When RAP costs more than the Standard plan

Every other income-driven plan protects you from your own salary. The Repayment Assistance Plan does not, and that single difference is what makes it the wrong plan for a particular kind of borrower: high earner, moderate balance, no forgiveness in sight.

Is the RAP payment capped at the 10-year Standard amount?

not capped at any amount

The single most consequential difference between RAP and IBR. IBR's payment stops at the 10-year Standard amount; RAP's keeps climbing with income.

Income-Based Repayment computes a payment from your discretionary income and then applies a ceiling: whatever the formula produces, you never pay more than the 10-year Standard amount. RAP computes a payment from your gross adjusted gross income — there is no poverty-line subtraction and no exempted income at all — and applies no ceiling of any kind.

How the RAP payment is built

RAP is a bracket table, not a percentage of discretionary income. Your AGI lands in a $10,000† Source: 34 C.F.R. § 685.209 as revised by the RISE final rule — full GPO text (published 1 May 2026, FR Doc. 2026-08556, effective 1 Jul 2026), verified 15 Aug 2026 band, and the band names a percentage of your whole AGI.

Adjusted gross income	Annual payment
Not more than $10,000	$10 a month
More than $10,000 and not more than $20,000	1% of AGI
More than $20,000 and not more than $30,000	2% of AGI
More than $30,000 and not more than $40,000	3% of AGI
More than $40,000 and not more than $50,000	4% of AGI
More than $50,000 and not more than $60,000	5% of AGI
More than $60,000 and not more than $70,000	6% of AGI
More than $70,000 and not more than $80,000	7% of AGI
More than $80,000 and not more than $90,000	8% of AGI
More than $90,000 and not more than $100,000	9% of AGI
More than $100,000	10% of AGI

The regulation reads 'more than $X and not more than $Y', so an AGI landing exactly on a bracket boundary falls in the LOWER band.

Ruleset rap-2026-07-01·Verified 15 Aug 2026·34 C.F.R. § 685.209 as revised by the RISE final rule — full GPO text (published 1 May 2026, FR Doc. 2026-08556, effective 1 Jul 2026)

Two details that decide real cases. The regulation reads "more than $X and not more than $Y", so an AGI landing exactly on a boundary falls in the lower band — $60,000 is 5%, not 6%. And the payment is reduced by $50 a month† Source: 34 C.F.R. § 685.209 as revised by the RISE final rule — full GPO text (published 1 May 2026, FR Doc. 2026-08556, effective 1 Jul 2026), verified 15 Aug 2026 for each dependent you claim, with a floor of $10† Source: 34 C.F.R. § 685.209 as revised by the RISE final rule — full GPO text (published 1 May 2026, FR Doc. 2026-08556, effective 1 Jul 2026), verified 15 Aug 2026 a month.

Where it turns expensive

Follow a borrower earning $145,000 with a $42,000 balance at 6.53%.

RAP puts that AGI in the top band, 10% of AGI† Source: 34 C.F.R. § 685.209 as revised by the RISE final rule — full GPO text (published 1 May 2026, FR Doc. 2026-08556, effective 1 Jul 2026), verified 15 Aug 2026, which is about $1,208 a month. The 10-year Standard payment on the same balance is roughly $477. Under IBR the ceiling would hold the payment at the Standard amount; under RAP nothing holds it anywhere. The borrower pays two and a half times as much per month, clears the balance years early, and reaches 360 qualifying payments† Source: 34 C.F.R. § 685.209 as revised by the RISE final rule — full GPO text (published 1 May 2026, FR Doc. 2026-08556, effective 1 Jul 2026), verified 15 Aug 2026 having been forgiven nothing, because there was nothing left to forgive.

That is not a defect in RAP. It is what an income-percentage plan does to someone whose income is large relative to their debt, and it is precisely the case the payment cap was invented for.

Where RAP wins instead

Reverse the ratio and RAP is often the cheapest plan on the board, for two reasons that have nothing to do with the payment formula.

The first is the interest waiver: unpaid interest is waived, never capitalised† Source: 34 C.F.R. § 685.209 as revised by the RISE final rule — full GPO text (published 1 May 2026, FR Doc. 2026-08556, effective 1 Jul 2026), verified 15 Aug 2026. On an on-time payment, interest that your payment did not cover is written off rather than added to the balance. Under IBR, PAYE and ICR that interest accrues in a separate bucket and follows you. Under RAP the balance cannot grow at all.

