The Future of Student Loan Repayment: What Borrowers Need to Know *

Big changes may be on the horizon for federal student loans. Congressional Republicans are pushing forward a sweeping overhaul of the student loan repayment system—one that could reshape how millions of Americans repay their debt. Whether you’re a current borrower, a future student, or just trying to make sense of it all, here’s a straightforward breakdown of what’s on the table.

 

The Basics: Two Options for Future Borrowers

If this proposal becomes law, most existing repayment plans would be phased out. In their place, future borrowers would choose between just two plans:

1. The Standard Plan

This plan would function a lot like a mortgage:

• Monthly payments are fixed and predictable.

• Repayment term depends on how much you owe:

  • Under $25K → 10 years

  • $25K–$50K → 15 years

  • $50K–$100K → 20 years

  • Over $100K → 25 years

Existing borrowers won’t be eligible for this plan, but can stay on their current plans.

2.  The Repayment Assistance Plan (RAP)

This income-based plan is designed for borrowers who need more flexibility:

• Payments are based on your adjusted gross income (AGI).

• Example:

  • Earn under $10K? Pay $10/month.

  • $10K–$20K? Pay 1% of income.

  • $20K–$30K? Pay 2%, scaling up to 10% at $100K+.

• Everyone pays at least $10/month, ending the $0 payment option.

• No more ballooning balances: Any unpaid interest each month is waived.

• If your payment doesn’t touch your principal, the government will contribute extra toward your balance—like a monthly mini-forgiveness.

That last part is key. It’s designed to give borrowers hope and visible progress. “It’s a drip-drip-drip of loan forgiveness,” says Jason Delisle of the Urban Institute.

But here’s the kicker: Once you choose this plan, you can’t switch out. Critics call it a “roach motel”—you can check in, but you can’t leave.

What About Current Borrowers?

If you took out loans before July 1, 2026, you’ll still have a few more options:

• Stick with existing plans.

• Choose the new Repayment Assistance Plan.

• Or opt into an older Income-Based Repayment (IBR) plan.

IBR Breakdown:

• Payments: 15% of your discretionary income (a much higher percentage than newer plans).

• Forgiveness: After 20 years (undergrad) or 25 years (grad).

• This could still benefit long-time borrowers close to forgiveness.

What’s Going Away?

If the plan passes, President Biden’s SAVE Plan—currently on legal hold—would be scrapped entirely. That plan had allowed $0 payments for low-income borrowers and forgiveness after 20–25 years. Under the new system, forgiveness shifts to 30 years.

And for graduate borrowers, especially those with large balances, the new plan could mean more out-of-pocket costs and fewer forgiveness benefits.

Key Takeaways

• Two plans only for new borrowers: fixed payments or income-based payments.

• Minimum $10 monthly payment—even for low-income borrowers.

• Balances won’t grow due to unpaid interest.

• No switching plans once enrolled in RAP.

• Forgiveness comes slower—after 30 years.

What Should Borrowers Do?

• Current borrowers: Evaluate your existing plan and timeline. If you’re nearing forgiveness, IBR might make more sense than switching.

• Future borrowers: Think carefully about the long-term impact of your repayment choice—especially since you can’t change it later.

• Low-income borrowers: That $10/month may seem small, but it could be significant. Weigh your options carefully and stay informed.

The proposed changes could simplify a notoriously complex system—but they also bring new trade-offs, especially for the most vulnerable borrowers. As always, knowing your options is the first step toward financial empowerment.

Stay tuned as Congress debates and borrowers weigh in.

Questions? Confused about your own loan options? Reach out to a certified student loan advisor or check out resources at studentaid.gov.

Turner, C. (2025, May 12). Trump-era overhaul of student loan program could reshape repayment and forgiveness. NPR. https://www.npr.org/2025/05/12/nx-s1-5389644/trump-student-loan-program-forgiveness-overhaul