Repayment Assistance Plan payment, interest waiver and $50 principal match
Updated October 2026
Take the borrower with $55,000 of AGI, no dependents, $35,000 of Direct Loans at 6.5%:
1. Tier: $55,000 is in the $50,001-$60,000 band, so the rate is 5%.
2. Annual amount: $55,000 × 5% = $2,750, applied to the whole AGI, not just the part above a line.
3. Monthly: $2,750 ÷ 12 = $229.17. No dependents, so nothing is subtracted, and it is above the $10 minimum.
4. First month: interest is $35,000 × 6.5% ÷ 12 = $189.58, leaving $39.58 for principal. That is under $50, so the Department adds $10.42 and the balance drops by $50.00.
5. Long run: with income rising 3% a year, the payment is reset each year and the loan is paid off after 162 payments (13 years 6 months), about $55,550 paid in total and $107 of federal match.
AGI is line 11 of your most recent Form 1040, the figure RAP uses when you certify income (you can also let the Department pull it from the IRS with consent). Filing status matters: on a joint return RAP uses combined AGI, and if your spouse also has federal loans the household payment is split by each person’s share of the combined balance. Dependents are the ones claimed on that return. The balance and weighted rate are on your loan details at StudentAid.gov; the weighted rate is each loan’s rate weighted by its balance. Income growth only affects the long-term projection.
The results give the first payment with how it was built, the first month’s interest and match, the AGI that would move you to the next tier, and either the payoff date or the amount forgiven after 360 payments.
Because each band’s rate applies to all income, the bracket edges are steep: $40,000 of AGI costs $100 a month, but $40,001 costs $133.34.
| AGI | Rate | Monthly payment, no dependents | With 2 dependents |
|---|---|---|---|
| $15,000 | 1% | $12.50 | $10.00 |
| $25,000 | 2% | $41.67 | $10.00 |
| $35,000 | 3% | $87.50 | $10.00 |
| $45,000 | 4% | $150.00 | $50.00 |
| $55,000 | 5% | $229.17 | $129.17 |
| $65,000 | 6% | $325.00 | $225.00 |
| $75,000 | 7% | $437.50 | $337.50 |
| $85,000 | 8% | $566.67 | $466.67 |
| $95,000 | 9% | $712.50 | $612.50 |
| $120,000 | 10% | $1,000.00 | $900.00 |
Projections assume income grows 3% a year, payments are made in full and on time, and the rate is fixed. Totals are what the borrower pays; the match and waived interest come from the Department.
| Borrower | Profile | First payment | Outcome | Total paid | Principal match | Interest waived |
|---|---|---|---|---|---|---|
| Single, low income | $25,000 AGI, 0 dep., $30,000 at 6.0% | $41.67 | Forgiven after 30 yrs: $1,568 | $43,908 | $9,652 | $11,317 |
| Parent of two | $35,000 AGI, 2 dep., $40,000 at 6.5% | $10.00 | Forgiven after 30 yrs: $8,377 | $55,046 | $8,733 | $30,438 |
| Single, mid income | $55,000 AGI, 0 dep., $35,000 at 6.5% | $229.17 | Paid off in 13 yr 6 mo | $55,550 | $107 | $0 |
| Parent of one, higher balance | $80,000 AGI, 1 dep., $60,000 at 7.0% | $416.67 | Paid off in 11 yr 10 mo | $92,994 | $0 | $0 |
| Graduate degree, high balance | $120,000 AGI, 0 dep., $120,000 at 7.5% | $1,000.00 | Paid off in 13 yr 8 mo | $198,583 | $0 | $0 |
The low-income borrowers never cover their interest, so the waiver keeps their balances from growing and the match shrinks them slowly; both end with a forgiven balance. Higher earners pay their loans off in 12 to 14 years, and for them RAP works much like a standard plan.
If a full, on-time payment does not cover the month’s interest, the unpaid interest is waived instead of added to the balance. If the payment reduces principal by less than $50, the Department adds a matching amount equal to the smaller of $50 minus the principal you paid, or your whole payment, so a $10 payment that goes entirely to interest still lowers principal by $10. Late or partial payments get neither benefit.
RAP opened July 1, 2026. Direct Subsidized, Unsubsidized, Grad PLUS and Consolidation loans are eligible; Parent PLUS loans and consolidation loans that repaid a Parent PLUS loan are not. Loans first disbursed on or after July 1, 2026 can be repaid only under RAP or the new Tiered Standard plan (fixed payments over 10 to 25 years depending on the amount borrowed). Borrowers in the older plans being phased out have until July 1, 2028 to choose RAP, Tiered Standard or IBR. Any balance left after 360 qualifying payments is discharged, and RAP payments count toward Public Service Loan Forgiveness. Since 2026, balances forgiven under income-driven plans are generally taxable federal income again, because the temporary exclusion expired after 2025.
IBR for borrowers since July 2014 takes 10% of AGI above 150% of the poverty guideline for your family size. Using the 2026 HHS guidelines for the 48 states and family size = borrower plus dependents:
| Borrower (from above) | RAP monthly | IBR monthly (10%) | Lower payment |
|---|---|---|---|
| Single, low income | $41.67 | $8.83 | IBR |
| Parent of two | $10.00 | $0.00 | IBR |
| Single, mid income | $229.17 | $258.83 | RAP |
| Parent of one, higher balance | $416.67 | $396.17 | IBR |
| Graduate degree, high balance | $1,000.00 | $800.50 | IBR |
IBR is lower at the bottom, where the poverty-line allowance shelters most income, and at higher incomes, where RAP’s rate reaches 7% to 10% of all AGI; RAP is cheaper in the middle and adds the interest waiver and match. A lower payment is not the whole story: IBR forgives after 20 or 25 years rather than 30, and IBR payments are capped at the 10-year standard payment, which this comparison does not apply.
Using gross pay instead of AGI. Pre-tax 401(k), HSA and health premiums are not in AGI, so AGI is usually lower than salary. Missing a tier edge. A small raise that crosses a $10,000 boundary lifts the rate on all income; a pre-tax retirement contribution can pull AGI back under the line. Assuming joint filing is free. Combined AGI can move a couple into a higher tier; filing separately uses only your own AGI but can cost tax credits. Counting Parent PLUS loans. They are not eligible. Paying late. The interest waiver and match apply only to on-time, full payments.
It does not track PSLF’s 120-payment count, estimate tax on a forgiven balance, compare the Tiered Standard plan, apply IBR’s payment cap, or handle periods of forbearance, deferment or default. It assumes one weighted rate and annual recertification at a steady growth rate. Private student loans are not covered. For a binding figure use the Loan Simulator at StudentAid.gov or your servicer, and get tax advice before a large forgiven balance is discharged.