The Education Department's New RAP Repayment Plan Launches July 1. Millions of Borrowers Will Pay More.

Since a federal appeals court ended the Biden-era SAVE repayment plan earlier this year, tens of millions of federal student loan borrowers have been in limbo waiting for what comes next. What comes next is the Repayment Assistance Plan, known as RAP, which launches July 1, 2026.

Borrowers currently on SAVE have roughly 90 days from that date to exit and enroll in a new plan, according to CNBC. Many of them will face higher required monthly payments.

How RAP Actually Works

RAP calculates monthly payments as a percentage of a borrower's adjusted gross income, or AGI, sliding from 1% to 10% depending on earnings. The more you make, the larger the share you owe. There is a floor: a minimum $10 monthly payment for all borrowers.

That structure differs meaningfully from existing income-driven repayment plans. Current IDR options shield a portion of a borrower's income to account for basic living expenses before calculating the payment. RAP does NOT include that protection, according to CNBC. Very low-income borrowers who previously qualified for a $0 monthly payment under IDR plans may now owe something every month.

RAP does offer one offset: a $50 monthly reduction per dependent.

The AGI Lever

Because RAP ties payments directly to adjusted gross income rather than take-home pay, reducing your AGI before July 1 and in future tax years directly reduces what you owe each month.

Landon Warmund, a certified financial planner and certified student loan professional at Reliant Financial Services in Kansas City, Missouri, told CNBC that using pre-tax workplace benefits is the most accessible tool available to most borrowers. Contributions to a 401(k), 403(b), health savings account, or flexible spending account all reduce AGI dollar-for-dollar.

Warmund estimates that strategic tax planning could save some borrowers up to $600 per year under RAP. "Borrowers can look to avoid these payment jumps by exploring what pre-tax benefits they have available to them at work to reduce their taxable income, which keeps them under key income numbers," he told CNBC.

The Strongest Case for RAP

Defenders of the new plan argue that SAVE was legally indefensible from the start and that the appeals court was right to strike it down. On that view, RAP is a functional replacement that still ties payments to income, still offers a path to eventual forgiveness, and still provides a dependent credit unavailable under standard repayment. A plan with a legal foundation, even an imperfect one, is better than a plan stuck in court limbo costing borrowers certainty.

SAVE's legal problems were real, and uncertainty about whether payments counted toward forgiveness while the plan was in litigation genuinely harmed borrowers who stayed enrolled.

Who Gets Hurt

The concern that critics raise is straightforward: RAP removes the income-floor protection and the $0 payment option that currently exist for the lowest-income borrowers. A person making $22,000 a year who qualified for $0 under an existing IDR plan will now owe at least $10 a month and, depending on how RAP's 1%-to-10% scale is applied, potentially more.

At the higher end, borrowers who benefited from SAVE's generous income exemptions and saw dramatically reduced payments under that plan face the steepest climb. CNBC describes the change as a "payment jump" for this group, and Warmund's advice is aimed squarely at softening that impact.

The $50-per-dependent reduction helps families with children but does nothing for single borrowers without dependents who are also in the lower-income range.

What Borrowers Need to Do Before July 1

The 90-day exit window from SAVE starts July 1. Borrowers still on SAVE need to select a new plan no later than around late September 2026, though enrolling earlier reduces the risk of processing delays.

For borrowers who want to use the AGI strategy Warmund describes, the most impactful actions happen during open enrollment at work. Specifically, increasing pre-tax retirement contributions or enrolling in an HSA if eligible. Changes made before the end of the tax year will flow through to the AGI used for RAP calculations.

As of June 13, 2026, the Education Department has not publicly released the complete regulatory text of RAP's income-exemption methodology, making it difficult for borrowers or their financial advisors to model exact payment outcomes before the plan goes live.