RAP, the Repayment Assistance Plan that replaced most income-driven repayment options starting July 1, 2026, gets summarized in headlines as "payments as low as $10 a month." That's technically true, but it's true for a narrower slice of borrowers than the headline implies, and the plan has several other structural quirks — the dependent reduction, the Parent PLUS exclusion, and its tiered (not marginal) percentage formula — that change the real math for most people.
The $10 floor only applies below $10,000 AGI
RAP's payment formula is built around 11 AGI tiers. The very first tier — AGI up to $10,000 — gets a flat $10/month payment, regardless of the borrower's exact income within that range. But that's the floor of the whole system, not a general minimum available to everyone. Once AGI crosses $10,000, the formula switches to a percentage of AGI: 1% for the next tier (AGI $10,000-$20,000), rising in 1-percentage-point increments per tier, up to 10% of AGI for anyone above $100,000. A borrower with $45,000 AGI falls in the 4% tier (AGI $40,000-$50,000), paying 4% of their AGI divided by 12 months — a payment far above $10.
The formula is tiered, not marginal — an important distinction
This is the part that surprises people who assume RAP works like income tax brackets. Federal tax brackets are marginal: only the portion of income within a bracket is taxed at that bracket's rate. RAP's tiers are NOT marginal — once your AGI lands in a tier, that tier's percentage applies to your FULL AGI, not just the portion within that tier's range. A borrower with $49,000 AGI (in the 4% tier) pays 4% of the full $49,000, not 4% of just the portion between $40,000 and $49,000. This makes RAP's payment jumps between tiers noticeably sharper than a marginal tax system would produce.
The dependent reduction, and its floor
For every dependent a borrower claims, RAP subtracts $50 a month from the calculated payment. A borrower in the 5% tier with $55,000 AGI and 2 dependents would calculate a base payment of 5% × $55,000 ÷ 12 ≈ $229/month, then subtract $100 (2 × $50) for a final payment around $129/month. That reduction can't push the payment below the $10/month floor, though — it's a discount on the calculated amount, not a path to a payment of $0.
Parent PLUS loans are excluded entirely
RAP is explicitly unavailable for Parent PLUS loans, and for any Direct Consolidation loan that includes a Parent PLUS loan within it. This matters because Parent PLUS borrowers — parents who took out federal loans on behalf of their child's education — sometimes assumed RAP would apply to them the same way it does to the student's own loans. It doesn't; parents with Parent PLUS debt need to look at the more limited repayment options that remain available for that specific loan type.
Common mistakes
Assuming the $10/month figure applies broadly is the most common one — it's a floor for a specific low-income tier, not a general minimum. The second is expecting a marginal calculation the way federal income tax works, when RAP applies its percentage to the full AGI within a tier. The third is a Parent PLUS borrower assuming their loan qualifies for RAP at all, when it explicitly doesn't.