The Repayment Assistance Plan (RAP): How Your Federal Payment Is Worked Out

The Repayment Assistance Plan (RAP) is a federal income-based repayment plan created by the One Big Beautiful Bill Act. Instead of charging you a fixed instalment, it takes a percentage of your adjusted gross income each month, on a scale that rises from roughly 1 percent at the bottom to roughly 10 percent at the top, with a floor of 10 dollars a month for very low incomes. Two features matter as much as the payment: interest your payment does not cover is waived rather than added to the balance, and any balance left after 360 qualifying monthly payments, which is 30 years, is forgiven. Because the plan was still being implemented, confirm the current brackets on the official repayment plans page before budgeting on them.

What problem is RAP meant to solve?

Older income-driven plans had a flaw borrowers discovered the hard way: when the income-based payment was smaller than the month's interest, the shortfall was added to the balance, so you could pay for years and still owe more. That is negative amortisation, and it is the main reason people feel a student loan is unpayable. RAP ends it, because unpaid interest is written off rather than capitalised. In exchange the plan is simpler and its forgiveness point sits further out, at 30 years of payments.

How is a RAP payment calculated?

Start with adjusted gross income, the figure from your federal tax return, not your gross salary and not your take-home pay. The plan places that income in a band and applies the percentage for the band. As enacted, the scale moves in one-percentage-point steps for each 10,000 dollars of income, from about 1 percent at the bottom to 10 percent once income reaches six figures.

Two worked examples, using that structure:

• AGI of 48,000 dollars falls in the 4 percent band. 48,000 x 0.04 = 1,920 dollars a year, which is 160 dollars a month.
• AGI of 72,000 dollars falls in the 7 percent band. 72,000 x 0.07 = 5,040 dollars a year, which is 420 dollars a month.

There is then a reduction for dependent children, reported as 50 dollars a month per child, so the borrower on 48,000 dollars with one child would pay 160 - 50 = 110 dollars a month. The floor applies at the bottom: 1 percent of 10,000 dollars is 100 dollars a year, about 8.33 dollars a month, so the payment becomes the minimum 10 dollars. The RAP estimator in the Citizens Student Loan: Pointer app runs this offline for your own figures, as a planning estimate rather than a statement of what a servicer will bill.

What happens to interest your payment does not cover?

This is where RAP differs most from what came before. Suppose you owe 40,000 dollars at 6.5 percent. A year of interest is 40,000 x 0.065 = 2,600 dollars, which is about 217 dollars a month. If the formula sets your payment at 160 dollars, roughly 57 dollars of interest goes unpaid that month. Under the old approach that 57 dollars joined your balance. Under RAP it is waived, so the balance does not grow.

There is also a reported principal match of up to 50 dollars a month when your payment covers less than that much principal, so the balance edges down rather than standing still. For a borrower whose payment is smaller than the interest charge, the loan stops compounding against them.

How does RAP compare with the tiered standard plan?

The newer federal menu is deliberately short: a tiered standard plan whose fixed term lengthens as the balance gets bigger, and RAP. The standard plan clears the debt in a defined number of years and costs less interest overall, but the payment is whatever the schedule requires, whether or not your income supports it. RAP ties the payment to income and protects you when earnings fall, but takes longer, so total interest is higher if you stay on it.

A rough rule of thumb: if the standard payment is comfortable, taking it clears the debt sooner and cheaper. If it is not, RAP exists precisely so that a bad year does not turn into a default. Run both before choosing, and remember a plan can be changed later.

Who is on RAP, and who still has a choice?

Broadly, the new two-plan menu applies to newer loans, while older loans keep access to a longer list of plans that is being wound down over a transition period. Which set of rules applies depends on when your loans were made, which is why two graduates from the same programme can face different menus. Your servicer and your federal account are the authoritative answer, and the official repayment plans page sets out the plans currently available and the dates that separate them.

What should you check before you choose a plan?

• Your actual AGI, and whether a spouse's income counts under your filing status.
• Your dependent children, since the per-child reduction matters most at lower incomes.
• Which loans you hold, because the date of the loan and any consolidation change your options.
• Whether you are pursuing public service forgiveness, since the plan affects which payments count.
• Recertification, because a missed recalculation is a common way for a payment to jump.

Frequently asked questions

Is RAP better than the old income-driven plans?

Better in one way that matters: unpaid interest is waived, so the balance does not grow while you pay. Worse in another, since forgiveness comes after 360 payments, longer than under some plans it replaces.

Does 10 percent of income mean 10 percent of my salary?

No. The percentage applies to adjusted gross income, and only the top band is at 10 percent. Lower incomes sit in lower bands, so a borrower on 48,000 dollars pays about 4 percent, not 10.

What happens if I earn nothing at all?

The formula produces a very small figure, and the 10 dollar monthly floor applies. It is still a payment, so you cannot simply ignore the bill. Contact your servicer about deferment or forbearance if you genuinely cannot pay, rather than letting the loan fall into default.

Can an app tell me my official payment?

No. An independent calculator estimates a payment from figures you type in; only your servicer and your federal account show what is actually due. Never enter a Social Security number, a bank account number, a password, or a one-time code anywhere but an official channel you reached yourself.

RAP is a simple formula with two protective features attached, and the arithmetic is checkable by hand: find your income band, multiply AGI by that percentage, divide by twelve, subtract 50 dollars per dependent child. If you want the comparison with the tiered standard term done offline, that is what the independent, unofficial app on Google Play was built for. Neither this site nor that app is affiliated with the U.S. Department of Education, Federal Student Aid, Citizens Bank, N.A., or Citizens Financial Group, Inc.; neither can process an application or access your record, and the official pages take precedence over any estimate.