Core Insights - The "One Big Beautiful Bill" will significantly change the student loan repayment system starting next year, impacting both current borrowers and those still in school [1] Group 1: Changes to Repayment Plans - The Department of Education will discontinue the Saving for a Valuable Education (SAVE) plan, expected to end in 2026, affecting millions of borrowers who have been in forbearance for over a year [2][4] - Starting July 1, 2026, new borrowers will have two repayment options: the Repayment Assistance Plan (RAP), which is income-driven, and a new tiered Standard Plan based on loan size [5][6] Group 2: Implications for Borrowers - Over 7.7 million borrowers currently on the SAVE plan will need to explore alternative repayment options by 2026 [4] - Borrowers should assess whether the RAP is more beneficial than their current plan, considering their loan balance and future income [7][10] - Online calculators will be provided by the Department of Education to help borrowers compare repayment plans based on their financial situation [8][10] Group 3: Recommendations for Existing Borrowers - Existing borrowers are encouraged to consider transferring to other income-driven repayment plans, such as Income-Based Repayment (IBR), as interest continues to accrue during forbearance [12][14] - It is advised that borrowers who can afford to make payments should transition to IBR sooner rather than later to avoid increasing loan sizes [14][15]

Core Insights - Significant changes to student loans and repayment plans are set to take effect in 2026, particularly affecting first-time borrowers in the fall of 2026 [1][2] Group 1: New Repayment Plans - The Repayment Assistance Plan (RAP) will be introduced as a new income-driven repayment plan, available from July 1, 2026, allowing borrowers to adjust payments based on income [3] - Some borrowers may find RAP payments more affordable, with the government contributing at least $50 monthly to help reduce loan balances [4] - However, lower-income borrowers may face higher total costs under RAP, as it requires a minimum payment of $10 per month, eliminating the current option for $0 payments [5] Group 2: Impact on First-Time Borrowers - First-time student loan borrowers in the fall of 2026 will not have access to existing income-driven repayment plans, with RAP being the only option available upon graduation [6][7] - The average recent graduate borrower is expected to pay less under RAP compared to existing plans, but those with children may incur higher costs due to the minimum payment requirement [8] Group 3: New Loan Limits - The "One Big, Beautiful Bill" introduces new loan limits that generally reduce the amount and types of federal student loans available [11] - Parents of undergraduate students will face new limits on Parent PLUS loans, affecting nearly 30% of borrowers, while new graduate students will lose eligibility for PLUS loans [12][13] - Existing borrowers before June 30, 2026, will not be subject to these new limits and can continue borrowing under current terms [14] Group 4: Tax Implications - Loan forgiveness received in 2026 or later will be taxable, reversing the tax exemption that applied to borrowers reaching forgiveness thresholds between 2021 and 2025 [16][18] - Borrowers who qualify for forgiveness before 2026 but experience delays due to lawsuits will still benefit from tax-free forgiveness [17] Group 5: Changes to PSLF Eligibility - New rules finalized by the Trump administration will allow the Department of Education to deny Public Service Loan Forgiveness (PSLF) to certain organizations deemed "illegal," affecting nonprofit workers [19] - This rule could impact workers in hospitals or nonprofits focused on immigrant families and diversity initiatives, although legal actions may delay its implementation [20]

Core Insights - High school seniors entering college in fall 2026 will encounter a transformed federal student loan landscape due to the 'One Big Beautiful Bill' which implements significant changes effective July 1, 2026 [1][2] Loan Limits - Stricter loan limits will be imposed on Parent PLUS loans, allowing families to borrow only up to $20,000 per year with an aggregate limit of $65,000 per child, contrasting with the current system that has no aggregate limit [4][5] - Nearly 30% of Parent PLUS loan borrowers will be impacted by these new limits, primarily affecting middle-to-higher income families not eligible for Pell Grants [5][6] Repayment System Changes - A new repayment system will be introduced for college students taking loans after July 1, 2026, which will differ significantly from current options [7][9] - Borrowers will be placed in a standard repayment plan based on their loan size, with repayment periods ranging from 10 to 25 years [11][12] - The new Repayment Assistance Plan (RAP) will replace two existing income-driven repayment plans by 2028, potentially increasing monthly payments for lower-income borrowers compared to current plans [13][14]

Core Insights - The Saving for a Valuable Education (SAVE) repayment plan for federal student loans is ending, requiring millions of borrowers to select a new, likely more expensive repayment plan [1][11] Group 1: Transition from SAVE Plan - 7.7 million borrowers will soon need to exit the SAVE plan, which was an income-driven repayment plan initiated by the Biden administration [3] - The Department of Education has not set a specific date for when borrowers must leave the SAVE plan but has advised them to transition to another repayment plan now [3][4] - The Income-Based Repayment (IBR) plan is currently recommended as the most stable option for borrowers transitioning from SAVE, as other income-driven plans will be eliminated after July 1, 2028 [4] Group 2: New Repayment Options - A new income-driven repayment plan, the Repayment Assistance Plan (RAP), will offer lower monthly payments than the IBR plan for some borrowers, but it will not be available until at least July 1, 2026 [5] - Payments for borrowers under the IBR and Pay as You Earn (PAYE) plans will be approximately $100 to $200 more per month compared to the SAVE plan, depending on their income and family size [7][8][11] Group 3: Financial Impact on Borrowers - The median yearly income for a worker with a bachelor's degree is $80,132, and a single borrower with this income would see payments increase by about $100 on IBR and PAYE compared to SAVE [7] - For a borrower with a spouse and two children, monthly payments could increase by $200 on IBR and PAYE compared to SAVE, with ICR payments exceeding $500 [8] - Lower-income borrowers, such as those in early childhood education, would face similar increases, with the RAP plan being a more affordable option, albeit not available until mid-2026 [12][13][14]

