Student loan borrowers will have fewer repayment options under GOP megabill

The Senate narrowly passed its spending megabill on Tuesday night. The House is aiming to vote on the bill and send it to President Donald Trump by July 4, but it's unclear whether Republicans have the votes to pass the bill in its current form.

Among numerous provisions aimed at reducing federal spending and increasing tax revenue, the bill lays out some major changes for federal student loan borrowers.

Most of the changes to student borrowing, such as lower limits on graduate loans, won't impact borrowers who are out of school and currently in repayment. But those taking out loans next summer and after, as well as an estimated 8 million borrowers awaiting further action on the Saving on a Valuable Education income-driven repayment plan, can expect fewer repayment options if the House passes the bill as is.

The change to repayment plans could be one of the most impactful provisions of the bill for current and future federal student loan borrowers.

Two years to choose from two plans

The Senate's bill narrows the number of repayment options currently available to federal student loan borrowers down to just two plans: a standard repayment plan and a new income-driven plan known as the Repayment Assistance Plan. Borrowers on any of the currently existing repayment plans, except the SAVE plan, will be able to keep their plans and monthly payments the same.

Borrowers whose loans are dispersed on or after July 1, 2026 and those currently enrolled in the SAVE plan — who are in an administrative forbearance since federal courts blocked the plan from going into effect in July 2024— will have only the two repayment plan options.

Borrowers on the SAVE plan would likely have to choose another plan anyway if federal courts retain the temporary injunction against it. Under the Republicans' legislation, those borrowers will have between July 2026 and July 2028 to choose a new plan. After July 1, 2028, borrowers will automatically be moved into the income-based repayment plan.

The new standard plan will give borrowers a fixed monthly payment to have their loans paid off between 10 and 25 years, depending on the size of their loans. The current standard plan has a loan term of 10 years, regardless of the amount borrowed.

The Repayment Assistance Plan will calculate monthly payments as between 1% and 10% of a borrower's discretionary income, down from the current offerings that set payments at 10%, 15% or 20% of a borrower's income.

One analysis found that borrowers' monthly payments could spike by hundreds of dollars on RAP, compared with what their payments would be on the SAVE plan.