House Republicans recently passed a spending megabill that introduces significant changes to federal student loan repayment options. This bill is set to have considerable effects on current and future borrowers, particularly those taking out loans from next summer onwards.
Starting in July 2026, the number of available repayment plans will be reduced to just two: a standard repayment plan and a new income-driven repayment option called the Repayment Assistance Plan (RAP). The standard plan will offer borrowers a consistent monthly payment that will allow them to pay off their loans within a 10 to 25-year period, a shift from the current standard 10-year term. Meanwhile, the RAP aims to set monthly payments at between 1% and 10% of a borrower’s discretionary income, a reduction from existing plans which range from 10% to 20%.
However, not all borrowers will be affected by these changes immediately. Currently enrolled borrowers in certain repayment plans, like the SAVE plan, will maintain their current setup, at least temporarily. Yet, as the legislation stands, those whose loans are distributed after July 1, 2026, will need to select one of the two new repayment options, while others may be prompted to reevaluate their plans due to potential legal challenges surrounding the SAVE initiative.
A report indicated that monthly payments under the new RAP might increase significantly compared to those under the SAVE plan, potentially by hundreds of dollars. This adjustment could put additional pressure on borrowers already managing student loan debts.
This legislation arrives as part of broader efforts to manage federal spending and enhance tax revenue, indicating a shift in policy that prioritizes fiscal responsibility. As the situation develops, borrowers are encouraged to stay informed about their options and potential opportunities for managing their student loan repayments.
In light of these changes, it’s hopeful that with the introduction of income-driven options like RAP, some borrowers may find manageable paths to repaying their loans based on their financial situations.