Before 2008 Federal Student Loan Borrowers

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Pre-2007 Graduate Borrowers: Your IBR Is Safe, and RAP Arrives Next Summer

If you took your very first federal student loan before October 1 2007, you sit in a small, often-overlooked corner of the repayment world. Here is what the new law does—and does not do—to your current Income-Based Repayment (IBR) plan, plus what to expect when the new Repayment Assistance Plan (RAP) opens on July 1 2026.

Where You Stand Today

Old IBR stays exactly as it is. Payments remain 15 percent of discretionary income (AGI minus 150 percent of the poverty line), never higher than the 10-year Standard amount, with any remaining balance forgiven after 25 years. The recent legislation left these statutory terms untouched.

What Arrives on July 1 2026: The Basics of RAP

RAP gives every borrower—new or old—the option to switch to a simpler sliding-scale formula. Its core rules are:

  • Payment scale:
    • $10 a month if your AGI is $10 000 or less
    • 1 percent of AGI from $10 001–$20 000
    • 2 percent from $20 001–$30 000
    • The percentage climbs by one point in each $10 000 band, topping out at 10 percent above $100 000.
  • Family relief: Subtract $50 per dependent from the monthly bill.
  • Interest safety net: Any unpaid interest is waived each month, so balances cannot grow if you make the required payment.
  • Forgiveness window: Remaining debt is cancelled after 30 years (360 payments).
  • Public-service credit: Payments still count toward the 120 qualifying payments for Public Service Loan Forgiveness (PSLF).

RAP or Old IBR: How to Think About the Choice

  • If your income is modest relative to debt (for example $90 000 AGI on $250 000 of loans):
    RAP’s early payment bands can cut your bill nearly in half compared with the 15 percent IBR rate, and the interest waiver prevents balance creep.
  • If you expect high earnings (surgeons, specialists, practice Owners):
    Old IBR keeps you capped at the Standard ten-year amount, while RAP rises with no ceiling. IBR often costs less once income soars.
  • If you work toward PSLF:
    Either plan qualifies, but lower RAP payments may leave more to forgive after your 120th payment—good if you stay in public service, risky if you leave.
  • If you aim to pay the debt off early:
    IBR’s 25-year horizon plus the cap generally burns through the balance sooner and with less total interest than RAP’s 30-year track.

Switching Has Consequences

Moving from IBR to RAP will capitalize any unpaid interest one time on the day you switch. After that, RAP’s monthly interest wipe keeps new charges from piling up, but the capitalized amount becomes part of your principal. You can switch plans once per year, so run the numbers before you jump. The newer post-2014 IBR, PAYE, or SAVE, have different capitalization caps and rules.

Also, your payment could go up because it’s likely been a while since you have recertified your income. If that’s the case and you want to switch, just wait until you’re forced to certify on IBR.

Action Steps Between Now and Summer 2026

  1. Update income and family size on StudentAid.gov so both plans’ estimates are accurate.
  2. Model side-by-side costs: compare monthly payments, total paid, and forgiveness dates for IBR versus RAP.
  3. Check PSLF paperwork if you serve a nonprofit or government employer.
  4. Build a small cash buffer now; RAP payments will rise as income rises.
  5. Set a calendar reminder for June 2026 to submit a plan-change request if you decide RAP fits your goals.

Q & A for 08-2014 Borrowers

  • Will I be moved automatically?
    No. You stay in IBR unless you file to change plans.
    Learn more
  • I’m in an Income Driven Repayment plan and haven’t recertified my income in years. When will I have to do it again?
    If you’re enrolled in an income driven repayment plan and haven’t recertified your income recently—likely due to pandemic-related pauses or extended administrative forbearance—you’re not alone. Millions of borrowers have seen their recertification dates re...
    Learn more
  • Should I Just Pay My Debt Off?
    If you borrowed a large amount for graduate school and you're already deep into an income-driven plan like IBR—or soon considering RAP—it’s worth running the numbers before rushing to pay everything off.Here’s what to consider:If forgiveness is on th...
    Learn more
  • When does interest capitalize on the old IBR plan?
    If you are determined to no longer have a ‘partial financial hardship’, fail to recertify your income by the deadline, or leave the IBR plan, interest is capitalized.
    Learn more
  • Will My Current Credit Toward Forgiveness Still Count?
    Yes, your existing qualifying payment count will carry over when you switch from PAYE to IBR or RAP—as long as you stay in an income-driven repayment (IDR) plan continuously.Here’s how it works:If you’ve made 120 qualifying payments under PAYE, and yo...
    Learn more