Blogging for Change

Student Loan Borrowers are About to Have Fewer Options

by Jesse Campbell on
9/25/2025
in Managing Student Loans
Young couple reviewing paperwork together.

Big changes are on the horizon for federal student loan borrowers. Thanks to the One Big Beautiful Bill Act (OBBBA), the number of income-driven repayment (IDR) plan options will decrease in 2026, and according to early analysis this may make student loan repayment more expensive for a large number of borrowers.

Let's take a look at which plans are going away, which plans will remain, and how those changes may impact you.

Which student loan payments plans are going away?

Income-Contingent Repayment (ICR)

One of the oldest income-driven plans, ICR is available to all Direct Loan borrowers.

  • Monthly payment is 20% of your discretionary income (what remains after paying for essential needs and taxes) or what you would pay on a fixed 12-year plan (adjusted for income), whichever is smaller.
  • Forgiveness is available after 25 years.

Pay As You Earn (PAYE)

The PAYE plan is available to any federal student loan borrower who received their first loan on October 1, 2007 or later. They must also have received a disbursement of a Direct Loan on or after October 1, 2011.

  • Monthly payment is 10% of your discretionary income, however your payments can never be more than the amount they would be for a standard 10-year repayment plan.
  • Forgiveness is available after 20 years.

Saving on a Valuable Education (SAVE)

SAVE never really went into effect, thanks to various legal challenges. It was made available to almost all Direct Loan borrowers.

  • Monthly payment is 5% of discretionary income for undergraduate loans and 10% of discretionary income for graduate loans. If you have both, the percent is the weighted average of all of your loans. The income protection threshold is higher for SAVE, though, meaning that more income is exempt before calculating your payment.
  • Forgiveness is available after 20 years for undergraduate loans and 25 years for graduate loans.

Which student loan payment plans will still exist?

Income-Based Repayment (IBR)

The IBR plan is available to most federal Direct Loan and Federal Family Education Loan (FFEL) borrowers.

  • Monthly payment is 10% of discretionary income for new borrowers as of July 1, 2014, and 15% for borrowers prior to that, however your payments can never be more than the amount they would be for a standard 10-year repayment plan.
  • Forgiveness is available after 20 years for new borrowers (July 1, 2014 and after) and 25 years for older borrowers.

Repayment Assistance Plan (RAP)

RAP is the newest IDR plan for federal student loan borrowers. Beginning on July 1, 2026, RAP and the Standard Repayment Plan will be the only repayment options for new student loan borrowers. Existing student loan borrowers will need to move to either IBR or RAP by July 1, 2028, at which point ICR, PAYE, and SAVE will all be eliminated).

  • Monthly payment will be based on Adjusted Gross Income (AGI) rather than discretionary income. While the specific tiers aren't know yet, payments may be as low as 1% of your AGI and as high as 10% of your AGI depending on your income, and those payments will scale up or down depending on your current income.
  • Forgiveness is available after 30 years.

How will this impact my student loan payments?

Every situation is unique, and there will likely be some borrowers who find the new RAP plan more affordable. Compared to IBR specifically, there's a good chance that your monthly payments may be lower on RAP.

A recent analysis from Protect Borrowers (formerly Student Borrower Protection Center), however, suggests that RAP, "forces borrowers to make more expensive monthly payments than almost every current IDR plan that it replaces."

Using an annual income of $80,236, which was the median income for bachelor's degree holders in 2024, the analysis found that:

  • A single borrower would pay $535 per month on RAP vs. $188 on the SAVE plan.
  • A family of four would pay $435 per month on RAP vs. $33 on the SAVE plan.

The lower your income and the tighter your margins, the more likely it is that you may have a harder time with RAP. Specifically, RAP carries a minimum monthly payment of $10, eliminating the possibility of a $0 a month payment, which is currently available to some low-income households under the old IDR plans.

Additionally, basing payments on AGI instead of discretionary income takes away a lot of nuance and wiggle room, especially for those with larger families and limited incomes.

How can I prepare for these changes?

Keep an eye on your student loans and be mindful of deadlines. While July 1, 2028 is the deadline for those legacy plans to be eliminated, there's always a chance that they go away even sooner. So be proactive and get your loans on the best plan (of your limited options) for your situation.

Meanwhile, this might be the right time to address any lingering non-student loan debts. While your student loan options may soon be very limited, you still have a number of different ways to address things like credit card debt.

At MMI, we offer a variety of debt relief solutions to suit your specific goals and needs, including plans that can have you out of credit card debt in as little as 24 months. Complete a free financial analysis to see which option is best for you.

Tagged in Advice for students, Debt strategies, Student loan options

Jesse Campbell photo.

Jesse Campbell is the Content Manager at MMI, with over ten years of experience creating valuable educational materials that help families through everyday and extraordinary financial challenges.

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