RAP vs. IBR: What Student Loan Borrowers Need To Know
The College Investor Audio Show · The College Investor
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Show Notes
The final version of the One Big Beautiful Bill is going to reshape the future of student loan repayment.
Starting July 1, 2026, all new federal student loan borrowers will only have two options: the revised Standard Plan or the newly introduced Repayment Assistance Plan (RAP). For current borrowers, the transition comes between 2026 and 2028, when legacy plans like SAVE, PAYE, and ICR will be phased out and borrowers will be forced to move into either the RAP plan, or the IBR plan.
The RAP plan calculates monthly payments on a sliding scale, ranging from 1% to 10% of adjusted gross income. A key feature is that unpaid interest is forgiven, and a $50 monthly principal match helps chip away at the balance. Loans are forgiven after 30 years of payments.
IBR, the other remaining option for existing borrowers, retains most of the features of Old and New IBR, depending on loan origination date. Those with loans from before July 1, 2014, pay 15% of discretionary income and receive forgiveness after 25 years. Borrowers with loans after July 1, 2014 will pay 10% of discretionary income, with forgiveness at 20 years. Discretionary income is defined as earnings above 150% of the federal poverty level.