RAP vs IBR: How to Choose a Student Loan Plan

For most federal borrowers after the OBBBA, the real decision comes down to two plans: the Repayment Assistance Plan (RAP) and Income-Based Repayment (IBR). They calculate payments in fundamentally different ways, and the cheaper plan depends on your income level, family size, and how long you expect to be in repayment.

RAP bases your payment on total adjusted gross income using discrete brackets — between 1% and 10% of AGI depending on your income range, with a $10 minimum monthly payment and a deduction of $50 per month for each dependent. IBR instead uses discretionary income: your AGI minus 150% of the federal poverty level for your household size, with new borrowers paying 10% of that amount.

The poverty-level shield means IBR payments can be $0 at low incomes where RAP still requires at least $10 per month. But as income rises, the comparison flips in many cases: RAP's bracket percentages apply to total AGI at graduated rates, while IBR's 10% applies to everything above the poverty shield. RAP also offers two benefits IBR lacks entirely — any interest your payment doesn't cover is waived rather than accruing, and payments below $50 are topped up with a principal match, so your balance falls even when payments are small.

Time horizon matters too. RAP forgiveness requires 360 qualifying payments (30 years) versus 20 years (240 payments) for new-borrower IBR. If you are within striking distance of IBR forgiveness — or pursuing PSLF, where the 120-payment count is what matters — the shorter timeline can outweigh a lower monthly payment. Run both plans against your actual numbers before deciding; the RAP calculator on this site models both side by side.

Because RAP uses AGI brackets rather than a single formula, the easiest way to understand it is to walk through concrete profiles.

A borrower with $28,000 AGI and no dependents falls in a low bracket, paying roughly 1–2% of AGI — in the neighborhood of $25–$45 per month. Under IBR, the same borrower would likely pay close to $0, because 150% of the poverty level exceeds most of their income. But under RAP, unpaid interest is waived and small payments receive a principal match, so their balance shrinks; under a $0 IBR payment, the balance simply sits still at best.

A borrower with $60,000 AGI sits in a mid-range bracket around 4–5% of AGI — roughly $200–$250 per month. The comparable IBR payment (single, no dependents) is about 10% of the ~$37,000 above the poverty shield, or roughly $310 per month. Here RAP is meaningfully cheaper month to month.

A borrower with $120,000 AGI hits RAP's top bracket at 10% of AGI — about $1,000 per month, calculated on gross AGI with no poverty-level deduction. IBR for the same borrower runs about $810 per month. At high incomes IBR is often cheaper, and a standard 10-year plan may beat both while avoiding decades of interest.

Dependents shift all of these numbers: each one reduces the RAP payment by $50 per month and also enlarges the IBR poverty shield. A married borrower with two children can see the plans swap rankings entirely, which is why modeling your own household — not a generic example — is essential.

Changing repayment plans is allowed, but it is rarely free. The biggest cost is interest capitalization: when you leave certain plans, any unpaid accrued interest can be added to your principal, permanently increasing the balance that future interest is calculated on.

This matters most for borrowers displaced from SAVE. Months spent in SAVE's administrative forbearance accrued interest for many borrowers, and moving through IBR on the way to another plan can trigger capitalization of that entire accumulated amount. If you are using IBR only as a bridge, understand what happens to your accrued interest on both entry and exit before you file the change.

Timing also interacts with forgiveness counts. Payments made under one qualifying plan generally continue to count toward IDR forgiveness when you switch to another qualifying plan, but the required total can change — moving from a 20-year plan to RAP's 30-year timeline can add years even though your payment drops. For PSLF borrowers the plan choice changes only the monthly amount, not the 120-payment requirement, so public-service workers should usually pick whichever qualifying plan is cheapest per month.

Before switching, get three numbers in writing from your servicer: your current accrued unpaid interest, whether it capitalizes on exit, and your recalculated payment and forgiveness date under the new plan. Then compare total remaining cost, not just the next monthly payment.