• Under $10,000: Flat $10/month
• $10,001–$20,000: 1% of AGI
• $20,001–$30,000: 2% of AGI
• Each $10,000 installment: Adds 1 percentage point
• Above $100,000: Capped at 10%

You also get a $50 per dependent deduction from your monthly payment.

RAP vs SAVE: side by side comparison

Real payment examples

For one borrower without dependents:

The good news: interest rate protection + principal matching

This master reconciliation is actually better than SAVE in one respect: it means that even small payments eat into your balance instead of just treading water.

Critical timeline: what happens when

• July 1, 2026: RAP launches; new borrowers only receive Standard or RAP
• July 1, 2028: SAVE, PAYE and ICR eliminated; only IBR and RAP remain
• After July 1, 2028: Existing borrowers who have not made a choice will be automatically enrolled in IBR or RAP

Parent PLUS: Big changes

PSLF still works, but differently

Public Service Loan Forgiveness continues to forgive after 120 qualifying payments (10 years). But here’s the catch: Your RAP payments will likely be higher than SAVE payments, meaning you’ll have a smaller balance to forgive at the end.

For some PSLF fighters, this could actually reduce the overall benefit. Run the numbers for your situation.

What to do now

• If on SAVE/PAYE/ICR: You can stay until July 2028, no rush
• If you are considering graduate school: If possible, borrow before July 1, 2026
• If you have Parent PLUS: Consolidate and register for IBR before the deadline
• If you are pursuing PSLF: Calculate whether RAP or sticking to the current plan is better
• Everyone: DO NOT take on new loans after July 2026 unless absolutely necessary. This activates RAP for ALL your loans

Math doesn’t lie. For many borrowers, RAP means higher payments and longer forgiveness periods. But the interest subsidy and repayment soften the blow. Know your numbers before you panic.–Steve Rhode

Not sure which path makes sense for your situation? Take my Find Your Path quiz for personalized guidance based on your specific circumstances.

Frequently asked questions

Can I keep my current IDR subscription?

If you do not take out a new loan after July 1, 2026, you can remain on SAVE, PAYE or ICR until July 1, 2028. After that, only IBR and RAP are available. You can choose either or be automatically enrolled.

What if I have almost 20 years of forgiveness on SAVE?

Your existing timeline for forgiveness should be protected if you continue on your current plan through July 2028. The 30-year timeline mainly affects new borrowers and those transitioning to RAP. Check this with your service technician.

Is RAP better or worse than SAVE?

For most borrowers, RAP means higher monthly payments. But the 100% interest subsidy remains, and principal matching is new. If you have a very low income, RAP’s $10 minimum is worse than SAVE’s $0 option. If you have a higher income, the difference is smaller.

What about income-related repayment (ICR)?

ICR will be eliminated as of July 1, 2028. If you are currently using ICR, you must switch to IBR or RAP before that date.

Should I rush to take out loans before July 2026?

If you do plan to borrow (for high school or otherwise), borrowing before July 1, 2026 will maintain your access to current IDR subscriptions. But don’t borrow money you don’t need just to meet a deadline.

(Source: Saving for college)