Payments, forgiveness, and who is eligible

Federal student loans make up a large portion of outstanding education debt, and part of their appeal is that they have historically offered borrowers more repayment options and protections than other loans. In fact, more than half of all student loan borrowers — about 55% — have signed up for another repayment plan.

But the US Department of Education is eliminating many existing payment options, and starting July 1, 2026, the new Reimbursement Assistance Program (RAP) will be the primary cash-based payment option going forward. The new system changes how loan servicers calculate borrowers’ monthly payments and extends the repayment period for many borrowers.

Understanding how the new RAP program works, who qualifies, and how to enroll will help you manage your student loan debt.

Who is eligible for RAP?

RAP will be available to most federal student loan lenders beginning July 1, 2026. Eligible borrowers include those with:

The biggest exception is borrowers with Parent PLUS loans. Parent PLUS Lenders Borrowers who take out any federal loans on or after July 1, 2026, are not eligible for RAP. Their only payment option is the new standard tiered payment plan.

Parent PLUS borrowers who borrow money before July 1, 2026, can get RAP and other repayment plans, but only if they consolidate their loan with a Direct Consolidation Loan before July 1.

The following types of loans are not eligible for RAP in any case:

IRS approval requirements

Eligible federal loan borrowers can only qualify for a RAP if they authorize the US Department of Education to obtain tax information from the IRS showing their income and number of dependents. The Department of Education will use that information to calculate your payments and will adjust them each year based on your tax return.

Related: What student loan repayment will look like after Trump’s budget bill

How RAP calculates your monthly payment

RAP bases your monthly payment on a percentage of your adjusted gross income (AGI), divided by 12. Your payment is reduced by $50 for each dependent you claim on your federal tax return. But all borrowers, regardless of their income or number of dependents, will pay at least $10 a month.

Here’s how the payments work, based on your AGI. This chart does not include any dependents you are looking for.

Source: Federal Student Aid

For example, say your household income is $55,000, and you have one child. Under the RAP, you’ll pay 5% of your $55,000 income, or $2,750 a year. Divide that number by 12, and your total monthly payment will be $229.17.

But because you have a child, your payment amount is reduced by $50, giving you a monthly payment of $179.17.

How does RAP handle interest?

If you make your required payments on time and the payment amount is less than the interest accrued in the previous month, RAP will waive any unpaid interest. Assuming you make all of your payments on time and never give yourself time to foreclose or forbearance, your total loan balance will not exceed the balance you had when you first entered the RAP.

How does marital status affect RAP payments?

If you’re married and filing a joint tax return, your RAP payments are based on your joint income. However, your payments are usually lower if your spouse has student loans.

If you are married and filing your taxes separately, only your income and those of your dependents are considered when calculating your payment amount.

Student loan forgiveness under RAP

There are two main ways to get loan forgiveness through RAP:

Payment term forgiveness

If you still have a balance on the loan after paying under the RAP for 30 years, the remaining balance is forgiven.

Forgiveness using the RAP pay period is taxable as income.

Government Servants Loan Forgiveness

In late April 2026, the US Department of Education announced a final rule amending provisions of the Working Families Tax Act and specified that RAP borrowers would be eligible for loan forgiveness under the Public Service Loan Forgiveness (PSLF) program.

The final rule confirmed that timely payments made under the RAP will count toward the 120 required payments required for the PSLF. Forgiveness under PSLF is not taxed as income.

Related: Will I be taxed on student loan forgiveness?

Advantages and disadvantages of RAP

Benefits

• Interest subsidy: RAP offers an interest subsidy to cover any unpaid interest on your outstanding balance, resulting in cost savings in the long run. While previous government repayment programs offered something similar, only certain loans were eligible for a limited time.

• Simple structure: Rather than having to decide between several income-driven plans, replacing existing plans with a RAP makes payments easier.

• Considers the spouse’s debt: For married couples filing jointly, RAP considers your spouse’s student loan debt when calculating your payments.

Evil

• Long payment period: Earlier, you were eligible for loan forgiveness under the income repayment scheme (IDR) for 20 or 25 years. With RAP, you are only eligible if you still have a balance after 30 years of repayments.

• Fees may be higher: Under the new formula, you may find that your payment is much higher than it was under previous programs such as Save on Value Education (SAVE).

• Requires a minimum payment: In previous income-based programs, low-income borrowers could get $0 down payments. But RAP requires all borrowers, regardless of income, to pay at least $10 a month.

How to register for RAP

RAP registration is not yet available. It is expected to be available on StudentAid.gov by July 1, 2026.

In the meantime, you can use the federal student loan repayment calculator to view other repayment options and see your repayment estimates under different repayment plans.

Your repayment options – and whether you qualify for a new RAP – depend on your loan type and when you took out your loan. The chart below shows what payment options you have for each type of loan and payment date:

Repayment Plan Options Based on State Student Loan Discharge Dates

*The US Department of Education is ending the ICR and PAYE payment systems on July 1, 2028.
†To qualify for these programs, borrowers must consolidate the loan by July 1, 2026.