· 9 min read · worthmydegree.com
The 2026 repayment plans, and what they replaced
Borrow a federal student loan on or after July 1, 2026 and the list of repayment plans is two items long. One is income-driven and is called the Repayment Assistance Plan, or RAP. The other is a fixed payment called the Tiered Standard Plan. That is the whole menu for a new loan.
Most coverage of the change stops at the shorter list. The list is the least interesting part. Underneath it the arithmetic that decides an income-driven payment was rewritten, and the rewrite moves money in a pattern that is not obvious from either plan's description: the new plan charges more at the bottom of the income range, less through the middle, and more again at the top.
Dollar amounts here are rounded for readability. The exact figures are the ones set in law or published by the Department: the $10 minimum monthly payment, the $50 per dependent reduction, the $20,000 and $65,000 Parent PLUS caps, and the dates. Every other number comes from the same model that runs the calculator, at the 6.5 percent federal rate the tool uses.
The formula, which is the actual change
An income-driven payment used to be a percentage of discretionary income. Discretionary income is what is left after a living allowance is subtracted from what you earn, so the first several thousand dollars of income were protected before any percentage applied. IBR charges 10 percent of that remainder for loans first disbursed on or after July 1, 2014, and 15 percent for a first loan before it.
RAP does not subtract a living allowance. It charges a percentage of adjusted gross income, or AGI, and it charges on the whole of it. The percentage climbs by one point for every $10,000 of income. One percent applies up to $20,000, two percent up to $30,000, and so on to a ceiling of ten percent above $100,000. Below $10,000 of income the schedule stops descending and a flat $10 applies.
Charging the percentage on AGI rather than on discretionary income raises the payment for people who earn a lot, because ten percent of all income is a larger number than ten percent of income above an allowance. In between, the lower band percentages win, and RAP is genuinely cheaper.
Here is the same borrower at seven incomes, comparing what each formula asks for in the first month:
| Income | RAP | IBR at 10 percent |
|---|---|---|
| $20,000 | $17 | $0 |
| $25,000 | $42 | $25 |
| $30,000 | $50 | $67 |
| $45,000 | $150 | $192 |
| $60,000 | $250 | $317 |
| $75,000 | $438 | $442 |
| $100,000 | $750 | $650 |
The crossings sit at roughly $30,000 and roughly $80,000. Neither is a clean line: around each one the answer flips back and forth across a few thousand dollars, because RAP steps at every $10,000 band while IBR climbs smoothly, so a raise of a few hundred dollars can move a RAP payment and leave an IBR payment almost where it was. Between the two crossings the new plan asks for less each month. Outside them it asks for more.
One consequence deserves saying plainly rather than leaving in the table. Under IBR an income at or below the living allowance produces a payment of zero. Under RAP there is no zero. The floor is $10, and the floor is also what bounds the dependent reduction, so a borrower with children and very little income lands on $10 rather than on nothing.
A smaller payment is not a smaller debt
Take a borrower who left with $27,000, which is the aggregate federal limit for a dependent undergraduate, on an income of $45,000. Five plans, one balance, one person:
| Plan | First payment | Years | Handed over |
|---|---|---|---|
| Standard, 10-year | $307 | 10 | $36,800 |
| IBR-style income-driven | $192 | 13 | $42,000 |
| 2026 Tiered Standard, 15-year | $235 | 15 | $42,300 |
| 2026 RAP | $150 | 15 | $43,300 |
| Extended Standard, 25-year | $182 | 25 | $54,700 |
RAP has the smallest payment in the table and the largest total of the four plans above the last row. The gap against the ten-year plan is about $6,500, which is the price of the lower payment rather than a penalty for choosing badly. Nothing is forgiven on any of these rows, because a $27,000 balance on a $45,000 income clears well inside every forgiveness clock.
The comparison is the same one the older plans always invited, and the answer has not changed: read the payment column and the total column together, because they run in opposite directions.
Interest behaves differently now
The older income-driven plans had a failure mode that borrowers found bewildering. When the payment was smaller than the month's interest, the shortfall was added to the balance, so someone paying every month on time watched what they owed climb. RAP does not do that. Interest a payment fails to cover is waived rather than capitalized, and the government adds a match of up to $50 a month against principal.
