Repayment plans for federal student loans are undergoing a major overhaul. Following the passage of the One Big Beautiful Bill Act in mid-2025, the U.S. Education Department is introducing student loan repayment plan changes that include introducing new plans and phasing out several existing plans.
If you owe student loans or plan to borrow in the future, your options for repayment may soon be different depending on your loan type and when you borrowed. Here’s what you need to know about what’s changing and how you can prepare.
Table of Contents
Key Points
• New federal student loan repayment plans open July 1, 2026, stemming from the One Big Beautiful Bill Act (OBBBA) of 2025.
• New borrowers after July 1, 2026, will have only two options: an updated Standard Repayment Plan and the new income-driven Repayment Assistance Plan (RAP).
• Existing income-driven plans (SAVE, PAYE, ICR) will be phased out by July 1, 2028, with IBR remaining an option for current borrowers.
• The new RAP may offer lower or higher monthly payments, depending on the borrower’s situation.
• RAP extends the forgiveness timeline to 30 years (up from 20 or 25).
Overview of Recent Changes to Student Loan Repayment Plans
Major changes to federal student loan repayment plans are in motion. Currently, borrowers have access to a variety of repayment plans, including the Standard 10-year plan, extended 25-year plan, and several income-driven repayment options.
Starting on July 1, 2026, new borrowers will have only two repayment plans to choose from: a Standard plan that spans 10 to 25 years, depending on your loan amount, and a Repayment Assistance Plan (RAP) that tailors your payment amount to your income.
Some current income-driven repayment options – specifically SAVE, PAYE, and ICR – will be phased out by July 1, 2028 or sooner. If you’re on any of those plans, you’ll have to switch to a different program before they’re eliminated.
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Why the Repayment Plans Are Changing
Federal repayment plans are changing due to the OBBBA legislation. The OBBBA student loan changes include replacing the current repayment plans with two new plans and altering student loan borrowing limits for graduate loans. (Limits for undergraduate loans will remain the same.) It also eliminated the Grad PLUS loan program for new borrowers after July 1, 2026.
Proponents of the bill claim the student loan changes will streamline repayment, limit excessive borrowing, and prevent runaway interest charges. Some borrower advocates, however, warn that borrowers will end up in debt for longer and pay more interest overall. Some borrowers may also see their monthly payments increase, though others could see them go down.
Breakdown of the New Repayment Plan Options
Understanding exactly how repayment plans are changing can help you prepare. Here’s a closer look at what’s coming for federal student loans.
Modified Income-Driven Repayment (IDR) Plans
Current borrowers might have a loan through one of these income-driven repayment plans: PAYE, IBR, ICR and the SAVE plan. Starting on July 1, 2026, the Education Department will offer one income-based repayment plan for new borrowers, called the Repayment Assistance Plan. While the current plans adjust your monthly payments to 10% to 20% of your discretionary income, RAP adjusts them to 1% to 10% of your adjusted gross income.
RAP also waives unpaid interest and reduces your monthly payments by $50 per dependent. RAP has a longer repayment timeline than the current plans, though — 30 years, while the current ones end after 20 or 25.
If you’re already on an income-driven plan, you can stay on it until it ends on July 1, 2028 or sooner. After that time, you can switch to IBR or RAP.
For borrowers who take out loans on or after July 1, 2026, the RAP plan will be the only income-driven repayment option, and one of only two repayment options. The second option for new borrowers after July 1, 2026 will be an updated Standard plan with four fixed repayment terms of 10, 15, 20, or 25 years based on the amount you borrow. This Standard plan will not take income into account.
Phase-Out or Termination of Existing Plans
The current IDR plans — SAVE, PAYE, and ICR — will be phased out by July 1, 2028, thanks to the student loan repayment changes. IBR will still be available to current borrowers, but it won’t be an option for loans borrowed on or after July 1, 2026.
If you’re on SAVE, PAYE, or ICR, you can switch to IBR or the new RAP once it becomes available. You can also wait until the plans sunset, but then your loan servicer will automatically place your loans on the RAP.
Borrowers who are currently on the Standard 10-year plan, Graduated Plan, or Extended Plan can choose to stay on those plans. However, they won’t be available to new borrowers after July 2026.
As mentioned, new borrowers will have a new Standard Repayment Plan option that spans 10 to 25 years, depending on their loan amount.
