RAP Escape
2026 Auditor · v2.3.1
⚠ Statutory Deadline RAP takes effect for new borrowers · SAVE transition deadline: July 1, 2028

July 1st 2026 — the 30-year clock starts.

On this date, new federal borrowers default into RAP — a uniform 360-month forgiveness timeline — and the OBBBA framework takes full effect. Existing SAVE borrowers have a two-year transition window (deadline: July 1, 2028) before mandatory migration. Forgiven balances are now taxable as ordinary income (ARPA exemption expired Dec 31, 2025). This auditor models real lifetime cost — including the tax bomb — and shows whether RAP, refinance, or PSLF is your cheapest path.

RAP · Yr 1 Monthly
—
Refi Monthly
—
Tax Bomb
—
Verdict
—
The Trap ≤ 360 months

RAP · 30-Year Federal Path

Income-based monthly payment, recertified annually. Includes tax bomb on forgiveness.

Total Lifetime Cost (payments + tax bomb)
—
Bracket (Yr 1)—
Yr 1 Monthly—
Final Yr Monthly—
Σ Payments—
Months to Payoff—
Interest Waived—
Forgiven @ 360—
Federal Tax on Forgiveness—
State Tax on Forgiveness—
▸ How this number is built
  1. ① Bracket lookup: AGI ≤$10k → $10 flat. AGI $10,001-$20,000 → 1%. Then +1% per $10k step, capping at 10% above $100k.
  2. ② Monthly = (AGI × bracket %) ÷ 12, minus $50 per dependent, $10 floor.
  3. ③ Each year, AGI grows by your assumed rate and bracket re-checks (RAP requires annual recertification).
  4. ④ Each month: interest = balance × rate ÷ 12. If payment ≥ interest, remainder hits principal. If payment < interest, gov waives the gap.
  5. ⑤ Matching credit per 34 CFR § 685.209(o)(2)(i): total principal reduction = max(principal_paid, min($50, payment)). Disabled during deferment/forbearance and in any month without a due date — see overpayment note below.
  6. ⑥ Lifetime cost = Σ payments until balance = 0 OR month 360. Anything left at 360 is forgiven AND taxed as ordinary income at federal marginal bracket + state rate.
The Escape 180 months

Private Refinance · Fixed Term

SoFi / Credible / ELFI marketplace. Locks in a fixed rate. No tax bomb. Forfeits IDR & PSLF.

Total Lifetime Cost
—
Refi APR—
Term—
Monthly Payment—
Total Interest—
Tax Bomb$0
Savings vs RAP—
Check SoFi Rate → Compare on Credible
Affiliate links: replace href with FlexOffers (SoFi) and CJ Affiliate (Credible) tracking URLs after approval. ELFI: use direct referral link (elfi.com/referral-program).
Net Lifetime Delta · Cheapest vs RAP-Trap
—
—
awaiting input
💡
Pay extra without losing your RAP benefits.

Per 34 CFR § 685.209(o)(3): paying more than the amount due automatically advances your next due date — and any month without a due date forfeits both the interest subsidy and the $50 matching credit. The reg gives you two opt-outs: (1) for electronic payments, select "do not advance due date" at submission; (2) for any payment method, call your servicer to elect manually. Per (o)(3)(ii), the months still count toward 360-payment forgiveness and PSLF — you only lose subsidy and match. If aggressive payoff is the goal, refinancing or the Tiered Standard Plan is structurally cheaper than RAP-with-extras.

Disclaimer. Estimates based on the OBBBA RAP framework (P.L. 119-21 §82001), CRS reports R48727 and IF13075, and the Department of Education's RISE Final Rule at 91 Fed. Reg. 23768 (May 1, 2026, codified at 34 CFR §§ 685.209(b), (f), (g), (h), and (o), effective July 1, 2026). Tax bomb estimate uses 2026 federal brackets and does not account for deductions, credits, or insolvency exclusion (IRS Form 982). Federal marginal rate is computed on AGI + forgiven amount in the year of forgiveness. State rates: Indiana 2.95% (2026 per HB 1001 phased reduction); other state rates as of 5/2026 — verify current with your state DOR. Limitation: this calculator does NOT model the dual-borrower spousal payment adjustment under § 685.209(g)(3). Couples where both spouses have eligible federal loans pay a proportional share of the household RAP amount based on each spouse's loan balance — your actual payment will be lower than shown. Consult a licensed CPA, financial planner, or student loan attorney before refinancing — refinancing federal loans into a private lender forfeits IDR, PSLF, deferment, and federal hardship protections permanently. This tool is decision support, not personalized advice.