The Compensation Help Plan, or RAP, is the latest scholar mortgage reimbursement plan, created from President Donald Trump’s “big, beautiful bill.”

The plan is slated to roll out on July 1, 2026. It is going to substitute the prevailing income-driven reimbursement program. Whereas some debtors may need decrease month-to-month payments on RAP in comparison with current income-driven reimbursement plans, they could additionally see an extended reimbursement time period and pay extra general.

Most federal scholar mortgage debtors can entry RAP, together with debtors with graduate faculty debt. Nonetheless, dad or mum PLUS mortgage debtors aren’t eligible.

New and current debtors could join RAP beginning on July 1, 2026.

In the event you took out your entire scholar loans previous to July 1, 2026, you’ll have these reimbursement choices going ahead:

The Schooling Division will get rid of the Saving on a Invaluable Schooling (SAVE), Pay as You Earn (PAYE) and Revenue-Contingent Compensation (ICR) plans by July 1, 2028. IBR and RAP might be your solely income-driven choices.

In the event you take out a brand new scholar mortgage on or after July 1, 2026, your entire loans will grow to be ineligible for IBR, together with the graduated and prolonged plans. (July 1, 2026 is the primary day you may take out a federal scholar mortgage for the 2026-27 educational yr.)

As an alternative, you’ll solely have two reimbursement choices:

• Commonplace reimbursement plan, which isn’t tied to earnings.

That is the case even if in case you have some older loans, since you should repay all loans on the identical reimbursement plan. For instance:

• Say you began your undergraduate program in the course of the 2024-2025 faculty yr and took out a federal scholar mortgage. Then for the third faculty yr — 2026-2027 — it is advisable to borrow extra. Now it’s after that July 1, 2026 deadline. So each loans, together with these from the 2024-2025 faculty yr, could be ineligible for IBR. 

• Or, perhaps you completed your undergrad in 2024 and have already got federal loans. In the event you return to highschool for a grasp’s diploma in 2027 and take out federal loans for it, each these and the undergrad loans would grow to be ineligible for IBR. 

RAP month-to-month funds are graduated primarily based in your annual adjusted gross earnings (AGI) within the earlier tax yr. The extra you earn, the bigger the slice of your earnings you’ll pay every month towards your scholar loans.

After getting your base fee, use this components to calculate your month-to-month RAP invoice:

(RAP base fee / 12) – $50 per dependent = Estimated month-to-month RAP fee

If in case you have current dad or mum PLUS loans, and also you need decrease funds primarily based on earnings at any level sooner or later, you could do the next:

These strikes will mean you can transition to the IBR plan, so you may keep within the income-driven reimbursement system till you repay your loans. In the event you do not do that, the usual reimbursement plan might be your solely choice going ahead.

Any debtors who take out a brand new dad or mum PLUS mortgage on or after July 1, 2026 can solely entry the usual plan — together with for any older dad or mum PLUS loans. Maintain this in thoughts if in case you have a scholar who’s at present in faculty.

Debtors who take out loans on or after July 1, 2026, should select RAP as a way to profit from Public Service Mortgage Forgiveness (PSLF). PSLF forgives remaining federal scholar debt after 10 years of working a public service job and making scholar mortgage funds.

Although the RAP nonetheless ties funds to earnings, it has a number of key variations from current income-driven reimbursement plans. For instance:

RAP doesn’t take inflation under consideration. RAP makes use of adjusted gross earnings (AGI) to calculate funds, whereas IDR plans use discretionary earnings.

Discretionary earnings for IDR plans is the distinction between your earnings and 100%, 150% or 225% of the federal poverty line. Moreover, the federal poverty line modifications over time in response to inflation, so discretionary earnings — and scholar mortgage funds — change in consequence.

AGI is your earnings minus some tax deductions, and it doesn’t take inflation over time under consideration. Meaning RAP funds could grow to be harder to handle within the long-term.

Modifications to household dimension reductions. IDR plans modify funds primarily based on household dimension — which can embrace mother and father or different adults in your house. The RAP calculation solely considers dependent youngsters.

No $0 funds. Not like income-driven reimbursement plans, you’ll by no means have $0 month-to-month funds on RAP in case you lose your job or have a really low earnings. The bottom fee you may have is $10.

RAP is costlier than SAVE for all debtors. Debtors face larger month-to-month funds on RAP than on SAVE, no matter their earnings or household dimension, in accordance with a latest evaluation by the Pupil Borrower Safety Heart, a nonprofit borrower advocacy and analysis group. Launched by the Biden administration, SAVE was beforehand probably the most inexpensive scholar mortgage plan.

The ICR plan is the one current income-driven choice that’s persistently costlier than RAP, the evaluation discovered.

In the event you’re at present enrolled in one of many three income-driven reimbursement plans which can be going away — SAVE, PAYE or ICR — your scholar mortgage servicer will robotically transfer you into the RAP by July 1, 2028. There’s no going again.

You possibly can keep away from RAP by signing up for the Revenue-Based mostly Compensation (IBR) plan on studentaid.gov/IDR earlier than July 1, 2028 — on the very newest. Don’t delay your IBR enrollment, since functions can take time to course of, and the Schooling Division could attempt to pace up this deadline.

In the event you enroll in IBR, you may keep on that plan till you repay your loans. You’ll nonetheless have the choice to change to RAP or the usual plan down the road.

The higher reimbursement plan — RAP or IBR — is determined by your earnings, general monetary state of affairs, household dimension and scholar debt quantity. Earlier than selecting between RAP and IBR, evaluate your estimated month-to-month funds, whole reimbursement prices and forgiveness timelines beneath every plan.