In 2025, 42.5 million people have federal student loans, with 29% enrolled in income-driven repayment plans. President Trump’s One Big Beautiful Bill (OBBB) changes student loan repayment options significantly, affecting current and future borrowers. The OBBB introduces a new standard repayment plan for loans taken out after July 1, 2026, based on loan balances.
A new Repayment Assistance Plan (RAP) under the OBBB requires borrowers to pay at least $10 per month, with payments based on income minus $50 per dependent. Interest is waived if payments don’t cover the full amount, but borrowers will be in repayment for 30 years. This plan applies to loans taken out after July 1, 2026.
New borrowers after July 1, 2026, will have access only to the new standard and RAP repayment plans, losing access to current IDR plans, extended repayment, and graduated repayment. Existing undergraduate and graduate borrowers have until July 1, 2028, to transition to new plans under the OBBB, such as IBR, RAP, or Standard Repayment.
Parent PLUS Loan borrowers can currently consolidate loans and qualify for an ICR plan, but the OBBB eliminates this option for new borrowers after July 1, 2026, who will only be eligible for standard repayment. Borrowers should be aware of these changes and act accordingly to avoid losing repayment options. Parent PLUS Loan borrowers will no longer be eligible for alternative payment plans starting July 1, 2026. Existing borrowers must consolidate their debt by that date and enroll in an IDR plan to access alternative payment plans. Those who don’t consolidate will only have access to the standard plan.
Consolidating with a Direct Consolidation Loan before July 1, 2026, can provide relief for borrowers struggling with payments. It offers access to repayment plans they wouldn’t qualify for otherwise, potentially providing 30-year terms and more affordable payments. However, the OBBB reduces the usefulness of Direct Consolidation Loans.
The new RAP and standard repayment plans have longer terms, affecting legacy borrowers who consolidate after July 1, 2026, by losing access to alternative payment plans. The OBBB has made significant changes to federal financial aid and repayment options, with details still forthcoming on some updates like the elimination of the ICR plan.
The Department of Education announced that the ICR plan will be eliminated, but the deadlines for borrowers to enroll in it before elimination are unclear. Stay updated on changes by checking the announcement page on studentaid.gov and contact your loan servicer for help understanding loan options or enrolling in a different repayment plan.
Read more at Yahoo Finance: What student loan repayment will look like after Trump’s budget bill