Summary
The Education Department will soon change how federal student loans are repaid. President Trump signed the One Big, Beautiful Bill Act into law, introducing a significant update to the Income-Based Repayment plan starting in December 2025. Other existing student loan repayment plans will be phased out by 2028.
Key Facts
- President Trump signed the One Big, Beautiful Bill Act into law in July 2025.
- Starting late December 2025, changes to the Income-Based Repayment (IBR) plan will take effect.
- The "partial financial hardship" requirement for IBR will be removed, allowing more people to use it.
- Other repayment plans, like PAYE and ICR, will be phased out by July 2028.
- A new plan called the Repayment Assistance Plan (RAP) begins on July 1, 2026, with a 30-year loan forgiveness timeline.
- From January 2026, forgiven loan amounts under income-driven plans will count as taxable income.
- New borrowing limits for federal student loans will start in July 2026.
- Parent PLUS loan borrowers must consolidate into the Direct Loan program by July 2026 to keep benefits.
