Student loan repayment is about to look very different under President Trump's budget bill, which was signed into law on July 4. A number of existing repayment plans are getting axed under the bill, and a new type of income-driven repayment plan is being introduced.
Borrowers will find themselves with fewer options for paying back their federal student loans. While they previously had seven repayment options to choose from, they will soon have just two. These shifts will not take effect immediately, but they will make "radical changes to the way Americans pay for college," said The New York Times. Not only will these rules "fundamentally alter the way borrowers repay their debts," they may also "make access to higher education more difficult." Here is what to know.
What repayment options will exist under Trump's bill?
Under Trump's "One Big Beautiful Bill," as of July 1, 2026, new federal student loan borrowers will have just two repayment options: a standard repayment plan and an income-driven repayment plan called the Repayment Assistance Plan (RAP).
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The standard repayment plan has "fixed monthly payments over 10-25 years — the larger the debt, the longer the repayment window," said NPR. Meanwhile, RAP "will allow borrowers to pay 1% to 10% of their income on a monthly basis, for up to 30 years," which is notably a "longer timeline" than current income-driven plans, said CBS MoneyWatch, citing Aissa Canchola Bañez, the policy director at advocacy group Student Borrower Protection Center. After 30 years of payments of at least $10 per month, any remaining debt is forgiven.
How will the repayment changes affect existing borrowers?
Millions of borrowers may be "forced to change their student loan repayment plan," as "most income-driven repayment (IDR) plans will no longer be available," said NerdWallet. This includes the Saving on a Valuable Education (SAVE) plan, the Pay as You Earn (PAYE) plan and the Income-Contingent Repayment (ICR) plan.
If you are already in one of these plans, you "will be able to move into the new RAP plan," though you will "also maintain access to at least one existing income-driven plan, Income-Based Repayment, if that works best," said the Times. However, there is one big caveat: If you take out "any new loans on or after next July 1," then you will only have access to the "new RAP and standard repayment plans," said the outlet, citing borrower advocates.
What should borrowers do ahead of the changes?
If you are a borrower currently on an income-driven repayment plan and want to stay on one, you "must switch to Income-Based Repayment (IBR) no later than July 1, 2028" — otherwise, you "will be moved to the RAP plan," said NerdWallet.
It is also worth weighing whether the RAP plan, available July 1, 2026, could be a better fit. "RAP tends to have a lower monthly payment for low- and moderate-income borrowers," said student loan expert Mark Kantrowitz to the Times. However, said the outlet, it also "has a longer repayment term before any debt forgiveness occurs, so borrowers may pay more over the life of the loan, unless they qualify for the Public Service Loan Forgiveness program."
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How will the new Repayment Assistance Plan for student loans work?the explainer The Repayment Assistance Plan (RAP) will replace existing income-driven repayment plans
