Under the Repayment Assistance Plan (RAP), your required monthly payment amount is based on your income and the number of your dependents, instead of being based on your loan debt, interest rate, and repayment period (as it would be under the Tiered Standard Plan). Changes in your income or number of dependents will result in changes to your monthly payment amount. If you choose RAP, you must

• authorize us to obtain tax information from the Internal Revenue Service (IRS) showing your income and number of dependents or
• provide other documentation of your income (and your spouse’s income, if applicable) and number of dependents.

We use this information to calculate your monthly payment amount under RAP and to recalculate your monthly payment amount each year based on your income and number of dependents at that time.

Borrower and Loan Eligibility
If you have a single loan—including a Direct Consolidation Loan—that is first disbursed on or after July 1, 2026, then you’ll have access to only RAP and the Tiered Standard Plan as repayment options for all of your Direct Loans, including any type of Direct Loan first disbursed before July 1, 2026.

Most Direct Loan borrowers will have access to RAP for their Direct Loans, with the exception of the following loan types that are ineligible for repayment under RAP:

 

• Direct PLUS Loans for parents
• Direct Consolidation Loans that paid off a parent PLUS loan
• Direct Consolidation Loans that paid off a consolidation loan that paid off a parent PLUS loan (sometimes referred to as a double consolidation)

Typically, all of a borrower’s Direct Loans must be paid under the same plan. However, if you have one of the ineligible loan types listed above and any of the following Direct Loan types listed below, then the loans listed above will be permitted to be repaid separately under the Tiered Standard Plan. The following loan types may be repaid under either the Tiered Standard Plan or RAP:

 

• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS Loans for graduate or professional students
• Direct Consolidation Loans that don’t include a Direct PLUS loan for parents

Other loan programs, like the Federal Family Education Loan (FFEL) Program, the Federal Perkins Loan Program, and the Health Education Loan (HEAL) Program, are not permitted to be repaid under RAP or the Tiered Standard Plan. If you have a mix of loans in a program that’s ineligible for the new plans and you have Direct Loans that are eligible for the new plans, then you may repay your Direct Loan(s) under either of the two new plans according to loan type eligibility and the non-Direct Loan(s) separately under one of the existing plans for which it is eligible.

Monthly Payment Amount
Your required monthly payment amount under RAP is a percentage of your annual income, most commonly your adjusted gross income (AGI), divided by 12 to determine the monthly payment amount. Your monthly payment amount is then reduced by $50 for each dependent you claim on your federal tax return; however, your monthly payment may not be less than $10 a month. The percentage of your annual income varies depending on your AGI (see the “Repayment Assistant Plan base payment percentage” table).

If you’re married and file a joint federal income tax return, your monthly payment is generally based on the combined income of you and your spouse. However, your monthly payment will be reduced if your spouse also has federal student loans.

If you’re married and file a separate tax return from your spouse, only your income and the dependents you claim on your tax return will be used to determine your monthly payment amount.

Repayment Assistance Plan base payment percentage

*The base payment is a percentage of your AGI that is used to determine what would be paid over 12 months without accounting for any reductions for your dependents. It is not the actual monthly payment amount that you’re required to pay each month. The "Monthly Payment Amount Based on Your AGI Range” table includes the range of monthly payment amounts derived from the base payment percentages.

Monthly Payment Amount Based on Your AGI Range*

*This chart assumes you have no dependents. You can subtract $50 from the monthly payment amount for each dependent you claim on your federal income tax return, but your monthly payment amount can never be less than $10.

Payment Processing
Unless you’re required to pay late charges or other costs, when you make a payment on your loan, we apply the payment first to any amount of outstanding interest as of the date the payment was received. If the payment amount is more than the amount of outstanding interest, we apply the remainder of your payment to your principal.

If you’re required to pay late charges or other costs, we apply your payment differently depending on your repayment plan. If you’re repaying under RAP, we apply your payment first to outstanding interest, then to late charges and other costs, and then to your principal.

If you’re repaying under the Tiered Standard Plan, we apply your payment first to late charges and other costs, then to outstanding interest, and then to your principal.

Interest Subsidy
Borrowers whose full, on-time monthly payments are less than the interest accrued between the previous due date and the current payment date will have their unpaid interest for that month subsidized.

Only the interest that accumulates from due date to due date after entering RAP will be subsidized. Interest that accrues during any periods of nonrepayment or that accrued before entering RAP won’t be subsidized.

Assuming all payments are made on time and in full and that you don’t take any breaks (like a deferment or forbearance) after entering RAP, then your total outstanding balance will never go higher than your total outstanding balance when you entered RAP.

