The two rules
The Repayment Assistance Plan has two protections for every on-time monthly payment. They come from 34 CFR 685.209(h)(4) and (o)(2):
- Interest subsidy. The Secretary doesn't charge any accrued interest your on-time payment doesn't cover. Unpaid interest simply disappears.
- Matching principal payment. If your on-time payment reduces principal by less than $50, the Secretary reduces principal by the lesser of $50 or your payment, minus the principal your payment already covered.
Put together, an on-time payment always lowers your balance: by at least $50, or by the whole payment when the payment is under $50. Under earlier plans, a payment smaller than the interest let the balance climb year after year.
Worked examples
Take a $30,000 balance at 6%. A month's interest is $150.00. Here is what happens at six RAP payment levels (the payment follows from the AGI shown):
| AGI | RAP payment | Covers interest | Covers principal | Interest waived | Principal match | Balance falls by |
|---|---|---|---|---|---|---|
| $12,000 | $10.00 | $10.00 | $0.00 | $140.00 | $10.00 | $10.00 |
| $30,000 | $50.00 | $50.00 | $0.00 | $100.00 | $50.00 | $50.00 |
| $45,000 | $150.00 | $150.00 | $0.00 | $0.00 | $50.00 | $50.00 |
| $46,800 | $156.00 | $150.00 | $6.00 | $0.00 | $44.00 | $50.00 |
| $54,000 | $225.00 | $150.00 | $75.00 | $0.00 | $0.00 | $75.00 |
| $70,000 | $350.00 | $150.00 | $200.00 | $0.00 | $0.00 | $200.00 |
The first two rows show the match at low payments. It equals the payment, so a $10 payment still cuts $10 of principal while $140 of interest is waived. In the middle rows, the payment covers the interest but not $50 of principal, and the match tops the principal reduction up to $50. Above that, the payment itself reduces principal by more than $50 and no help is needed.
The RAP calculator shows your own first month in the same format.
What the rules mean over time
- Low incomes, large balances. The balance falls slowly but steadily, by $10 to $50 a month from your payment and the match. After 360 qualifying payments the rest is forgiven. Under IBR the same borrower's balance usually grows with unpaid interest until forgiveness, which is larger and, after 2025, taxable.
- Middle incomes. The match matters most when the payment is close to the interest. It guarantees $50 of progress a month and shortens repayment by years.
- Higher incomes. Payments cover interest and much more principal. Neither rule is used, and RAP behaves like an income-based repayment schedule with no cap.
Each year, as your income changes, the calculator recalculates the payment and then applies both rules month by month. The "Interest waived" and "Principal matched" totals under the result are those benefits added up.
Conditions to keep in mind
- On time only. A payment is on time if it arrives by the due date for the month and after the previous month's due date. Late payments get neither benefit.
- Deferment and forbearance. The match doesn't apply in months you are in deferment or forbearance.
- Paying ahead. An extra payment normally advances your due date, and months without a payment due get no subsidy or match. You can opt out of advancing the due date, and your servicer must explain the choice. If you do let it advance, those months still count toward forgiveness and PSLF.
- Final payment. When the balance is nearly gone, the last payment can be less than $10, and no match is needed.
Why the waiver matters for the long run
Under the plans that came before, including IBR, unpaid interest accrues and can be added to the principal. Under RAP, what you owe after years of on-time payments is always less than what you started with. See how RAP compares with IBR over your whole repayment.
Common questions
Does unpaid interest grow under RAP?
No. If an on-time RAP payment doesn't cover the month's interest, the rest of that interest is not charged. Your balance can't grow from unpaid interest while you pay on time.
How much is the RAP principal match?
If your on-time payment reduces principal by less than $50, the government reduces it by the difference, up to $50 or up to your payment, whichever is smaller. Principal falls by at least $50, or by your whole payment when the payment is under $50.
Do I get the match if my payment is late?
No. Both the interest waiver and the match apply to on-time payments. A payment is on time when it arrives by the month's due date and after the previous due date.
What if I pay extra?
Extra money normally moves your next due date forward, and months with no payment due get no waiver or match. You can ask your servicer not to advance the due date, which keeps the monthly benefits.