RAP Calculator

How the RAP payment is calculated

RAP was created by the July 2025 budget law (Public Law 119-21, section 82001) and opened to borrowers on July 1, 2026. The payment starts from a yearly base amount: a flat $120 if your adjusted gross income (AGI) is $10,000 or less, otherwise a percentage of your whole AGI that rises by one point for every $10,000 band, from 1% for AGI over $10,000 up to $20,000, to 10% for AGI over $100,000. That base is divided by 12, then reduced by $50 a month for each dependent you claim on your tax return. If the result is under $10, you pay $10.

Worked example: a borrower with $55,000 of AGI is in the 5% band, so the base payment is $2,750 a year, or $229.17 a month. With two dependents the payment drops by $100 to $129.17. The Department of Education’s own example is a single borrower earning $45,000 with no dependents, who pays $150 a month (4% of $45,000, divided by 12).

Because the percentage applies to all of your income, the payment jumps at each $10,000 line. At $50,000 of AGI the payment is $166.67; at $50,001 it is $208.34. The payment is recalculated each year from your latest tax return. If you are married and file jointly, your spouse’s income counts; if you file separately, only your own AGI and the dependents on your own return count.

Interest waiver and the $50 principal match

Each on-time RAP payment goes to interest first, then fees, then principal. If the payment does not cover the month’s interest, the unpaid interest is not charged to you, so the balance cannot grow while you pay on time. And if the payment reduces your principal by less than $50, the Department reduces it further, by the smaller of $50 or your payment, minus whatever principal you paid yourself. In practice a borrower whose payment is at least $50 sees the principal fall by at least $50 every month.

Example: $35,000 at 6.5% accrues $189.58 of interest a month. A $229.17 payment covers the interest and puts $39.58 toward principal, so the government adds $10.42 and the balance falls by $50. A borrower paying the $10 minimum has $179.58 of interest waived and gets a $10 match, so the balance still falls by $10.

When RAP forgives the rest, and who can use it

Any balance left after 360 qualifying monthly payments, which is 30 years, is cancelled. Qualifying payments include on-time RAP payments, payments under IBR, payments on any plan that were at least the 10-year standard amount, and payments made before July 1, 2028, under ICR, PAYE or SAVE, so time already spent on an older income-driven plan counts. On-time RAP payments also count toward Public Service Loan Forgiveness.

RAP is open to all Direct Loan borrowers, whenever the loans were made, except for parent PLUS loans and consolidation loans that repaid a parent PLUS loan. Anyone who takes out a new federal loan on or after July 1, 2026, can only choose RAP or the tiered standard plan. Borrowers with older loans can also keep or choose IBR; the RAP vs IBR calculator puts the two side by side.

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