PAYE usually costs less over the life of the loan, because it forgives the balance after 20 years instead of RAP’s 30 and charges nothing on income up to 150% of the poverty guideline. RAP often has the lower monthly payment for a single borrower at a moderate income, so pick RAP when you are pursuing PSLF or your income is high enough to pay the loan off, and pick PAYE when you can still elect it, expect forgiveness outside PSLF, or support a family. PAYE is open to PAYE new borrowers who have taken no new loan, including a consolidation loan, on or after July 1, 2026, and it ends no later than July 1, 2028 (Federal Student Aid, Income-Driven Repayment Plans). RAP has no end date. PAYE’s lifetime figures on this page assume the plan continues for its full term; borrowers move to RAP (or IBR if RAP isn’t available) by July 1, 2028, and advisors can model that switch in Finology Software’s Plan Transition tool.
Every dollar figure below comes from the Finology Software engine, run on October 14, 2026 through the free calculator on this site. Four borrowers, four different answers.
PAYE vs RAP at a glance
| PAYE | RAP | |
|---|---|---|
| Monthly payment | 10% of discretionary income: AGI above 150% of the poverty guideline for your family size | 1% to 10% of your total AGI by $10,000 band, divided by 12, minus $50 for each dependent |
| Payment cap | Never more than the 10-year Standard payment | No cap |
| Lowest payment | Can be $0 | $10 a month |
| Forgiveness | After 20 years (240 payments) | After 30 years (360 payments) |
| Unpaid interest | Accrues; covered on subsidized loans for the first 3 years only | Waived each month you pay on time and in full, plus a principal match of up to $50 |
| Counts for PSLF | Yes | Yes |
| Who can enroll | PAYE new borrowers with no new loan, including consolidation, on or after July 1, 2026 | Most Direct Loan borrowers; not Parent PLUS or a consolidation that repaid Parent PLUS |
| Plan ends | No later than July 1, 2028 | No end date |
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Four borrowers, run through the engine
Computed October 14, 2026 with the free Finology Software calculator on finology.tech (the same engine advisors use). Direct Unsubsidized loans, no loan made on or after July 1, 2026, income held flat, no state entered, and a spouse with no federal student loans. Lifetime cost is every payment plus the estimated federal income tax on any balance forgiven outside PSLF. These are illustrations of how the formulas behave, not a projection of your loans.
1. Single, $60,000 income, $60,000 balance at 6.5%
| Plan | Monthly payment (year 1) | Forgiven | Est. tax on forgiveness | Lifetime cost |
|---|---|---|---|---|
| PAYE | $301 | $65,880 at 20 years | $14,897 | $87,017 |
| RAP | $250 | $42,000 at 30 years | $9,240 | $99,240 |
| 10-year Standard | $681 | None, paid off in 10 years | $0 | $81,755 |
RAP is $250 a month against $301 on PAYE, the lower payment by a small margin. PAYE still finishes ahead over the life of the loan: $87,017 against $99,240 on RAP, because RAP keeps billing for ten more years. If you can afford it, the 10-year Standard plan is the cheapest of the three at $81,755.
2. Single, $150,000 income, $80,000 balance at 6.5%
| Plan | Monthly payment (year 1) | Forgiven | Est. tax on forgiveness | Lifetime cost |
|---|---|---|---|---|
| PAYE | $908 | None, paid off in 10 years | $0 | $109,006 |
| RAP | $1,250 | None, paid off in 6.5 years | $0 | $98,497 |
| 10-year Standard | $908 | None, paid off in 9.9 years | $0 | $109,006 |
At a high income the order flips. PAYE’s payment is capped at the Standard amount, $908. RAP has no cap and charges 10% of the full AGI, $1,250, which retires the loan in 6.5 years. Faster payoff means less interest, so RAP’s lifetime cost is lower: $98,497 against $109,006. Neither plan forgives anything here.
