RAP vs PAYE: Switch Now or Ride Out the 2028 Sunset?

The short answer: if you are already on PAYE, you can keep it until it sunsets on July 1, 2028, and above roughly $80,000 of income it is probably worth keeping until then. Below that, RAP is often the cheaper payment right now. If you are not on PAYE today, the question is closed: PAYE stopped accepting new enrollment on July 1, 2026.

Where PAYE stands after July 1, 2026

PAYE survived the SAVE plan’s court defeat, but the One Big Beautiful Bill put it on a clock. It is closed to new enrollment as of July 1, 2026, and fully sunsets on July 1, 2028, when remaining PAYE borrowers will need a new plan. That makes the next two years a window, not a destination.

How the payments compare

PAYE charges 10% of discretionary income, meaning AGI minus 150% of the poverty line ($23,940 for a single filer in 2026). RAP charges a tiered 1% to 10% of your full AGI with no poverty shelter, minus $50 per month per dependent, with a $10 floor. Monthly payments for a single borrower with no dependents, computed with the same engine that powers Finology Software:

Family size moves the line. A married couple filing jointly with $120,000 combined income and two kids pays $900 on RAP (after the $100 dependent deduction) versus $588 on PAYE, because PAYE shelters 150% of the poverty line for a family of four. Higher earners with dependents lean PAYE; lower earners without them lean RAP.

Switch now or ride out the sunset?

• If PAYE is cheaper for you today: staying put until 2028 preserves the lower payment, and PAYE’s 20-year forgiveness clock keeps running. Time on PAYE also counts toward PSLF.
• If RAP is cheaper: there is little reason to wait. Switching starts RAP’s interest waiver immediately, so your balance stops growing, and every RAP payment counts toward PSLF and RAP’s 30-year forgiveness.
• Watch the balance effect: RAP waives unpaid interest and credits at least $50 per month to principal. PAYE lets unpaid interest accrue. Borrowers whose payment does not cover interest can come out ahead on RAP even when the monthly payment is slightly higher.
• Forgiveness horizon: PAYE forgives at 20 years, RAP at 30. If you are close to the 20-year mark on an income-driven plan, do not give that clock up without running the lifetime numbers.

If you are weighing a move, start with our RAP payment calculator to see your exact payment, check whether your current plan is going away, and follow the step-by-step guide to switching when you are ready. We also compared RAP against IBR, the other plan that remains open.

For financial advisors: the PAYE sunset puts every PAYE client on a two-year decision timer, and the right answer depends on income trajectory, family size, and forgiveness progress. Finology Software models RAP, IBR, PAYE, ICR, and PSLF side by side with provably correct numbers, so you can put the switch-or-stay answer in front of a client in minutes. Start your free trial.