The effect is easiest to see at low income, where the waiver actually bites. On that same $27,000 balance at an income of $30,000, RAP waives roughly $5,600 of interest across the life of the loan and the balance is repaid in about 25 years with nothing forgiven. The IBR row on the same numbers reaches its 20-year mark still owing, and roughly $25,400 is written off.
Two plans, two ways of arriving at a finish line, and the totals land closer together than the mechanisms suggest: about $43,800 handed over on RAP against about $36,600 on IBR, before any tax. Which is the better outcome depends on something outside the loan, and that something is the next section.
Forgiveness moved, and it is taxed
RAP discharges what is left after 30 years. IBR discharges after 20 for the newer version and 25 for a first loan before July 1, 2014. A longer clock is worth less by itself, and on many balances it is worth nothing at all, because a balance that clears before the clock runs out is never forgiven.
Since January 1, 2026 a discharged federal balance is ordinary income in the year it is written off. So the $25,400 in the paragraph above is not simply removed, it arrives on a tax return. Public Service Loan Forgiveness remains the exception and that discharge is not taxed.
This is where the interest waiver and the forgiveness clock meet. RAP is built so that more borrowers finish paying rather than reaching a discharge, and a borrower who finishes paying has no forgiveness and therefore no tax event. Whether that is an improvement depends on the balance, the income and the year, which is exactly the calculation a general article cannot do for a particular person.
The fixed plan changed shape too
Standard repayment used to be ten years for everybody. The 2026 Tiered Standard Plan sets the term by what is owed: 10 years below $25,000, 15 years below $50,000, 20 years below $100,000, and 25 years at or above it.
For a small balance nothing moves. For a large one the payment falls and the term stretches, which produces the same trade the income-driven plans make, without the income test and without any forgiveness at the end. The $27,000 balance in the table above sits in the 15-year tier, which is why its Tiered Standard payment is about $235 rather than the $307 that ten years would require.
What changed about borrowing, not repaying
Two limits moved at the same time and they shape the balances these plans are applied to. Grad PLUS, which let a graduate student borrow up to the full cost of attendance, is abolished. Parent PLUS is capped at $20,000 a year and $65,000 in total per student for loans first disbursed from July 1, 2026, where before it was limited only by the cost of attendance minus other aid.
Neither change appears on a repayment plan comparison, and both change what a family can borrow in the first place. What the Parent PLUS cap does to a senior year is its own piece.
What this article is not telling you
Three things sit outside it deliberately.
Moving between plans is governed by rules that do not point in the same direction, and the asymmetry is sharp enough to deserve its own treatment. Payments already made under an older income-driven plan carry into RAP. RAP payments mostly do not carry back out. Switching into RAP is close to a one-way door, and the lower the income relative to the balance, the more firmly it closes.
Consolidation is a separate decision with a permanent effect on which plans remain available, including for loans that predate all of this. What consolidating does to the plans you have left covers it.
The IBR figures here use a flat living allowance of $22,000. Real IBR subtracts 150 percent of the federal poverty guideline for your family size, so a larger household is protected more than this model shows and would pay less than the IBR column suggests. The RAP figures carry no such simplification: that schedule is a published table, and the dependent reduction is applied as published.
Run it on your own balance
The repayment comparison is free, needs no login, and asks for nothing that identifies you. Put in what you owe, what you earn, and how many payments you have already made, and it will lay the plans out side by side on your numbers rather than on the examples above.
The table it produces has the same two columns this article keeps pointing at. The monthly payment is the one that decides whether the next few years are survivable. The total is the one that decides what the loan cost.
This is not financial advice. Everything here is an educational estimate produced by a model, using national data and a single set of assumptions about rates, income growth and taxes. Your own balance, interest rates, family size and state will move these numbers, sometimes by a lot. Nothing on this page is a recommendation to choose any particular plan.
Before you commit to a repayment plan, talk to somebody who can see your actual account. Free help exists and is worth using: a nonprofit student loan counselor can go through your options with you at no cost, and a financial advisor can weigh a long repayment against everything else you are saving for.