A federal student loan borrower earning $45,000 a year with $35,000 in debt is now paying $150 a month instead of $176, according to the U.S. Department of Education. The lower bill comes from a new income-driven repayment option called the Repayment Assistance Plan, which opened to borrowers on July 1, 2026, and replaces the tangle of income-driven plans that came before it.
For a household budgeting around a fixed paycheck, a $26 monthly swing is real money. The bigger change is in how the loan balance behaves once the new formula, rather than the old one, is doing the math.
How the Repayment Assistance Plan Lands on $150 a Month
The Repayment Assistance Plan, known as RAP, ties monthly payments to a borrower’s adjusted gross income rather than to how much is owed. According to the payment table published by Edfinancial Services, an official federal loan servicer operating under Federal Student Aid, a borrower with adjusted gross income between $40,000 and $50,000 owes a base payment equal to 4 percent of that income, spread across 12 months. For a borrower earning $45,000, 4 percent works out to $1,800 a year, or $150 a month — the exact figure in the Education Department’s worked example for an unmarried borrower with no dependents and $35,000 in debt.
Under the income-driven repayment plans RAP replaces, that same borrower owed $176 a month, the Department says. The new formula does not look at the size of the loan once a borrower falls into a given income bracket; it looks only at income, then subtracts $50 for every dependent claimed on a federal tax return. A borrower’s total payment can never fall below $10 a month, regardless of how low the income.
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The Old Plans Let Balances Grow Even With On-Time Payments
The payment amount is only part of the story. Under the prior income-driven plans, the Department says a borrower in this situation could see the loan balance grow by as much as $15 a month even while making the required minimum payment, because that payment did not always cover the interest accruing each month. RAP addresses that directly: when a borrower’s payment falls short of a month’s interest, the unpaid portion is waived instead of being added to the balance. In the Department’s example, that waiver is worth $40 a month for the $45,000-income borrower.
RAP layers a second mechanism on top of the interest waiver. If an on-time payment does not reduce the loan’s principal by at least $50, the Department makes a matching payment of up to $50 a month to cover the difference. Together, the interest waiver and the principal match are built so a borrower who pays on time sees the balance move down every month, something the earlier plans did not guarantee.
The Department’s fact sheet includes a second worked example that shows the same protections scaling to a smaller loan: a borrower with no dependents, an initial income of $35,000 and a starting balance of $20,000 can expect about $400 in interest waived over the life of the loan, plus roughly $2,000 in matching principal payments over the repayment term. The Department also points to broader loan-portfolio data compiled by the Congressional Budget Office showing that three out of four borrowers in income-driven repayment plans still owed more than they originally borrowed six years after entering repayment — the exact pattern RAP’s interest waiver and principal match are designed to stop.
Forgiveness Still Requires 360 On-Time Payments
RAP carries the same long horizon as the plans it replaces. Any remaining balance is forgiven after 360 qualifying monthly payments — 30 years of on-time payments — under both the Department’s fact sheet and Edfinancial’s plan summary. A borrower pursuing Public Service Loan Forgiveness can still reach forgiveness in as little as 10 years under that separate program while enrolled in RAP. Outside of Public Service Loan Forgiveness, any balance forgiven at the end of the term may be treated as taxable income, a detail Edfinancial’s servicing page flags for borrowers weighing which plan to pick.
Direct Loans, PLUS Loans and Consolidation: Who Can Enroll in RAP
RAP is open only to Direct Loan borrowers. Eligible loan types include Direct Subsidized and Unsubsidized loans, Direct PLUS loans taken out by graduate or professional students, and Direct Consolidation loans that do not include an underlying Parent PLUS loan. A married borrower who files a joint federal tax return has the payment calculated on combined household income, though the payment is adjusted if the spouse also carries federal student loans. A married borrower who files a separate return is assessed only on individual income and the dependents claimed on that separate return.
Enrolling Through StudentAid.gov, and the 2028 Deadline for Switching Plans
Enrollment opened July 1, 2026, through a borrower’s account at StudentAid.gov, where RAP now appears as a selectable option inside the standard Income-Driven Repayment Plan Request. The Department says the application takes about 10 minutes, and it moves faster if the borrower consents to let the Department pull income and tax information directly from the Internal Revenue Service instead of uploading documents by hand. Borrowers currently enrolled in repayment plans that are being phased out, with loans made before July 1, 2026, have until July 1, 2028, to choose among RAP, the new Tiered Standard plan, or Income-Based Repayment.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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