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RAP vs IBR: Which Student Loan Repayment Plan Is Best in 2026?

ByMedia Pavilion

For most federal student loan borrowers in 2026, the choice comes down to three plans: the new Repayment Assistance Plan (RAP), Income-Based Repayment (IBR) and a fixed standard plan. RAP opened on 1 July 2026, the SAVE plan is closing, and borrowers in older income-driven plans have until 1 July 2028 to move. The best plan depends on your income, your balance, whether you are aiming for Public Service Loan Forgiveness (PSLF) and when you borrowed. This guide compares the options with official figures and worked examples.

What Changed for Student Loan Repayment in 2026?

The One Big Beautiful Bill Act, signed in July 2025 and described by the Education Department as the Working Families Tax Cuts Act, rewrote the federal repayment system. The main changes:

  • Two plans for new loans: loans made on or after 1 July 2026 can be repaid only through RAP or the new Tiered Standard plan.
  • Older plans phased out: the Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans close to existing borrowers by 1 July 2028, and SAVE was ended by a court order on 10 March 2026.
  • IBR stays for loans made before 1 July 2026, and the old requirement to show a “partial financial hardship” to enrol has been removed.
  • New borrowing limits, including the end of Grad PLUS loans for new graduate borrowers.

Borrowers who were in SAVE have been told to choose a new plan; our news report on the SAVE plan deadlines sets out the timetable.

How Does the Repayment Assistance Plan (RAP) Work?

RAP bases your payment on your adjusted gross income (AGI), not your balance:

  • Payment rate: between 1% and 10% of AGI, rising by one percentage point for each $10,000 of income. For example, AGI of $20,000 to $30,000 pays 2%, $40,000 to $50,000 pays 4%, and $100,000 or more pays 10%.
  • Lowest incomes: borrowers with AGI of $10,000 or less pay $120 a year ($10 a month).
  • Dependants: the monthly payment falls by $50 for each dependant, with a minimum of $10 a month.
  • Interest waiver: if your on-time payment does not cover the month’s interest, the unpaid interest is waived, so your balance cannot grow.
  • Principal match: if your payment reduces the principal by less than $50, the government adds up to $50 a month towards the principal.
  • Forgiveness: any balance left after 360 qualifying payments (30 years) is forgiven.

The Education Department’s own example: a single borrower with no dependants, $35,000 of debt and an income of $45,000 would pay $150 a month under RAP, compared with $176 under the previous income-driven plans. About $40 of unpaid interest would be waived each month, and the borrower would receive a $50 principal match, so the balance falls with every payment.

How Does Income-Based Repayment (IBR) Compare?

IBR calculates payments from “discretionary income”, which is your AGI minus 150% of the federal poverty guideline for your family size. It has two versions:

  • If you first borrowed on or after 1 July 2014: 10% of discretionary income, with remaining debt forgiven after 20 years.
  • If you borrowed earlier: 15% of discretionary income, with forgiveness after 25 years.
  • Payment cap: IBR payments never exceed what you would pay on the 10-year standard plan.
  • $0 payments are possible if your income is below 150% of the poverty guideline, whereas RAP has a $10 minimum.

IBR’s big advantage is the shorter path to forgiveness: 20 or 25 years rather than RAP’s 30. Its weakness is that unpaid interest is not waived in the same way, so balances can still grow if payments are low.

What Is the Tiered Standard Plan?

For new loans, the Tiered Standard plan replaces the old 10-year standard plan with fixed monthly payments over a term based on what you owe:

  • Less than $25,000: 10 years
  • $25,000 to under $50,000: 15 years
  • $50,000 to under $100,000: 20 years
  • $100,000 or more: 25 years

The department’s example: a $30,000 balance repaid over 15 years would cost about $262 a month, compared with $341 over 10 years. Lower payments mean more interest over the life of the loan, so you can always pay extra to clear it faster. Borrowers with loans from before July 2026 can still use the traditional 10-year standard plan.

Which Repayment Plan Is Best for You?

There is no single best plan, but these rules of thumb help:

  • Working towards PSLF? Choose the plan with the lowest monthly payment that qualifies, because whatever remains after 120 qualifying payments is forgiven. RAP and IBR both count. Our report on the Education Department’s PSLF rule covers the latest changes.
  • Low income relative to debt? RAP’s interest waiver and principal match stop the balance growing, which is valuable if you expect to pay for many years. IBR may suit you better if you have older loans and want forgiveness after 20 rather than 30 years, or if your income is low enough for $0 payments.
  • High income relative to debt? If you will repay in full anyway, an income-driven plan may simply cost more interest. A standard or tiered plan, plus extra payments, is usually cheaper.
  • Children or other dependants? RAP’s $50-a-month reduction per dependant can make a big difference.
  • Married? Under RAP and IBR, filing taxes separately can affect which income is counted. Check the rules carefully before you file.

How Do You Switch Plans?

Log in to your account at StudentAid.gov and use the repayment plan application, which the department says takes about 10 minutes. Before you apply:

  • Use the Repayment Calculator on StudentAid.gov to compare payments and total costs using your real loans.
  • Sign up for autopay. The autopay interest rate discount rose from 0.25% to 1% on 1 July 2026, a temporary benefit that runs until 30 June 2028 for borrowers who enrol by 31 December 2026, according to the federal servicer Edfinancial.
  • Allow access to your tax data from the IRS, which saves uploading documents and makes annual recertification automatic.
  • Check your loan types. Only federal Direct Loans qualify for RAP, including Grad PLUS loans and Direct Consolidation loans that do not include a Parent PLUS loan. Older Federal Family Education Loan (FFEL) and Perkins loans may need to be consolidated first, and consolidation loans that include Parent PLUS loans cannot be repaid under RAP.
  • Keep paying until your servicer confirms the change, to avoid missed payments.

What Happens If You Don’t Choose?

Borrowers in plans that are closing will be moved to an available plan if they do not choose one by the deadline. Missing payments is more serious: defaulted loans can lead to tax refunds being withheld and wages being garnished, as explained in our report on student loan wage garnishment. If you cannot afford your payment, contact your servicer early about income-driven options, deferment or forbearance.

Do These Rules Apply to Private Student Loans?

No. RAP, IBR, PSLF and the interest waiver apply only to federal loans. Private lenders set their own repayment terms, which is one reason to exhaust federal options first; our guide to federal vs private student loans explains the trade-offs, and our FAFSA guide covers how to apply for federal aid.

Repayment rules are still being implemented and can change. Check StudentAid.gov or your loan servicer for the terms that apply to your loans.

Featured image: College of DuPage 2014 Commencement Ceremony 214 (14219093001), by COD Newsroom / Wikimedia Commons, CC BY 2.0. Cropped, colour-graded and combined with MediaPavilion branding.

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