How The Big Beautiful Bill Impacts Student Loan Borrowers

Federal student loan borrowers have gotten accustomed to outright uncertainty over the past five years. A prolonged Pandemic moratorium kicked off the ambivalence back in 2020 — things got accentuated by extensions to this in 2022 and 2023, more complex after the introduction of amended repayment plans by the Biden administration, and then even more confusing after legal challenges and a new administration with a desire to upend those adjustments. 

Now, all of those changes have officially come undone after the passage of Trump’s “Big, Beautiful Bill” late last week. 

Here’s what you’ll need to know.

​​The biggest shift here is the complete unwinding of the Biden-era repayment framework. The SAVE plan, which currently covers 8 million borrowers, will be repealed by July 2028 — though it may end sooner, depending on the outcome of a court challenge. For now, borrowers enrolled in SAVE are largely in administrative forbearance until at least September, meaning they’re not required to make payments while the legal battle plays out. After that, it’s unclear whether the plan will continue to operate or be forced to sunset early. Two other plans, PAYE and ICR, are also set to expire in 2028. Once those go away, borrowers will be required to transition into either IBR or the newly introduced Repayment Assistance Plan (RAP) — unless they’re ineligible for both, in which case they'll be placed in one of the fixed repayment plans.

IBR (Income-Based Repayment) will remain largely as-is, with two versions depending on when you took out your loans. The bill removes the “partial financial hardship” requirement and keeps monthly payments capped at the 10-year standard amount based on your balance at plan entry. Like before, borrowers can still file taxes separately to exclude spousal income. One caveat: any time spent in RAP won’t count toward forgiveness under IBR, so switching plans midstream resets the forgiveness clock.

The Repayment Assistance Plan (RAP) is replacing SAVE — but it’s less generous

Starting in July 2026, RAP becomes the new income-driven repayment option for most borrowers. Unlike SAVE, which used discretionary income and allowed some borrowers to pay as little as $0/month, RAP bases monthly payments on total adjusted gross income (AGI) and sets a minimum payment of $10 for anyone earning under $10,000 a year.

From there, the plan scales up using fixed percentage bands:

• $10K–$20K AGI → 1% of income annually

• $20K–$30K → 2%

• Up to a max of 10% for incomes above $100K

Monthly payments are calculated by dividing the annual percentage by 12 and subtracting $50 for each dependent child.

As for loan forgiveness — RAP offers forgiveness after 30 years, waives any unpaid interest each month, and includes a small sweetener: up to $50/month in matching principal payments. Borrowers can file taxes separately to exclude spousal income, but unlike SAVE or IBR, RAP doesn’t proportionally adjust payments for married couples repaying jointly. It also requires annual income recertification, and if you miss it, your payment snaps back to a fixed 10-year repayment amount based on your balance at plan entry. Importantly, time spent in RAP does not count toward IBR forgiveness, so switching between the two midstream resets the forgiveness timeline. 

Other changes to know

Beyond repayment, the Big Beautiful Bill introduces a range of structural changes to how federal student loans work, especially for new borrowers and Parent PLUS participants.

Loan limits are tightening. For the first time, federal student loans now carry lifetime caps:

• $257,500 total across all federal loans

• $100,000 total for grad students ($20,500/year)

• $200,000 total for professional degrees ($50,000/year)

• $65,000 total for Parent PLUS loans ($20,000/year)

Grad PLUS loans are being phased out entirely for students starting programs after July 1, 2026. Current borrowers are exempt from the new limits for three academic years or until graduation, whichever comes first.

A new standard plan replaces the old one for anyone who takes out loans or consolidates after July 1, 2026. The repayment term will depend on your total loan balance:

• Under $25K: 10 years

• $25K–$50K: 15 years

• $50K–$100K: 20 years

• Over $100K: 25 years

Parent PLUS borrowers have a narrow path to remain eligible for income-driven repayment. They must consolidate by June 30, 2026, and make at least one IDR payment by June 30, 2028. If they miss that window or borrow after that date, they’ll be restricted to the new standard plan only — cutting them off from PSLF eligibility entirely.

Deferments and forbearances are being restricted.

• Economic hardship and unemployment deferments will be eliminated for loans issued after July 1, 2027.

• Forbearance will be capped at 9 months within any 24-month period for new loans after that date.

If you're currently on SAVE, PAYE, or ICR, you still have time — but that window is closing. Now’s the moment to take stock, map your options, and plan ahead. If you’re eyeing grad school or considering new loans, July 1, 2026, is the line in the sand. After that, you’ll be stepping into a different, more streamlined repayment framework. Ultimately, the Big Beautiful Bill alters how student loans are repaid and consolidates the system. And for millions of borrowers, the decisions made between now and then could shape the next decade — or three — of their financial lives.