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Income-Based Repayment (IBR) and the new Repayment Assistance Plan (RAP) each base a borrower’s monthly federal student loan payments on their income and family size. Both plans also offer possible paths to student loan forgiveness. The main differences between IBR vs. RAP are the way they calculate payments and handle unpaid interest.
The right plan for you generally depends on a number of factors, including your income, family size, loan type, and timeline to forgiveness. Read on to learn more about RAP vs. IBR to help decide which plan may be better suited to your financial situation and goals.
Key Points
• IBR sets payments at 10% of discretionary income for loans borrowed after July 1, 2014, and 15% for loans borrowed before that date, with remaining balances forgiven after 20 or 25 years.
• RAP calculates payments as 1% to 10% of adjusted gross income on a sliding scale, with a 30-year repayment term and forgiveness of any remaining balance afterward.
• For loans issued on or after July 1, 2026, RAP is the only income-driven repayment plan available, while existing borrowers can choose between RAP and IBR.
• RAP waives unpaid interest monthly and reduces principal by $50 per month for on-time payments, while IBR provides a government interest subsidy for unpaid interest for the first three consecutive years for those with subsidized loans.
• IBR allows payments as low as $0 for some borrowers, while RAP sets a $10 minimum payment and reduces payments by $50 for each dependent reported on tax returns.
What Is IBR and What Is RAP?
IBR and RAP are both income-driven repayment (IDR) plans that determine borrowers’ monthly federal student loan payments based on their income and family size. Here are the specific details about each plan and how they differ.
How IBR Works
The IBR plan sets payments at 10% of a borrower’s discretionary income for federal loans borrowed after July 1, 2014, and at 15% for loans borrowed before that date. Newer borrowers have a repayment term of 20 years, while those whose loans are older have a 25-year term. The IBR plan forgives any remaining balance at the end of the loan term.
While many of the other IDR plans will close to new enrollments as of July 1, 2027, IBR will remain open and available to borrowers whose loans were issued before July 1, 2026. Borrowers who are on the Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans can switch to the IBR plan by July 1, 2028.
Under IBR, your income and family size needs to be recertified every year. This IBR recertification guide can walk you through the process.
How RAP Works
The new Repayment Assistance Plan (RAP) was created under the 2025 One Big Beautiful Bill Act (OBBBA). For student loan borrowers whose loans were issued on or after July 1, 2026, RAP is the only IDR plan they can access. Existing borrowers (with loans issued before July 1, 2026) can choose RAP or IBR.
While IBR bases payments on discretionary income, RAP uses your adjusted gross income (AGI). Depending on your income, your monthly payment amount will be 1% to 10% of your AGI. The loan term on RAP is up to 30 years. If you still owe money after 30 years, the remaining balance will be forgiven.
On RAP, your unpaid interest will be waived each month and your loan’s principal balance will be reduced by $50 per month as long as you make your loan payments on time.
Borrowers on RAP need to recertify their income and family size every year.
Recommended: IBR vs. PAYE
IBR vs RAP: Side-by-Side Comparison
The chart below gives you a look at IBR vs. RAP so that you can easily compare the two plans.
| IBR | RAP | |
|---|---|---|
| Eligible loans | Federal Direct Loans and Federal Family Education Loans (FFEL) disbursed before July 1, 2026 (except those made to parents) | Federal Direct Loans, including those disbursed before or after July 1, 2026 (except those made to parents) |
| Monthly Payment Calculation | 10% of discretionary income for loans issued after July 1, 2014; 15% of discretionary income for loans before July 1, 2014 | 1% to 10% of adjusted gross income (AGI), minus $50 for each dependent |
| Minimum Monthly Payment | As low as $0 | As low as $10 |
| Repayment Term | 20 years for loans disbursed after July 1, 2014; 25 years for loans issued before July 1, 2014 | 30 years |
| Forgiveness | After 20 or 25 years of payments, remaining loan balance is forgiven | After 30 years of payments, remaining loan balance is forgiven |
How Monthly Payments Are Calculated
The calculations for RAP vs. IBR are different. This is how monthly federal student loan payments are determined for each plan.
• IBR: Monthly payments are based on your discretionary income and family size. Some borrowers may pay as little as $0 per month.
• RAP: Monthly payments are based on your AGI on a sliding scale from 1% to 10%, depending on your income. They will be reduced by $50 for each dependent reported on your federal tax return. Your total monthly payment cannot be less than $10.
Recommended: What Percentage of Your Income Should Go to Student Loans?
Forgiveness Timelines: IBR vs RAP
Student loan forgiveness is possible on both RAP and IBR. Forgiveness means that once you’ve made a qualifying number of payments over a certain period of time, any outstanding balance on your loans will be forgiven.
The difference between IBR and RAP is the length of their forgiveness timelines.
• IBR: On IBR, forgiveness depends on the date your loans were issued. If you borrowed after July 1, 2014, any remaining balance on your loans will be forgiven after making payments for 20 years. If you borrowed before July 1, 2014, the forgiveness timeline is 25 years.