Under RAP, the interest subsidy is applicable to both subsidized and unsubsidized loans and is available for the entire time a borrower is enrolled in the plan. Unlike the Income-Based Repayment (IBR) and Pay As You Earn (PAYE) plans, this subsidy is not limited to the first three years of payments.

Starting in spring 2027, payments for the IBR Plan must be made on time and in full in order for you to receive the interest subsidy.

Additional Considerations

• The interest subsidy is applicable only for Direct Loans being repaid under RAP and can be applied only to months for which (1) a borrower receives a bill with a monthly payment amount that’s derived using the RAP formula when (2) the borrower (or someone on the borrower’s behalf) makes a full and on-time payment to satisfy that same bill.
• If a borrower’s monthly payment amount isn’t enough to cover the interest that accrued since the previous due date and the borrower (or someone on the borrower’s behalf) chooses to pay more than the monthly payment amount, then any amount paid above the monthly payment amount will be applied first to accrued interest and then to the principal. This means that the additional amount paid may reduce or eliminate any interest subsidy that the borrower would’ve been entitled to if they hadn’t paid more than the amount due.
• In the near future, we’ll provide more information about how the interest subsidy will work when a borrower pays more than their amount due.

Matching Principal Payment
When a borrower makes a full, on-time payment and the principal isn’t reduced by at least $50, then we make a matching principal payment to ensure that the borrower’s principal is always reduced by at least the total amount paid (but not to exceed $50).

A month’s eligibility to receive the matching principal payment is based on whether or not that month’s payment is made on time and in full. However, the determination for the amount of the matching principal payment to be applied to the loan is based on the actual amount paid by the borrower (or on the borrower’s behalf) for that month.

In order to determine the amount of the matching principal payment that will be applied, we use the following steps:

1. Determine that the monthly payment was made on time (no later than its due date)
2. Determine that the amount of money that was actually paid in that month is not less than the total amount due for the month
3. Determine whether (after applying the payment) there was an outstanding principal reduction of less than $50
4. Determine which is less: $50 or the total amount paid* in the month following the previous due date
5. Subtract the total amount applied to the outstanding principal (in Step 3) in that month

*Amount does not include payments that were used to resolve delinquency.

Additional Considerations

• If a borrower makes a payment (or a payment is made on the borrower’s behalf) in a month in which the borrower hasn’t been billed due to being enrolled in RAP and/or because the borrower’s loan isn’t in a repayment status, then that month won’t be eligible for a matching principal payment.
• If a borrower’s monthly payment amount would result in their principal being reduced by less than $50, but the borrower (or someone on the borrower’s behalf) pays more than the amount due for that month, then the expected matching principal payment might be reduced or eliminated for that month, since additional amounts paid can affect the calculation.
• In the near future, we’ll provide more information about how matching principal payments will work when a borrower pays more than their amount due.

Loan Discharge
Under RAP, any remaining loan balance may be discharged after you’ve satisfied 360 qualifying monthly payments over a period of at least 30 years.

Qualifying payments for RAP include the following:

• Any progress toward discharge earned before entering RAP, which could include payments made under income-driven repayment (IDR) plans.*
• Generally, payments made after enrolling in RAP or the Tiered Standard Plan that are made on time, meaning that the payment is made on or before the date that the payment is due (commonly referred to as a monthly due date)

*If you change from one IDR plan to another, your repayment period might also change. For example, if you’re enrolled in the PAYE Plan, which has a 20-year repayment period, and you subsequently enroll in RAP, which has a 30-year repayment period, then your payments under the PAYE Plan will count toward discharge under RAP, but your repayment period would increase from 20 to 30 years.

Additionally, the on-time payment must be made in full, meaning that the total amount due (sometimes referred to as the monthly payment amount or the amount billed) is made on or before its monthly due date.

If you’re eligible for the IBR, ICR or PAYE plans and you enroll in RAP, you’re permitted to reenroll in the IBR, ICR or PAYE plan. However, payments made under RAP won’t count toward discharge under the IBR, ICR or PAYE plans, with the following exception:

• If the monthly payment amount while under RAP is greater than or equal to the 10-year Standard Repayment Plan monthly payment amount, then the month can count toward the IBR, ICR, and PAYE plans.

Public Service Loan Forgiveness (PSLF)
Generally, payments made under the RAP are eligible for Public Service Loan Forgiveness (PSLF) as long as the payment is made on time and in full.

In the near future, we’ll provide more information about the how RAP and the PSLF Program will interact.

Federal and State Income Tax
Except for PSLF, you might have to pay federal and/or state income taxes on any loan amount that is discharged. We’ll notify you when your loan is identified as eligible for discharge, and you’ll be provided 21 days to opt out of the discharge.