RAP vs. IBR: How to Choose Between the Two Income-Driven Plans

Updated June 2026

After July 1, 2026, federal borrowers effectively have two income-driven choices: the new Repayment Assistance Plan (RAP) and the long-standing Income-Based Repayment (IBR). They calculate payments completely differently, and the cheaper one is not obvious.

How each calculates your payment

RAP uses your total AGI with a tier system: $10/month if you earn under $10,000, then 1% of AGI at $10,001–20,000, rising one percentage point per $10,000 bracket to a 10% cap above $100,000. Subtract $50/month per dependent child. Divide by 12. (Married? Your filing status decides whose income is in that AGI — see married filing separately on RAP.)

IBR uses discretionary income: your AGI minus 150% of the poverty guideline for your family size. You pay 10% of that (15% if you first borrowed before July 2014), divided by 12, capped at the 10-year Standard amount.

The crossover

Because IBR shields 150% of poverty ($23,940 for a single person in the lower 48 in 2026) before charging anything, low earners often pay less on IBR — sometimes $0. RAP’s minimum is always at least $10. As income rises, RAP’s bracket structure can beat IBR, especially with dependent children (each one cuts $50/month off RAP).

What RAP gives you that IBR doesn’t

• No interest snowball. Unpaid interest is waived. Your balance can never grow on RAP.
• Principal guarantee. If your payment doesn’t cut principal by $50 in a month, the government makes up the difference — even $10/month payers watch the balance fall.

What IBR gives you that RAP doesn’t

• A much shorter forgiveness clock: 20 years (new borrowers) or 25, versus RAP’s 30 years. Your months in previous income-driven plans — SAVE, PAYE, ICR, REPAYE — count toward both plans’ clocks, but the destination differs: with 10 years of IDR credit, IBR forgives at year 20–25 while RAP still runs to year 30.

One warning about switching: the credit flows one way. Legacy-plan months count toward RAP’s 30-year clock, but months paid on RAP do not count toward IBR, PAYE, or ICR forgiveness. If you try RAP and change your mind later, the RAP months are lost to the IBR clock. (Operational note: ED has paused and resumed IBR discharge processing while it recalculates payment counts — your credit keeps accruing either way, but final discharges can lag.)

The bottom line

• Pursuing PSLF? Both qualify — pick whichever payment is lower, since forgiveness arrives at 120 payments either way.
• Many years of IDR already behind you? IBR’s shorter, credit-preserving clock usually wins even at a higher monthly payment.
• Early in repayment, growing family, modest income? RAP’s dependent deductions and interest waiver are hard to beat.

Don’t guess — run both with your actual numbers.