Federal loans made from July 1, 2026 have two repayment choices. One of them ties your payment to your income, with a few unusual twists.
Key numbers
- RAP payments range from 1% to 10% of adjusted gross income, minus $50 a month for each dependent.
- The minimum payment is $10 a month, including for borrowers with very low income.
- Interest a full, on-time payment doesn’t cover isn’t added to the balance.
- Any remaining balance is forgiven after 30 years of qualifying payments.
Borrowers whose first federal loan is made on or after July 1, 2026 can choose between two repayment plans: a fixed standard plan, with a term of 10 to 25 years depending on how much they owe, and the new Repayment Assistance Plan (RAP), which bases payments on income.
How the payment is calculated
RAP uses your adjusted gross income (AGI) from your tax return:
| AGI | Share of AGI paid each year |
|---|---|
| $10,000 or less | $10 a month minimum |
| $10,001 to $20,000 | 1% |
| $20,001 to $30,000 | 2% |
| Each additional $10,000 band | One more percentage point |
| More than $100,000 | 10% |
Then:
- Divide the yearly amount by 12.
- Subtract $50 for each dependent.
- If the result is less than $10, you pay $10.
Example: With an AGI of $45,000, you’re in the 4% band. That’s $1,800 a year, or $150 a month. With one dependent, the payment drops to $100.
The extra features
- Interest relief. If a full, on-time payment doesn’t cover the month’s interest, the unpaid interest is waived rather than added to your balance, so your balance doesn’t grow.
- Principal help. If your payment barely reduces what you owe, the government adds a small matching amount, up to $50 a month, so the balance keeps going down.
- Forgiveness. Whatever remains after 30 years of qualifying payments is forgiven.
Money tip
Recertify your income on time every year. Your payment is recalculated with each recertification, and missing the deadline can raise your payment until you catch up.
RAP or standard?
| Choose | If |
|---|---|
| RAP | Your income is low or uncertain, you work in public service, or your debt is high compared with your income |
| Standard | Your income is solid and you want the loan gone sooner, with less total interest |
Before you borrow, check the new federal loan limits, and if a private lender is pitching a lower rate, remember what you’d give up: federal vs. private student loans explains the trade-off.
Questions families ask
Do RAP payments count toward Public Service Loan Forgiveness?
Yes. RAP is a qualifying plan for PSLF, so borrowers working in public service can still have their balance forgiven after 120 qualifying payments.
I already have federal loans. Do I have to switch?
Not necessarily. Older plans such as Pay As You Earn and Income-Contingent Repayment are being phased out by July 1, 2028, but borrowers with loans from before July 2026 have more choices, including Income-Based Repayment.
Is the forgiven amount taxed?
Under current federal law, student loan forgiveness on death or disability isn’t taxed, but forgiveness at the end of income-driven repayment may be treated as taxable income. Check the rules in the year your loan is forgiven.
Award amounts, loan limits and tax rules change, and some 2026 rules are still being finalized. This guide is general information for U.S. students and families, not financial or tax advice; confirm details at StudentAid.gov, with the IRS or with your school’s financial aid office.
