Trump Says He’ll Repeal Federal Student Loan Income Based Repayment. Here’s What Borrowers Face
President Trump's administration is dismantling the federal student loan income-based repayment system that helped millions of borrowers manage their debt...
President Trump’s administration is dismantling the federal student loan income-based repayment system that helped millions of borrowers manage their debt payments. Under changes that become law through the “One Big Beautiful Bill Act” passed in 2026, the SAVE repayment plan is being eliminated and replaced with a more restrictive option called the Repayment Assistance Plan (RAP). The new system will charge borrowers significantly higher monthly payments, even as they earn the same income.
For a borrower with a bachelor’s degree earning a typical salary, the shift could mean paying $3,425 more per year in student loan payments—money that would otherwise go toward rent, groceries, childcare, or other necessities. More than 7 million student loan borrowers currently using the SAVE plan face a deadline to leave it and transition to the new RAP plan, potentially within months. If you have federal student loans and have structured your budget around lower monthly payments based on your income, this change will directly affect your finances. The new RAP plan caps payments at 1% to 10% of adjusted gross income, depending on your loan type and degree level, but eliminates the savings and debt forgiveness benefits that made income-driven repayment attractive to borrowers in the first place.
What Exactly Is Changing in Trump’s Federal Student Loan Repayment Plan?
The trump administration is replacing income-driven repayment plans with the new Repayment Assistance Plan (RAP) effective July 1, 2026 for all new loan disbursements. The RAP sets payment rates at 1% to 10% of adjusted gross income, with a flat $10 per month minimum for borrowers whose income falls below $10,000 per year. This sounds protective, but the structure removes critical borrower protections. Unlike the SAVE plan, which capped payments at 10% of discretionary income for graduate degrees and offered
Which Borrowers Are Affected and What Happens to SAVE Plan Users?
More than 7 million borrowers currently enrolled in the SAVE plan must transition to another plan by a deadline the Department of Education will announce. The SAVE plan, launched under the Biden administration, reduced payments for millions of borrowers earning less than $32,000 per year to zero dollars monthly while still accumulating payments toward forgiveness. Its elimination affects borrowers across all income levels, from recent college graduates to mid-career professionals, including those pursuing Public Service Loan Forgiveness (PSLF).
Borrowers on PAYE and ICR plans face mandatory transitions as well, though the Department of Education has indicated current borrowers will be notified before their plans are discontinued. Undergraduate borrowers will transition to different RAP provisions than graduate borrowers, creating a complex system where borrowers need to understand their eligibility category. The Department has not yet published detailed guidance on how transition will work for borrowers who have partially paid down their loans or who are close to loan forgiveness milestones. This lack of clarity is itself a risk—borrowers who miss deadlines or receive confusing notices could face sudden payment increases or loss of repayment protections.
What Should Borrowers Do Right Now?
Borrowers should immediately review their current repayment plan and gather documentation of their income and household size, as this information will determine their RAP payment rate. Document your current monthly payment amount and compare it to early estimates of what RAP would cost you. Many borrowers can access repayment estimators through the Federal Student Aid website or through their loan servicer, though these tools may not yet reflect final RAP calculations.
Borrowers pursuing Public Service Loan Forgiveness should consult guidance from PSLF advocates, as the transition to RAP could affect their forgiveness timelines. Those with Parent PLUS loans or private student loans should note that RAP only applies to federal undergraduate and graduate loans—these borrowers will not have access to the new plan. Borrowers facing the most dramatic payment increases should also contact their Congressional representatives, as this is an active policy area and legislative changes could still affect how the transition is implemented.
What Protections Are Borrowers Losing?
The shift from SAVE to RAP eliminates several key borrower protections that prevented financial hardship. The SAVE plan’s zero-payment provision for borrowers earning less than 225% of the poverty line disappears entirely. RAP’s $10 monthly minimum means borrowers in poverty are still required to make loan payments, even if those payments represent a significant share of their monthly income. This requirement directly contradicts the original purpose of income-based repayment—to ensure that student loan payments don’t exceed a borrower’s ability to pay.
Debt forgiveness timelines also change. The SAVE plan offered forgiveness after 20 years for undergraduate loans and 25 years for graduate loans. RAP extends forgiveness periods significantly and ties them to loan type rather than degree level, meaning some borrowers will face decades of longer repayment periods. Borrowers who expected loan forgiveness around age 45 or 50 may now not receive forgiveness until age 65 or later—if at all, given that RAP allows indefinite extensions for borrowers whose income remains below repayment thresholds. This matters because the average federal student loan borrower has nearly $40,000 in debt, and forgiveness timelines affect retirement planning and financial stability across someone’s entire career.
How Did We Get Here? The Policy Context
The move to eliminate income-based repayment reflects a fundamental shift in Trump administration philosophy toward student debt. The administration argues that income-based repayment plans are too generous and encourage borrowers to avoid paying full amounts. This position ignores the evidence that income-based repayment prevents default among low-income borrowers and that the plans have been in place since 1993—long before the policy debates of the 2020s.
The “One Big Beautiful Bill Act,” which enacted these changes, consolidated multiple policy objectives into one legislative package. Student loan repayment changes were grouped alongside other federal spending measures, giving borrowers little opportunity to engage separately with the decision. The lack of a specific negotiation period or public comment process means borrowers and advocates had limited chance to raise concerns before the law passed.
What Comes Next for Federal Student Loan Borrowers?
The Department of Education must still publish detailed regulations explaining how RAP will function, how transitions will work for borrowers on existing plans, and how income calculations will be verified. This regulatory process typically takes months, and final guidance may not be available until 2026. Borrowers should expect multiple notices from their loan servicers as transition deadlines approach.
Looking ahead, the student loan landscape will likely become more stratified. Borrowers with higher incomes may absorb payment increases more easily, but low-income borrowers—those for whom income-based repayment was specifically designed—will face the most severe squeeze. Whether Congress revisits these changes will depend on political dynamics and whether the predicted payment increases generate sufficient constituent concern to prompt legislative reconsideration. For now, borrowers should prepare for higher monthly payments and plan accordingly.
Conclusion
Trump’s repeal of federal student loan income-based repayment represents the most significant change to borrower protections in two decades. More than 7 million borrowers currently using SAVE will be forced into a new system with higher payments, longer forgiveness timelines, and fewer protections for those in financial hardship. The real-world impact is substantial—an average borrower will pay thousands of dollars more each year, affecting their ability to save, invest in homes, and build financial security.
Borrowers should act now by understanding their current plan, estimating their RAP payments, and exploring whether they qualify for alternative protections or exemptions. Advocate for yourself by contacting elected representatives if these changes would create genuine hardship. Stay informed as the Department of Education releases guidance, and don’t assume your loan servicer will automatically move you to the best available option—you may need to take action yourself to protect your interests.
