As of 2025, 42.5 million Americans hold outstanding federal student loans. Among them, nearly 12.3 million borrowers—about 29%—are enrolled in income-driven repayment (IDR) plans, which aim to make monthly payments more manageable based on income.
However, a sweeping overhaul to the student loan system is on the horizon thanks to President Trump’s recently passed One Big Beautiful Bill (OBBB), set to reshape loan repayment options for millions. The changes, which affect both current and future borrowers, will bring substantial shifts to repayment plans and eligibility. For many, time is running out to take action before some options are permanently phased out.
Key Changes to Student Loan Repayment Under the OBBB
The OBBB will implement significant changes to how federal student loans are repaid, with some provisions going into effect as early as July 1, 2026. Here’s what borrowers need to know.
1. Introduction of a New Standard Repayment Plan
Who it affects: New federal loan borrowers, starting July 1, 2026
Key Change: The OBBB will eliminate the current standard 10-year repayment plan, replacing it with a tiered repayment system based on the borrower’s loan balance. This change will apply to borrowers taking out new loans after July 1, 2026, even if they already have existing federal loans.
2. New Income-Based Repayment Plan: The Repayment Assistance Plan (RAP)
Who it affects: All undergraduate and graduate loan borrowers
Key Change: A new income-based repayment plan, the Repayment Assistance Plan (RAP), will go into effect for all borrowers starting July 1, 2026. Unlike current IDR plans, RAP mandates a minimum payment of $10 per month, regardless of income or dependents. Payments will be based on income, with a $50 monthly deduction for each dependent.
For example, a borrower earning $45,000 annually with one child would have a monthly payment of $150, reduced to $100 due to the dependent deduction. While RAP waives interest if payments don’t cover the full loan balance, borrowers will remain in repayment for up to 30 years.
3. New Borrowers Will Have Only Two Repayment Options
Who it affects: Undergraduate and graduate borrowers taking out new loans after July 1, 2026
Key Change: Starting in 2026, borrowers taking out new loans will be limited to just two repayment options: the new standard repayment plan and the RAP. The OBBB phases out current IDR plans, such as Pay As You Earn (PAYE) and Saving on a Valuable Education (SAVE), for new borrowers.
4. Transition for Current Borrowers to New Plans
Who it affects: Borrowers with existing undergraduate or graduate loans
Key Change: Current borrowers won’t immediately be affected by these changes. Those with existing loans can continue on their current repayment plans, including Income-Contingent Repayment (ICR) or Income-Based Repayment (IBR), until July 1, 2028. After that, all borrowers must transition to either the RAP, IBR, or the new standard repayment plan.
5. Restrictions for New Parent PLUS Loan Borrowers
Who it affects: Parents who take out new Parent PLUS Loans after July 1, 2026
Key Change: The OBBB eliminates the ability for new Parent PLUS Loan borrowers to use alternative repayment options like IDR plans. These borrowers will only be eligible for the new standard repayment plan, which features flexible monthly payments based on the loan balance.
6. Action Required for Current Parent Borrowers
Who it affects: Parents with existing Parent PLUS Loans
Key Change: Existing Parent PLUS Loan borrowers must take action before July 1, 2026, to retain access to alternative repayment plans. If borrowers consolidate their loans and enroll in an IDR plan before this deadline, they can continue accessing these options. After this date, new loans will only qualify for the standard repayment plan.
7. Federal Loan Consolidation Will Lose Some Benefits
Who it affects: All federal student loan borrowers
Key Change: Consolidating loans via a Direct Consolidation Loan will still be an option after July 1, 2026, but it will offer fewer benefits. Consolidation will no longer allow borrowers to access certain repayment plans, like PAYE or SAVE, and could result in the loss of flexible repayment options.
How to Manage Your Loans Moving Forward
The OBBB’s sweeping changes to federal student loan repayment options will have far-reaching implications for both current and future borrowers. To ensure you don’t lose access to your preferred repayment plan, it’s crucial to stay informed about the latest deadlines and updates.
If you’re unsure about how these changes affect your loans or need help navigating new repayment options, it’s recommended to contact your loan servicer for further guidance.
For more detailed information, visit the Department of Education’s Federal Student Aid website, which will continue to update borrowers as the new laws take effect.
Final Thoughts: The OBBB is poised to overhaul student loan repayment options, bringing substantial changes that could impact millions of borrowers. Stay proactive and monitor deadlines to avoid losing access to certain repayment plans.
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