The One Big Beautiful Bill Act (OBBBA) made some significant changes to the student loan landscape. Many of the changes will not take place until 2026 or beyond since the Department of Education (ED) will need to put in development regulations through the Federal Regulation process, which requires public comment. Here's a summary of what we know now.
Effects on Existing Student Borrowers
Repayment Plan options for Current Borrowers: Borrowers with no new loans made on or after July 1, 2026, can continue to be eligible to enroll in the current Standard, current Income-Based (IBR), Graduated, and Extended repayment plans, and could also opt in to the new RAP. They can also choose the PAYE and ICR plans until July 1, 2026. Borrowers enrolled in ICR, PAYE, or SAVE after July 1, 2026, must transition to a new repayment plan (IBR) by July 1, 2028. If no selection is made, then they will be moved to the RAP plan.
Changes to Income-Based Repayment (IBR): The law removes the requirement for borrowers to demonstrate a partial financial hardship to enroll in IBR. Additionally, the law retains cancellation for balances of loans repaid under IBR at 25 years. While previous versions of the bill aimed to eliminate the IBR for new borrowers (effective July 2014), this provision, with a 10% of income and 20-year maximum repayment period, remains in effect for those who had no loan balance on July 1, 2014, and no loans after July 1, 2025.
Borrowers in the SAVE Forbearance: The law requires borrowers in the SAVE forbearance to transition to an eligible repayment plan by July 1, 2028. Those who do not change plans will be moved to the RAP plan. If they have loans ineligible for the RAP plan (Parent Borrowers), they will be transferred to the Income-Based Repayment Plan.
**Special Note: As of Aug 1, 2025, borrowers in the SAVE forbearance will no longer have 0% interest per ED’s announcement on 7/9/2025
Effects on Student Borrowers after July 1, 2026
Repayment Plan Options for New Borrowers: Borrowers with new loans made on or after July 1, 2026, can be repaid using only two plans: a new standard repayment plan with fixed monthly payments and fixed terms ranging from 10 to 25 years, based on the amount borrowed and the new income-based repayment plan, RAP. The RAP plan is not expected to be available for enrollment until July 1, 2026.
Repayment Assistance Plan monthly payments calculation: Borrowers who either don’t have an Adjusted Gross Income (AGI) or whose AGI doesn’t reasonably reflect the borrower’s current income are required to provide the Department of Education (ED) with documentation to calculate their monthly payments.
Repayment Assistance Plan monthly payment amount: The law requires a $10 minimum monthly payment under RAP, and a borrower’s RAP monthly payment will be based on their AGI and number of dependents. Income and dependents are calculated separately for married borrowers who filed taxes separately from their spouses.
The next Blog post will discuss the impact on Parent Plus loans.