Student loan borrowers across the United States are on the verge of seeing meaningful relief, as the U.S. Department of Education prepares major updates to its repayment system. These changes—driven by provisions in President Donald Trump’s spending package, often referred to as the “big beautiful bill”—could expand eligibility for affordable repayment plans and help higher earners access long-awaited benefits.
According to newly updated guidance on the Federal Student Aid (FSA) website, the Department of Education expects to finish implementing major changes to the Income-Based Repayment (IBR) plan by December 2025, removing the long-standing requirement to prove “partial financial hardship.” This shift could help millions of student loan borrowers reduce their monthly payments and accelerate their path to debt relief.
IBR Becomes Easier to Access—Even for Higher Earners
For years, the Income-Based Repayment plan was considered one of the most helpful income-driven repayment options. Under IBR, student loan borrowers pay 10% of their discretionary income—or 15% for borrowers with older loans—with full debt cancellation after 20 or 25 years, depending on when their loans were issued.
However, there was one major obstacle: borrowers had to demonstrate a partial financial hardship to qualify. This meant their income-calculated monthly payment had to be lower than what they would pay on a standard 10-year plan. As a result, many higher-income borrowers and those on certain other repayment plans were automatically excluded.
Trump’s spending bill permanently removed this requirement, and the Department of Education says this update will be fully implemented in December 2025. Until then, servicers have been directed to hold IBR applications that would otherwise be denied, ensuring borrowers don’t miss out on eligibility once the system changes take effect.
Higher education expert Mark Kantrowitz emphasized that once this barrier is removed, most federal student loan borrowers—including higher earners—will qualify for IBR. This expansion is significant, especially as several older repayment plans are being phased out.
Fewer Repayment Plans Ahead as ICR and PAYE Get Eliminated
These improvements to IBR come during a major restructuring of federal student loan repayment options. President Trump’s tax and spending package effectively eliminates two long-standing repayment plans:
Income-Contingent Repayment (ICR)
Pay As You Earn (PAYE)
Both plans will be phased out by July 1, 2028.
According to Kantrowitz, 2.5 million borrowers are currently enrolled in ICR or PAYE. Many of these student loan borrowers will find they have lower monthly bills under IBR, especially those transitioning from ICR. Borrowers who entered PAYE after July 1, 2014, however, may not experience a major difference in their monthly payments when switching to IBR.
It is important to note that monthly payments under IBR will be higher than those under the now-overturned SAVE plan, which was eliminated as part of Trump’s legislation.
Borrowers Won’t Lose Progress Toward Forgiveness When Switching Plans
One of the most common concerns among student loan borrowers is whether switching repayment plans will reset their progress toward forgiveness.
According to Betsy Mayotte, president of The Institute of Student Loan Advisors, this won’t happen.
“The good news is that all of these plans cross-pollinate,” Mayotte explained. “Whatever count borrowers have on ICR or PAYE will also count toward the new plan they switch into.”
This provides reassurance for borrowers who have already spent years making qualifying payments under other IDR plans.
New ‘Repayment Assistance Plan’ (RAP) to Launch in July 2026
In addition to revamping IBR, the Department of Education is preparing to launch another new income-driven repayment option: the Repayment Assistance Plan (RAP).
Beginning July 1, 2026, RAP will become an alternative IDR plan with a longer forgiveness timeline of 30 years, compared to IBR’s 20-25-year structure. Many people will have lower monthly payments because the repayment term is longer. This provides an alternative for individuals seeking to minimize their monthly payments.
Borrowers will be able to switch between plans at any time, giving them flexibility based on changes in income, family size, or financial circumstances.
IBR Processing Delays and Lawsuit-Driven Pressure
The IBR plan has been at the center of controversy in recent months. A lawsuit filed by the American Federation of Teachers (AFT) accused the Education Department of delaying IBR application processing, even for borrowers who had already reached the forgiveness threshold.
Following legal pressure, the department agreed to continue processing forgiveness for eligible borrowers. Several student loan borrowers have already reported that their balances were completely wiped out, confirming that forgiveness is still being granted for those who have met the required number of qualifying payments.
The Department of Education also recently concluded negotiations on a broad repayment overhaul, including:
Replacing several existing IDR plans with two main options
Adding new borrowing caps for graduate and professional programs
Restructuring federal oversight as part of a larger organizational shake-up
These rapid changes have raised concerns among some lawmakers, particularly as the administration moves forward with efforts to dismantle portions of the Department of Education.
Senator Elizabeth Warren has formally requested that the department’s Inspector General investigate whether these changes have weakened oversight of student loan servicers, which are responsible for providing crucial support to millions of borrowers.
What Student Loan Borrowers Should Do Now
People who have student loans should keep a close eye on information from the Department of Education because a lot of changes are happening at once. To stay ready, do these key things:
1. You should ask for IBR again if the first one was turned down.
If you didn’t get IBR because you didn’t have enough money problems, you should try again.
2. Find out how much each plan costs every month.
Individuals who take out loans can utilize online resources to determine potential savings through IBR or RAP.
3. Look back at how far you’ve come in your efforts to forgive
If you change plans, your count will not start over, but it’s important to check your new qualifying payments once the new method is in place.
Last Thoughts
The upcoming changes will be a big turning point for millions of people who have student loans. The new RAP plan takes away the reasons why people are in financial trouble and makes more people qualified for IBR. This means that borrowers may be able to lower their monthly payments and get out of debt more quickly.
As the Department of Education makes changes to the system through 2025 and 2026, borrowers should stay up to date and take action to get the most out of the new system.