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How to Switch to a New Repayment Plan
You can switch to a new repayment plan by submitting a repayment plan request to your loan servicer or applying for an IDR plan on the Federal Student Aid website. You may want to start the process by using the Loan Simulator tool at StudentAid.gov to compare your options. In the spring of 2026, the RAP had not been added to the tool as a borrowing option; it should be added no later than July 1, 2026. You might find other calculators that include RAP as non-government student-loan organizations update their online offerings. Try periodically searching the web for “RAP student loan calculator.”
Effects on Loan Forgiveness Programs
The student loan repayment changes may have an effect on your eligibility for student loan forgiveness. Here are some key changes to be aware of:
• RAP has a longer timeline to forgiveness: Current income-driven plans end in forgiveness after 20 or 25 years if you’re still carrying a balance. The new RAP plan requires 30 years of repayment before offering forgiveness, a full five or 10 years longer than the current options.
• Parent PLUS loans not eligible for RAP: Parent PLUS loans won’t be eligible for RAP, which means they may not have a pathway to Public Service Loan Forgiveness (currently, you have to be on the IBR or 10-year Standard Repayment Plan to qualify for Public Service Loan Forgiveness). If you already have Parent PLUS loans, you’ll need to consolidate your loans and get them on an IDR plan before July 1, 2026; otherwise you’ll be closed out of any income-driven repayment option.
• Potential taxation on loan forgiveness: The American Rescue Plan Act exempted student loan forgiveness from federal taxation through the end of 2025, but that protection wasn’t renewed. You could see a tax bill if you get forgiveness from an IDR plan in 2026 or later. The good news is that forgiveness from PSLF isn’t taxed.
Tips for Choosing the Right Repayment Plan
With all the changes around student loan repayment options, it can be tricky to choose the right one. Here are some steps that can help:
• Use a loan simulator tool: The tool will estimate your payments under different repayment plans and reveal your long-term interest charges. It can help you pick a plan that meets your goals, whether that’s to pay off student loans quickly, get the lowest monthly payment, or reduce the total amount you pay over time. You can also use our student loan payoff calculator to estimate your borrowing costs.
• Consider your loan forgiveness plans: If you plan to pursue PSLF, make sure your loans are on a qualifying repayment plan. And if you have Parent PLUS loans, get them on an IDR plan while you still can.
• Weigh monthly payments with long-term costs: While you may want the lowest monthly payment, that could mean more time in debt and total interest costs. Consider striking a balance between the length of student loan terms and monthly payments you can afford.
• Stay informed: Some current borrowers will retain access to their current plans, while others will have to switch by July 1, 2028 (or be auto-enrolled in a new plan by their loan servicer). Stay up to date about all your options so you can choose a plan that best fits your financial situation and repayment goals.
The Takeaway
If you borrow federal student loans after July 1, 2026, you’ll have only two federal government repayment programs to choose from, thanks to the One Big Beautiful Bill student loans changes: the new Standard Plan or the Repayment Assistance Plan. Existing borrowers have the option to switch to RAP but may also be able to retain access to their current plan until mid-2028. Staying informed about the upcoming changes can help you avoid surprises and make proactive decisions. Consider the impact on student loan forgiveness too. And remember that student loan refinancing may be an option worth exploring as well.
By familiarizing yourself with the upcoming student loan repayment plan changes and key deadlines, you can choose a path that works for your budget and goals.
FAQ
Can I switch repayment plans even if I’ve already consolidated my loans?
You can switch federal student loan repayment plans even if you’ve already consolidated your student loans. However, you’ll have fewer repayment options if you consolidate your loans on or after July 1, 2026.
Do the new repayment changes impact loan forgiveness timelines?
The new federal student loan Repayment Assistance Plan requires 30 years of repayment before forgiving your remaining balance, while the current income-driven plans offer forgiveness after 20 or 25 years. The repayment changes won’t impact Public Service Loan Forgiveness (PSLF) rules, however, which will continue to offer forgiveness after 120 qualifying payments and 10 years of working in public service.
Will my monthly payment increase under the new student loan plan?
Your monthly federal student loan payments could increase under the new repayment plans, particularly RAP. RAP sets monthly payments to 1% to 10% of your adjusted gross income (the current plans use discretionary income), depending on your income level. It also requires a minimum monthly payment of $10, whereas the current plans can set your monthly payment as low as $0.
How do I know if my loan servicer applied the correct plan?
You can check your federal student loan repayment plan by logging into your account on your student loan servicer’s website. You can also sign into your Federal Student Aid account at StudentAid.gov to view your current repayment plan.
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