Full Breakdown
Repayment Assistance Plan (RAP) Becomes Sole Income-Driven Option After SAVE Ends
6/14/2026, 1:58:20 AM
Background: End of the SAVE Plan and Legal Settlement
The Saving on a Valuable Education (SAVE) plan—launched under the Biden administration and known for $0-payment options and forgiveness after as few as 10 years—was terminated on July 1, 2026. A settlement between the U.S. Department of Education and a coalition of state attorneys general led by Missouri barred new enrollments, denied pending applications, and moved existing borrowers into either the Standard Repayment Plan or the newly introduced Repayment Assistance Plan (RAP).
Core Features of RAP
RAP calculates monthly payments as 1 %–10 % of a borrower’s adjusted gross income (AGI), with a $10 minimum. For each dependent claimed on the federal tax return, $50 is deducted from the calculated payment. Unlike other income-driven repayment (IDR) plans, RAP does not shield a portion of income for necessary expenses; it uses AGI directly. Forgiveness occurs after 30 years of qualifying payments, compared with 20–25 years for most other IDR plans.
Strategies to Lower Adjusted Gross Income
Financial planners advise borrowers to reduce pretax earnings to stay below RAP income thresholds. Options include:
- Increasing contributions to workplace 401(k) or traditional IRA accounts.
- Making pretax deposits to health-savings accounts (HSAs) or flexible-spending accounts (FSAs).
- For the self-employed, claiming legitimate business expenses on Schedule C.
Each $1,001 of pretax retirement contributions can lower AGI by that amount, potentially reducing a monthly RAP payment by $64 (e.g., from $414 to $350). Claiming additional dependents yields a $50 monthly reduction per dependent.
Data Highlights
- RAP payment range: 1 %–10 % of AGI.
- Minimum payment: $10 per month.
- $50 deduction per dependent.
- Example: AGI $59,999 -> ? $50/month; AGI $60,000 -> ? $600/year higher.
- Forgiveness timeline: 30 years vs 20–25 years for other IDR plans.
Official Statements & Responses
The Department of Education describes RAP as “the only IDR plan available to borrowers who take out a loan after July 1.” It notes that the loan-simulator tool provides estimates based on current income, debt, and family size, while acknowledging that the simulator’s assumptions limit precise future predictions. Higher-education expert Mark Kantrowitz recommends RAP for borrowers with lower incomes and higher debt burdens. Nerdwallet characterizes the Standard Repayment Plan as suitable for borrowers who can match debt to income and wish to minimize interest costs.
Criticism & Concerns
Consumer advocates warn that the 30-year forgiveness horizon may increase total repayment costs relative to other IDR options. Because RAP relies on AGI without expense shielding, borrowers with limited pretax deductions could face higher monthly obligations. The loan-simulator’s undisclosed assumptions further complicate borrowers’ ability to forecast long-term expenses.
Verbatim Quotes
- “There's definitely some unique opportunities with it,” — Landon Warmund, Certified Financial Planner, Reliant Financial Services
- “Borrowers can look to avoid these payment jumps by exploring what pre-tax benefits they have available to them at work to reduce their taxable income, which keeps them under key income numbers,” — Landon Warmund
- “This can include ordinary and necessary business costs, retirement contributions and health insurance deductions,” — Carolina Rodriguez, Director, Education Debt Consumer Assistance Program
- “For those whose income is lower and debt is higher, “you should prefer RAP,” higher education expert Mark Kantrowitz told CNBC.” — Mark Kantrowitz, Higher-Education Expert
- “The standard repayment plan is best for borrowers who want to pay off their loans quickly and minimize interest costs,” — Nerdwallet
Conflicting Reports & Gaps
The Department of Education states that RAP forgiveness occurs after 30 years, while other IDR plans offer 20–25 year forgiveness. No source provides a direct comparison of total interest accrued under each timeline, leaving borrowers without a clear cost-benefit analysis.
What’s Next for Borrowers
Borrowers must select a repayment plan by July 1, 2026. The Education Department recommends using the online loan-simulator to gauge RAP payments, adjusting pretax contributions where feasible, and reviewing dependent claims on tax filings. Ongoing monitoring of AGI changes will be essential to maintain lower monthly obligations under RAP.
