The RAP plan explained: what it is and who it affects in 2026

Who RAP actually affects

RAP matters most to two groups. First, anyone taking out a new federal loan after July 1, 2026, for whom RAP and a reworked standard plan are the only choices. Second, former SAVE borrowers shopping for a new income-driven plan during their 90-day window. Existing borrowers who already hold loans and want income-driven terms can often still choose IBR instead, so for them RAP is an option to weigh, not a mandate, unless they take a new loan.

How RAP payments are calculated

RAP bases your monthly payment on your adjusted gross income (AGI), the income figure from your tax return after certain deductions. On top of that, RAP reduces your payment by $50 per month for each dependent child. Like other income-driven plans, the idea is that your payment scales with what you can afford rather than a fixed amount, but the exact formula is different from the plans it replaces, which is why two people with the same balance can owe very different monthly amounts.

The principal-match subsidy

RAP includes a feature designed to keep your balance from ballooning: a principal-match subsidy. In any month where your payment does not reduce your principal by at least $50, a government subsidy makes up the difference, so your balance still moves down by at least that amount. For borrowers with low payments relative to their interest, this is a meaningful protection against negative amortization, the slow-growth trap where your balance rises even though you are paying.

A worked example of the overpayment trap

Say your RAP minimum is $120 in a month where, left alone, the subsidy would top up your principal reduction to the $50 floor. Pay exactly $120 and you keep the subsidy. Throw an extra $200 at the loan that month and the rules can route that $200 to interest first and forfeit the subsidy, so your principal may end up reduced by less than it would have been at the minimum. The lesson is not "never pay extra," it is "do not pay extra into a RAP loan." Aim spare dollars at a high-rate private balance instead, where every extra dollar does exactly what you expect.

RAP vs IBR: which to choose

If you are an existing borrower with a choice, the real decision is usually RAP versus IBR. RAP is generally pricier month to month than SAVE was. As a rough illustration, a single borrower earning around $100,000 might have paid roughly $315 a month under the old SAVE plan and closer to $830 a month under RAP. How RAP compares to IBR depends heavily on your income and family size, so model both rather than assuming the newest plan is the best one for you.

The bottom line

Pay the RAP minimum to keep the subsidy working, point any extra money at high-rate private debt, and if you have a real choice between RAP and IBR, decide it on the actual monthly numbers for your income and household, not on which plan is newest.