• RAP: Under RAP, any outstanding balance is forgiven after making 30 years of payments.
Interest Subsidies and Balance Growth
IBR offers an interest subsidy for Direct and FFEL subsidized loans. This means that if your monthly payment amount isn’t enough to cover the interest that accrues on a monthly basis, the federal government will subsidize 100% of the remaining interest due for the first three consecutive years.
RAP also offers an interest subsidy. If your monthly RAP payment is less than your monthly interest payment, the unpaid interest will be subsidized by the government throughout the 30-year term. This may make your loan less expensive over the repayment period because interest won’t be added to your loan balance as long as you make your loan payments on time.
Which Plan Is Better for You?
Because of all the student loan repayment changes in recent years, it’s important to understand the specifics of the plans available to you so you can choose wisely.
When deciding between RAP vs. IBR, selecting a plan typically depends on such factors as how close you are to forgiveness, your income and family size, and whether you’re more interested in keeping your monthly payment low or preventing unpaid interest from increasing your balance. Here’s a look at which plan may be a better fit depending on a few key objectives.
If your main goal is:
The lowest payment possible: RAP may provide the lowest monthly payments for borrowers with lower incomes. Just keep in mind that the extended timeline before you can reach forgiveness may result in paying more on your loans overall.
For those with higher incomes, as well as those who have family members they partially support but don’t claim as dependents on their taxes (such as parents that live with them), IBR may offer a lower payment since IBR payment calculations count those family members and RAP doesn’t.
A shorter timeline to forgiveness: IBR offers forgiveness after 20 or 25 years. The forgiveness timeline on RAP is longer — 30 years. You might also consider IBR if you are already close to forgiveness, since it will typically get you there faster.
Help covering your interest: RAP subsidizes your monthly interest if your monthly payments aren’t enough to cover it. This keeps unpaid interest from building up and being added to your loan balance.
Reducing your student loan’s principal balance: RAP will help pay down your principal if your payments don’t reduce your balance by $50 a month. If you have many years left to repay your loan, this may be helpful.
In addition to IDR plans, some borrowers looking to lower their student loan payments may also want to explore other repayment methods, including student loan refinancing. When you refinance student loans, you replace your existing loans with a new loan from a private lender, ideally with a lower interest rate and more favorable terms. However, it’s important to know that if you refinance federal loans, you lose access to federal benefits, including income-driven repayment and forgiveness.
The Takeaway
Income-driven repayment plans like IBR and RAP that are based on income and family size may help keep some borrowers’ payments lower. Because of the differences between the two plans, it’s wise to consider them carefully and think about how they fit into an individual’s financial picture and goals. Borrowers may also want to explore other repayment methods such as student loan refinancing as a way to potentially make monthly payments more manageable.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
What is the difference between IBR and RAP for student loans?
The main difference between RAP vs IBR is how your monthly student loan payment is calculated. IBR bases payments on 10% or 15% of your discretionary income (depending on when you borrowed your loans). After 20 or 25 years of payments, your remaining balance is forgiven. On RAP, your monthly payment amount is 1% to 10% of your adjusted gross income (AGI). After 30 years of payments, the remaining balance will be forgiven. On RAP, the government will subsidize any unpaid interest each month.
Does switching to RAP reset my forgiveness progress?
No, switching to RAP does not reset the months or years you’ve already built toward forgiveness. All qualifying months earned under IDR programs count toward forgiveness on RAP.
Is IBR or RAP better if I’m pursuing PSLF?
IBR and RAP are both qualifying repayment plans for those pursuing PSLF (Public Service Loan Forgiveness). That means after you make 120 qualifying monthly payments under IBR or RAP, your student loans will be forgiven. Choosing the plan that gives you the lower monthly payment often maximizes the amount you can have forgiven under PSLF. For many borrowers with lower incomes, RAP may offer a lower payment, while for those with higher incomes, IBR might provide a lower payment. But it’s wise to compare your specific income, family size, and tax situation under both plans before making a decision.
How does the IBR vs RAP calculator help me decide?
An IBR vs RAP calculator uses information such as your income, family size, loan information, and tax filing situation to help give you a sense of what your monthly payments might be under RAP and IBR. For example, a calculator will ask you questions about the type of loans you have, the loan amounts, and your interest rates, as well as your income, family size, and the number dependents claimed on your tax return, among other factors. Once you input the required information, the calculator will give you an estimated comparison of what you might pay on both plans.
What happens to married borrowers under RAP?
Under RAP, married borrowers who file a joint tax return will have a monthly student loan payment that is calculated using their combined incomes. (Monthly payments may be reduced if your spouse also has federal student loans.) If you are married and file separately from your spouse, only your income and the dependents you claim on your tax return will determine your monthly payment amount on RAP. However, filing separately may eliminate certain tax credits or deductions. You may want to consult a tax professional for more information.
photo credit: iStock/miloradkravic
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