The second is the principal match. Every on-time payment reduces principal by at least $50† Source: 34 C.F.R. § 685.209 as revised by the RISE final rule — full GPO text (published 1 May 2026, FR Doc. 2026-08556, effective 1 Jul 2026), verified 15 Aug 2026 — or by the payment amount, when the payment is smaller than that. A borrower paying the $10† Source: 34 C.F.R. § 685.209 as revised by the RISE final rule — full GPO text (published 1 May 2026, FR Doc. 2026-08556, effective 1 Jul 2026), verified 15 Aug 2026 minimum still moves the balance down, which is a thing no other income-driven plan does.

So the shape of the answer is: low income against a large balance, RAP is usually the cheapest plan you can be on. High income against a moderate balance, it can be the most expensive. The crossover depends on your exact numbers, which is what the simulation is for.

The trap on the way in

Switching to RAP forfeits every qualifying payment you have already made under IBR, PAYE or ICR. Those payments do not transfer. A borrower eleven years into old IBR — 300 payments† Source: 34 C.F.R. § 685.209 — income-driven repayment plans, as revised by the RISE final rule (full GPO text, published 1 May 2026), verified 15 Aug 2026 to forgiveness — who moves to RAP restarts at zero against 360 qualifying payments† Source: 34 C.F.R. § 685.209 as revised by the RISE final rule — full GPO text (published 1 May 2026, FR Doc. 2026-08556, effective 1 Jul 2026), verified 15 Aug 2026. That is a one-way door, and it is the single most expensive mistake available in the whole system.

There is a related trap on the way through. Paying extra on RAP does not simply pay the loan down faster: amounts above the required payment go to interest first and can cancel both the waiver and the principal match for that month. The plan rewards paying exactly what is asked.

What happens at the end

Forgiveness under RAP arrives at 360 qualifying payments† Source: 34 C.F.R. § 685.209 as revised by the RISE final rule — full GPO text (published 1 May 2026, FR Doc. 2026-08556, effective 1 Jul 2026), verified 15 Aug 2026. Under Public Service Loan Forgiveness it arrives at 120 payments† Source: 34 C.F.R. § 685.209 — income-driven repayment plans, as revised by the RISE final rule (full GPO text, published 1 May 2026), verified 15 Aug 2026 instead, and the difference between those two endpoints is a tax bill:

Is non-PSLF forgiveness taxable?

taxable as cancellation-of-debt income

This figure has an open verification item

• GAP-004

  nonPslfForgivenessTaxable: true rests on the 2024 U.S. Code edition of 26 U.S.C. § 108(f). A 2025–26 amendment cannot be ruled out.

  What it means for this page: If § 108(f)(5) was extended after 2024, the engine is taxing forgiveness that is in fact excluded — which changes the ranking of every non-PSLF IDR plan. IRS Topic 431 (live) still states the 2021–2025 window, which is corroboration, not proof.

  What would close it: A current official U.S. Code edition. uscode.house.gov refused connection; govinfo carries only the 2024 edition. Source

PSLF discharge is excluded from income under 26 U.S.C. § 108(f)(1)† Source: 26 U.S.C. § 108(f)(5) — ARPA exclusion for discharged student debt expired 31 Dec 2025, verified 8 Aug 2026. Any ranking that ignores the tax on a non-PSLF forgiven balance is ranking the wrong number, which is why the simulation carries it.

Common questions

Does RAP have a payment cap?

No. RAP is not capped at any amount. Income-Based Repayment stops at the 10-year Standard amount; RAP has no equivalent ceiling, so the payment keeps rising with income. At the top band the payment is 10% of AGI.

How many payments until RAP forgives the balance?

360 qualifying payments, which is 30 years of on-time payments. Public Service Loan Forgiveness still arrives at 120 payments for borrowers in qualifying employment.

Does unpaid interest capitalise under RAP?

No — unpaid interest is waived, never capitalised. On an on-time payment, interest your payment did not cover is written off rather than added to the balance, so the balance cannot grow. Paying more than the required amount can cancel the waiver for that month, because the extra is applied to interest first.

Do my old IBR payments count toward RAP forgiveness?

No. Switching to RAP forfeits qualifying payment credit earned under IBR, PAYE or ICR. It is a one-way door: a borrower part-way through old IBR's 300 payments restarts against RAP's 360 qualifying payments.

Is a forgiven balance taxed?

Under current federal law a non-PSLF forgiven balance is taxable as cancellation-of-debt income. A PSLF discharge is excluded from income under 26 U.S.C. § 108(f)(1). State treatment varies and is not modelled here.