Key Points
- Income-driven repayment options are narrowing, and SAVE is being phased out.
- Parent PLUS borrowers face hard deadlines for consolidation and forgiveness access.
- Borrowers may need to act quickly to avoid losing eligibility for key repayment plans.
President Donald Trump’s signature on the “Big Beautiful Bill” has set in motion some of the most sweeping changes to the federal student loan system in over a decade. The legislation, which passed through budget reconciliation, reduces the number of available repayment plans and restructures how families will pay for college. While most of the bill’s provisions do not take immediate effect, some borrowers have a limited window to act.
Whether you're in repayment on your student loans now, stuck in the SAVE student loan forbearance, or figuring out how to pay for college this fall, you may need to think through your plan.
The list below outlines what student loan borrowers should consider doing now to prepare for higher payments, fewer repayment options, and a more restricted path to forgiveness.
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1. Start Budgeting For Higher Payments
The One Big Beautiful Bill officially eliminated the SAVE, PAYE, and ICR student loan repayment plans. The plans don't end immediately, but will end sometime between July 1, 2026 and June 30, 2028.
Borrowers who were in the SAVE and PAYE plans need to plan for higher monthly student loan payments. These plans, both of which cap payments at 5% and 10% of discretionary income, respectively, likely have lower payments than the IBR plan which borrowers will migrate into (some borrowers on PAYE will have the same payment, while others will see it rise).
In mid-2026 borrowers can opt for the new Repayment Assistance Plan (RAP), and you can run our RAP calculator now to estimate your payment. However, depending on what plan you were on, payments may still be higher.
With interest resuming on SAVE accounts starting August 1, 2025, borrowers will feel the impact of inaction quickly. If you’re not ready to switch plans, consider how to absorb future payment increases by reviewing your current budget and prioritizing debt payments.
2. Know Where You Stand With IBR vs. RAP
RAP, the new Repayment Assistance Plan, will launch no later than July 1, 2026. It features subsidies for unpaid interest and principal, but forgiveness will take 30 years. Borrowers should weigh RAP’s long timeline against IBR’s 20- or 25-year forgiveness schedule.
If you’re currently in SAVE or PAYE, explore switching to IBR to continue building IBR-based forgiveness credit. But be careful: switching from RAP back to IBR does not preserve your IDR-based forgiveness history. Once you move into RAP, there’s no going back (loan forgiveness wise). They don't want borrowers jumping onto RAP for a lower payment, then moving back to IBR for a 20 or 25 year loan forgiveness schedule.
Remember, you're not obligated to leave SAVE now for IBR, but it's recommended for many.
3. Existing Parent PLUS Borrowers Need To Act Now
If you have an existing Parent PLUS Loan, you'll lose access to income driven repayment and Public Service Loan Forgiveness (PSLF), unless you consolidate by June 30, 2026 and enroll in an income driven repayment plan.
Under the bill, only borrowers who consolidate by June 30, 2026 and enroll in income-driven repayment by July 1, 2028 will retain access to the amended version of IBR (mentioned above).
If you hold Parent PLUS loans and want to preserve eligibility for programs like Public Service Loan Forgiveness or IDR-based forgiveness, consolidation is the only route. These borrowers face some of the harshest cuts under the new law, including exclusion from RAP.
Important to note: loan consolidation can take time. You should likely start this process in February or March of 2026 at the latest to ensure it's completed in time.
4. Future Borrowers: Know The New Restrictions
If you're planning on borrowing student loans in the future, you have to know the new restrictions.
First, for undergraduates, Parent PLUS Loans will be capped starting in fall 2026. If your parent borrowers this year (fall of 2025), you'll be grandfathered in for three academic years for the loan caps. However, if they borrow another loan in 2026, they "contaminate" their loans and will only have access to the standard repayment plan going forward.
For graduate students, Grad PLUS loans are ending, and graduate student loans will capped. This might lead more graduate students to private student loans for grad school.
Also starting July 1, 2026, new borrowers will be restricted to RAP and the Standard plan. That includes borrowers who consolidate existing loans after this date. The IBR plan will only remain available to current borrowers who do not take out new loans.
5. Follow Up, Follow Up, Follow Up
At the end of the day, nobody cares more about your money than you - not me, not the government, and not your loan servicer. They're here to answer specific questions, but they may not know your whole financial situation.
That's on you - please research and understand the specifics of whatever plan you're pursuing.
Backlogs in forgiveness processing, delayed updates to IDR payment counts, and long customer service wait times are already testing the limits of the student loan system. The Big Beautiful Bill cuts funding to the Consumer Financial Protection Bureau and the Supreme Court just allowed layoffs at the Department of Education, which means borrowers may be on their own when problems arise.
Borrowers need to understand alternative routes for help, such as state student loan ombudsman or local congressional offices. Keeping detailed records and screenshots of applications and servicer interactions will become even more important.
What Happens Next?
Although many of the bill’s provisions will phase in over the next one to three years, interest is resuming next month for borrowers in the SAVE plan. And other changes are happening to processing times, staffing, and more.
Decision points are arriving quickly for those pursuing forgiveness or struggling with affordability. Making sense of the new rules now can help minimize surprises later. Take a few minutes in the next week and create a plan for your student loans - then revisit the plan every three months for the foreseeable future.
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Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.