This week, the Trump administration announced a proposed settlement with the state of Missouri that said it would end the Saving on a Valuable Education (SAVE) plan — upending the repayment plans of millions of student loan borrowers across the country. Initially, President Trump’s One Big Beautiful Bill had set the student loan repayment plan's expiration date as July 1, 2028. However, the new deal, which is pending court approval, would end it even sooner than expected. The Department of Education said ...

Core Insights - The article addresses the challenges faced by recent graduates, particularly in managing student loans before securing employment [1][2] Group 1: Deferment Options - New graduates often struggle to manage living expenses and loan payments without income, making deferment options crucial [3] - Federal student loans typically offer a six-month grace period post-graduation, during which payments are not required, although interest may accrue on private loans [3] - Making small payments during the grace period can help reduce long-term interest costs [3] Group 2: Income-Driven Repayment Plans - Most federal borrowers qualify for income-driven repayment plans, which adjust monthly payments based on income [4] - Plans such as Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR) provide options for managing payments and potential forgiveness of remaining balances after a set term [5] - PAYE caps payments at 10% of discretionary income, while IBR bases payments on income and family size, forgiving balances after 20 or 25 years [5]

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]