3. Married filing jointly, two children, $110,000 household income, $120,000 balance at 6.8%
Borrower AGI $65,000, spouse AGI $45,000, two dependents.
| Plan | Monthly payment (year 1) | Forgiven | Est. tax on forgiveness | Lifetime cost |
|---|---|---|---|---|
| PAYE | $504 | $162,200 at 20 years | $36,900 | $157,900 |
| RAP | $817 | None, paid off in 26.3 years | $0 | $258,367 |
| 10-year Standard | $1,381 | None, paid off in 10 years | $0 | $165,716 |
This is where PAYE pulls far ahead. PAYE subtracts 150% of the poverty guideline for a family of four before charging 10%, so the payment is $504. RAP charges 10% of the full $110,000 and takes off $100 for the two children, $817. Over the life of the loan PAYE comes to $157,900 including the tax on forgiveness, and RAP to $258,367.
4. Pursuing PSLF: single, $50,000 income, $70,000 balance at 6.0%, 36 qualifying payments made
| Plan | Monthly payment (year 1) | Forgiven | Tax | Total you pay |
|---|---|---|---|---|
| PAYE | $217 | $81,158 through PSLF | $0 (PSLF is tax-free) | $18,242 |
| RAP | $167 | $65,800 through PSLF | $0 (PSLF is tax-free) | $14,000 |
Under PSLF the balance is forgiven tax-free after 120 qualifying payments on either plan, so the term difference disappears and the lower monthly payment wins. RAP is $167 a month against $217, and the 84 remaining payments total $14,000 on RAP and $18,242 on PAYE.
How the payment formulas differ
PAYE starts from your adjusted gross income and subtracts 150% of the federal poverty guideline for your family size. What is left is your discretionary income, and PAYE charges 10% of it, never more than the 10-year Standard payment you would have owed when you entered the plan (Federal Student Aid, Income-Driven Repayment Plans). A larger family raises the poverty line and lowers the payment.
RAP skips the poverty-line step. It takes a percentage of your full AGI, from 1% just over $10,000 up to 10% above $100,000, divides by 12, and subtracts $50 for each dependent you claim, with a $10 floor (Federal Student Aid, One Big Beautiful Bill Act definitions; Pub. L. 119-21, section 82001). Because the percentage steps up with each $10,000 band and there is no cap, RAP rises faster than PAYE as income grows.
The practical rule: the lower your income and the larger your family, the more PAYE’s poverty-line subtraction is worth. A single borrower at a moderate income often pays a little less on RAP. A high earner pays more on RAP each month and may pay the loan off sooner.
20 years versus 30 years
PAYE forgives what remains after 240 qualifying payments; RAP after 360. Outside PSLF that decade is usually the whole story: ten more years of payments on RAP almost always outweigh a slightly lower bill today. Forgiveness outside PSLF counts as taxable income again, and the engine’s lifetime cost includes that estimated tax (Federal Student Aid, One Big Beautiful Bill Act definitions).
Interest: RAP stops the balance from growing
RAP waives the unpaid interest for each month you pay on time and in full, and when your payment reduces principal by less than $50, a matching payment brings the reduction up to $50 (or up to the amount you paid, if your payment is under $50). Federal Student Aid says that with every payment on time and no breaks, your balance will never go higher than it was when you entered RAP (Federal Student Aid, One Big Beautiful Bill Act definitions).
On PAYE, unpaid interest on subsidized loans is covered only for the first three years; after that, and on unsubsidized loans, interest your payment does not cover keeps accruing and capitalizes if you stop qualifying for an income-based payment (Federal Student Aid, IDR questions and answers). A growing balance matters less if it is forgiven at year 20 anyway, which is why PAYE can still win on lifetime cost.
PSLF on either plan
Both plans are income-driven plans, and all income-driven plans qualify for Public Service Loan Forgiveness (Federal Student Aid, Public Service Loan Forgiveness). Forgiveness comes after 120 qualifying payments and is tax-free, so for a public servant the plan with the lower monthly payment is the cheaper plan. Run your own income through the calculator, since RAP is lower for some incomes and PAYE for others. For the details, see Does RAP qualify for PSLF?
What happens to PAYE in 2028
Before July 1, 2028, everyone repaying under PAYE must choose another plan: RAP, IBR, or a Standard, Graduated or Extended plan they qualify for. A borrower who does not choose is placed on RAP for loans RAP can take (34 CFR 685.209(c)(7)). Two facts make the move less costly than it sounds:
- PAYE payments made on or before June 30, 2028 count toward IBR forgiveness (34 CFR 685.209(k)(4)(i)(B)). If you first borrowed on or after July 1, 2014, IBR uses the same 10% and 20-year terms, which is why the engine returns the same figures for PAYE and IBR.
