IBR vs. RAP: Key Differences for Federal Student Loan Borrowers

As SAVE-related forbearance ends, borrowers who are not taking out new federal student loans after July 1, 2026 will need to consider their repayment options. For many, that means deciding whether Income-Based Repayment (IBR) or the new Repayment Assistance Plan (RAP) is the better fit. Although both plans are income-driven, they can produce very different outcomes over time.

The right choice depends on your goals, and the tradeoffs start with how each plan calculates your payment.

The monthly payment calculation is different.

Under IBR, your annual payment is set at 10% of your discretionary income (15% if you first borrowed federal student loans before July 1, 2014) and divided by 12 to determine your monthly payment. Discretionary income is your adjusted gross income (AGI) minus a protected income amount tied to federal poverty guidelines. Depending on your income and family size, your calculated payment could be as low as $0 per month.

Under RAP, your payment is calculated using a tiered formula that applies different percentages of your AGI across income bands, with rates ranging from 1% to 10%. The resulting annual payment amount is divided by 12 to determine your monthly payment. Unlike IBR, RAP requires a minimum monthly payment of $10, even for borrowers with very low incomes.

Example 1
Single borrower with no federal loans prior to 2014*

• Adjusted Gross Income: $40,000
  • IBR Monthly Payment: $134
  • RAP Monthly Payment: $100
• Adjusted Gross Income: $70,000
  • IBR Monthly Payment: $384
  • RAP Monthly Payment: $350
• Adjusted Gross Income: $120,000
  • IBR Monthly Payment: $801
  • RAP Monthly Payment: $1,000

* Using the 2026 federal poverty guidelines for the IBR calculations throughout all examples. These calculations may be further impacted by community property laws in your state, so always check with your loan servicer for the most accurate estimates.

There is an important difference when it comes to monthly payment amounts: IBR has a payment cap. Your payment under IBR will never be higher than what you would pay on the 10-year Standard Repayment Plan.

Example 2 
Single borrower with no federal loans prior to 2014 
Current student loan balance of $50,000 at an average 8% interest rate

• Adjusted Gross Income: $120,000
  • 10-year Standard Monthly Repayment: $607
  • IBR Monthly Payment: $607*
  • RAP Monthly Payment: $1,000

*As you can see from Example 1, under IBR the payment calculation would have been $801 but the payment under the 10-year Standard Repayment Plan is lower.

The time-based forgiveness period is different.

Another key difference between the two plans is the path to forgiveness. IBR offers forgiveness after 20 years of qualifying payments (25 years for borrowers with older loans), while RAP provides forgiveness after 30 years. Under current law, forgiveness under either plan is considered a taxable event.

Interest treatment is different.

Another important difference is how interest is treated. With IBR, any interest that accrues and is not covered by your monthly payment is added to your total loan balance, so even if you’re making payments, your overall student loan balance continues to grow. With RAP, unpaid interest each month is subsidized, meaning it is not charged to the borrower.

In addition, if your monthly payment does not bring down your student loan balance by at least $50, the government will apply up to $50 towards your principal each month.

Example 3 
Single borrower with no federal loans prior to 2014 
Current student loan balance of $160,000 at an average 8% interest rate 
AGI of $120,000

• IBR
  • Monthly Payment: $801
  • Monthly Interest Assessed: $1,067
  • Unpaid Interest Accrued After Payment: $266
  • Total Student Loan Balance: $160,266
• RAP
  • Monthly Payment: $1,000
  • Monthly Interest Assessed: $1,067
  • Unpaid Interest Accrued After Payment: $0*
  • Total Student Loan Balance: $159,950

*Under RAP, the unpaid $67 in interest is not charged to the borrower. Further, if your RAP payment reduces the principal by less than $50, the program applies a matching subsidy to ensure your balance drops by exactly $50.

Consequences of switching repayment plans are different.

You can switch plans anytime, but there are considerations to doing so.

Anytime you leave IBR, any unpaid interest will capitalize and be added to your principal balance, which can increase the total cost of repayment over time. In contrast, leaving RAP does not trigger interest capitalization.

However, time spent in RAP does not count towards IBR time-based forgiveness of 20 or 25 years. Presumably, this is to prevent someone from being in RAP for 19 years and switching to IBR to have their loans forgiven in year 20. It's important to note that switching plans does not affect progress toward Public Service Loan Forgiveness (PSLF); it only affects eligibility for IBR's time-based forgiveness.

One additional hurdle to note: To leave IBR, you must complete a bridge month by either making one payment under the Standard Repayment Plan or requesting a one-month transitional forbearance.

Family size is treated differently based on tax filing status.

Tax filing status and household size can affect your payment differently under IBR and RAP.

If you file a joint tax return, both plans consider your combined household income and family size. If you file separately, however, the plans diverge: IBR still includes your spouse in the household size calculation, while RAP excludes your spouse entirely. In addition, to receive RAP's dependent-related payment reduction, the borrower must claim the dependent on their tax return.

Household size also affects payments differently under each plan. Under IBR, a larger household size increases the amount of income that is protected from the payment calculation, which can reduce discretionary income and lower monthly payments. Under RAP, each qualifying dependent reduces the monthly payment by $50, although the payment cannot be reduced below the $10 monthly minimum.

Example 4 
Married borrower with no federal loans prior to 2014 
Student loan balance of $160,000 at an average 8% interest rate 
Taxes filed separately, claiming two dependents

• Adjusted Gross Income: $40,000
  • IBR Monthly Payment: $0
  • RAP Monthly Payment: $10
• Adjusted Gross Income: $70,000
  • IBR Monthly Payment: $171
  • RAP Monthly Payment: $250
• Adjusted Gross Income: $120,000
  • IBR Monthly Payment: $588
  • RAP Monthly Payment: $900

Final Considerations

With all these intricacies, it’s important to balance short-term and long-term goals.

If your long-term goal is the lowest monthly payment over time, whether pursuing Public Service Loan Forgiveness or time-based forgiveness, IBR may be best. If your short-term goal is having a low payment, but your long-term goal is to pay off your loans, RAP may be best as it allows for lower payments while helping to avoid a ballooning student loan balance.

If you'd like help evaluating your options, schedule a coaching call with an AccessLex Accredited Financial Counselor^® or run personalized repayment scenarios using the AccessLex Student Loan Calculator.

Weighing IBR, RAP, or Standard Repayment as the SAVE forbearance ends? Join our live Q&A with AccessLex Accredited Financial Counselors on August 6 and get the clarity you need to choose your next step with confidence.