Core Insights - Major changes to the federal student loan system will take effect on July 1, 2026, primarily due to the Trump administration's One Big Beautiful Bill Act (OBBBA) [1] Group 1: Repayment Plans - New repayment options will be limited to two plans for loans disbursed after July 1, 2026, while existing borrowers can continue with three current plans until they transition [2] - Current income-driven repayment plans (PAYE, ICR, IBR) will phase out, with PAYE and ICR ending by July 1, 2028, leaving IBR and the new Repayment Assistance Plan (RAP) as options for future borrowers [4][3] - The RAP will set payments based on income, with potential forgiveness after 30 years [7] Group 2: Borrowing Limits - Federal borrowing limits will tighten starting July 1, 2026, with part-time students facing reduced limits based on enrollment status [11] - Current borrowers can access previous borrowing limits for three years or until program completion, with graduate students able to borrow up to $20,500 annually [12][16] Group 3: Grad PLUS Loans and Parent Loans - The Grad PLUS loan program will be eliminated after July 1, 2026, affecting graduate and professional students seeking financing [13] - Parent PLUS loans issued after July 1, 2026, will not qualify for Public Service Loan Forgiveness (PSLF), limiting options for future borrowers [17][18] Group 4: Deferment and Tax Implications - New loans will not be eligible for economic hardship or unemployment deferments starting July 1, 2027, and forbearance will be limited to nine months within a two-year period [20] - Student loan forgiveness may become taxable again after 2025, impacting borrowers who receive forgiveness in 2026 or later [21] Group 5: Preparation Steps - Borrowers are advised to review their current repayment plans, compare future options, and note key deadlines to prepare for the upcoming changes [22][23] - Parent borrowers should act quickly to access income-driven plans or PSLF eligibility, and consider potential tax implications of loan discharge [25]

Core Insights - A new income-driven repayment plan, the Repayment Assistance Plan (RAP), is set to be implemented by July 1, 2026, replacing existing income-driven plans and potentially increasing costs for certain borrowers, particularly low-income individuals [3][4][19] Summary by Category New Repayment Plan - The RAP will open for enrollment by July 1, 2026, and will eliminate all existing income-driven repayment plans within three years [3] - Borrowers who take out loans before the implementation date can still enroll in the current Income-Based Repayment (IBR) plan [3] Impact on Borrowers - Monthly payments under RAP are expected to be significantly higher for lower-income borrowers compared to the IBR plan, with some facing payments of at least $10 per month instead of $0 [4][14] - The average lower-income borrower could pay 734% more under RAP than under IBR, with total payments over the life of the loan increasing from $0 to $12,287 for those with families [14][19] Financial Examples - A borrower with an annual income of $23,475 would pay $4,512 over 20 years under IBR, while under RAP, they would pay $38,510 over 30 years [9][10] - For an average income borrower earning $68,400, total payments would be $54,867 under IBR and $55,165 under RAP, indicating minimal difference for this income bracket [15][18] Additional Provisions - The Department of Education will contribute up to $50 a month to lower the principal balance for borrowers, but this support may not be sufficient for those with low incomes and high loan amounts [13]

Core Insights - The article discusses the changes to income-driven repayment (IDR) plans and loan forgiveness for federal student loan borrowers due to President Trump's One Big Beautiful Bill (OBBB) [1][16] IDR Plans Overview - Approximately 29% of federal loan borrowers are enrolled in IDR plans, which base monthly payments on a percentage of discretionary income and offer repayment terms of 20 or 25 years [2] - Current IDR plans include Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE) [5][10] Payment Examples - A borrower with $20,000 in Grad PLUS Loans at an 8.9% interest rate would pay $226 monthly under a standard plan, but only $96 under PAYE, with forgiveness after 20 years [3] Future Changes to IDR Plans - Significant changes to IDR plans will take effect in July 2026, transitioning to a single Repayment Assistance Plan (RAP) for new borrowers, requiring 30 years of payments for forgiveness [5][16] - Current borrowers must transition to IBR, RAP, or standard repayment by July 1, 2028, as ICR and PAYE will be phased out [18] Parent PLUS Loan Borrowers - New Parent PLUS Loan borrowers after July 1, 2026, will not be eligible for ICR or loan forgiveness through IDR plans [19] - Current Parent PLUS borrowers must consolidate loans and enroll in ICR before the deadline to maintain eligibility for forgiveness [20]