How Existing Student Loan Borrowers Are Affected By The ‘Big, Beautiful Bill’

Many federal student loan borrowers will need to change repayment plans in the next three years, and that will hike monthly costs for millions of people.

The ‘Big, Beautiful Bill,’ which President Donald Trump has signed into law, revamps and simplifies the student loan repayment system for future borrowers. It also forces millions of existing borrowers who take out loans before July 1, 2026, to move to a different repayment plan.

How Will the Bill Change The Repayment Plan System?

Currently, all borrowers are placed into the standard repayment plan, which gives borrowers 10 years to pay their debt balance in equal payments. If a borrower needs to lower the monthly payments, they have the option to switch to one of four income-driven repayment plans: Income-Based Repayment, Paying for a Valuable Education, Income-Contingent Repayment, or the Saving for a Valuable Education plan.

The ‘Big, Beautiful Bill’ phases out the PAYE, ICR, and SAVE plans. As of July 1, 2028, these three plans will no longer be available to borrowers.

Instead, borrowers will only have two income-driven options: the IBR plan or the newly created Repayment Assistance Plan.

The RAP plan, which will be available to borrowers starting July 1, 2026, is a new income-based plan that uses a different method to calculate payments. Payments for borrowers who enroll in the RAP plan will be between $10 per month and 10% percent of their adjusted gross income (AGI), with the percentage climbing when their income does.

Additionally, the RAP plan allows borrowers to subtract $50 a month for every dependent child they have. RAP also raises the amount of time borrowers need to be in repayment before they get loan forgiveness to 30 years, from 20 or 25 years under current income-driven repayment plans.

Will This Bill Affect You?

If you are currently enrolled in PAYE, ICR, or SAVE, the bill requires you to transition into either a standard repayment plan, IBR, or RAP by July 1, 2028.

It’s important to note that the bill only requires borrowers in the affected plans to select a different option. Borrowers currently in a standard plan or the IBR plan can remain there.

How Will Your Payments Change?

The ‘Big, Beautiful Bill’ will increase payments for many existing borrowers in an income-driven repayment plan, but it depends on the borrower and their balances.

The bill adds $3,694 to the amount the average SAVE borrower will pay over their lifetime, according to an estimate from the Wharton School at the University of Pennsylvania.

The 1.3 million borrowers currently enrolled in PAYE will not see much of an increase in monthly payments if they enroll in IBR since the formulas for both plans are fairly similar. However, according to Investopedia calculations, the RAP plan can be $60 to almost $170 more expensive monthly than PAYE for the average borrower.

For most borrowers, the ICR plan has always had the most expensive monthly payments. However, for the almost 1.2 million borrowers currently enrolled in ICR, the average borrower will see their payments decrease under both IBR and RAP, according to Investopedia calculations.