- PAYE payments also count toward RAP’s 360, but the clock becomes 30 years instead of 20 (Federal Student Aid, One Big Beautiful Bill Act definitions).
So the real long-run comparison for most PAYE borrowers is RAP against IBR. See RAP vs IBR and IBR vs PAYE.
Which one fits you
- Choose PAYE (then IBR) if you can still elect it, you are not pursuing PSLF, and you expect a balance to remain after 20 years.
- Choose PAYE if you support a family on one income or file jointly with a lower-earning spouse; the poverty-line subtraction is worth the most there.
- Choose RAP if you are pursuing PSLF and RAP’s payment is the lower one.
- Choose RAP if your income is high enough that RAP’s uncapped payment pays the loan off; you finish sooner and pay less interest.
- Choose RAP if you took a new loan on or after July 1, 2026; RAP and the Tiered Standard plan are the plans available to you.
Run your own numbers
The calculator below is the one that produced every figure on this page. Enter your balance, rate, income, filing status and dependents to see PAYE, RAP, IBR and Standard side by side. For RAP alone, use the RAP payment calculator; for all four plans explained together, see RAP vs PAYE vs IBR, all plans compared.
Frequently asked questions
Can I still sign up for PAYE in 2026?
Yes, if you are a PAYE new borrower and have taken no new loan, including a consolidation loan, on or after July 1, 2026. A PAYE new borrower had no outstanding Direct or FFEL balance when receiving a Direct or FFEL loan on or after October 1, 2007, and received a Direct Loan disbursement on or after October 1, 2011. PAYE ends no later than July 1, 2028 (Federal Student Aid).
What happens to PAYE on July 1, 2028?
PAYE ends. Borrowers on it must choose RAP, IBR or a fixed-payment plan before that date, and anyone who does not choose is placed on RAP for loans RAP can take (34 CFR 685.209(c)(7)). PAYE payments made through June 30, 2028 count toward IBR forgiveness.
Is RAP or PAYE better for PSLF?
Both qualify, and PSLF forgives the balance tax-free after 120 qualifying payments on either plan, so the plan with the lower monthly payment costs less. In the engine example at $50,000 of income, RAP was $167 a month and PAYE $217.
Why can RAP cost more in total when its payment is lower?
RAP forgives after 30 years and PAYE after 20. Ten more years of payments usually outweigh a slightly lower monthly bill. In the engine example at $60,000 of income, RAP was $250 a month against PAYE’s $301, but RAP’s lifetime cost was $99,240 against $87,017. This assumes PAYE continues for its full term; PAYE ends no later than July 1, 2028, when borrowers move to RAP (or IBR if RAP isn’t available), and advisors can model that switch in Finology Software’s Plan Transition tool.
Can RAP be higher than PAYE?
Yes. RAP counts your full AGI with no poverty-line subtraction and has no cap. At $150,000 of income RAP was $1,250 a month against PAYE’s capped $908, and a married family of four at $110,000 paid $817 on RAP against $504 on PAYE.
Do my PAYE payments count if I switch to RAP?
Yes. Progress earned under another income-driven plan counts toward RAP’s 360 payments, but the forgiveness clock becomes 30 years instead of 20 (Federal Student Aid).
Should I consolidate to qualify for PAYE?
A consolidation loan made on or after July 1, 2026 is a new loan, and a new loan removes PAYE and IBR and leaves RAP and the Tiered Standard plan. Check which plans your current loans can elect before consolidating.
For financial advisors
Advisors: compare every plan for each client from their own loan file. Start a free 7-day trial, no credit card required.
Sources
- Federal Student Aid, Income-Driven Repayment Plans, read October 13, 2026.
- Federal Student Aid, One Big Beautiful Bill Act definitions, last updated August 24, 2026.
- Federal Student Aid, IDR questions and answers.
- Federal Student Aid, Public Service Loan Forgiveness.
- 34 CFR 685.209, paragraphs (c)(7) and (k)(4).
- Pub. L. 119-21, section 82001 (One Big Beautiful Bill Act): the Repayment Assistance Plan.
- Finology Software engine, free calculator on finology.tech, run October 14, 2026.
Related: RAP vs PAYE vs IBR, all plans compared · RAP vs IBR · IBR vs PAYE · RAP and PSLF
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