Americans with outstanding federal student loans have three years to transition from their current repayment plan to one of two new options codified by President Donald Trump’s “big, beautiful bill.”
By July 1, 2028, the permanent changes will apply to all federal aid borrowers who still hold balances, while prospective borrowers will face the changes starting July 1, 2026.
Republicans argue that the plan, tucked inside Trump’s $3.3 trillion budget reconciliation bill, will not only save the federal government $278 billion by 2034 but also simplify and streamline the federal student loan borrowing and repayment process.
The bill terminates existing income-contingent repayment plans – including the ICR plan, PAYE plan, and now defunct Biden-era SAVE plan – and replaces them with two alternatives. Those options are either a Standard Repayment Plan or a Repayment Assistance Plan based on the borrowers’ income.
The Standard Repayment Plan, which currently lasts 10 years, will be modified to allow borrowers to pay a fixed monthly payment, based on the loan amount instead of income, over a period of 10 to 25 years.
Lower-income borrowers could choose the Repayment Assistance Plan and pay a lesser percentage of their adjusted gross income, capped at 10%.
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Author: Ray Hilbrich
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