The Department of Education clarified some key details on massive changes that are coming to federal student loan repayment as it advanced new regulations earlier this month. More than 40 million borrowers could be affected by the reforms.
The proposed regulations represent the next step in enacting the “One Big, Beautiful Bill Act” that President Donald Trump signed into law last summer. Congressional Republicans passed the legislation on a party-line vote. The bill directs the Department of Education to establish regulations that will facilitate the implementation major changes to various federal student loan programs.
The department convened a special rulemaking group called the Reimagining and Improving Student Education, or RISE, committee to review the proposed regulations. The RISE committee met earlier in October and discussed several key regulatory provisions that will fundamentally change federal student loan repayment for millions of Americans under the “One Big, Beautiful Bill Act.” Here’s a breakdown.
Changes To Fixed Federal Student Loan Repayment Plans
The “One Big, Beautiful Bill Act” makes significant changes to fixed federal student loan repayment plans, which are plans not tied to a borrower’s income. Currently, there is a 10-year Standard plan, a 25-year Extended plan, and a consolidation Standard plan of up to 30 years. Under these plans, monthly payments are fixed at the beginning of the student loan’s repayment term and don’t change over the course of repayment. There are also Graduated repayment plans, where monthly payments start off lower but then gradually increase over time on a fixed schedule.
Under the “One Big, Beautiful Bill Act,” these repayment plans will all be eliminated for borrowers who take out any new federal student loan, or consolidate existing loans, on or after July 1, 2026. After that, the only fixed repayment plan option will be a new tiered Standard repayment plan that has a term of 10 to 25 years, depending on the size of the loan balance.
The Department of Education confirmed during this month’s RISE committee meeting that borrowers who already have federal student loans and who do not take out new student loans or consolidate after the cutoff date will maintain access to the “legacy” fixed repayment options, regardless of when they actually enter repayment.
“Based on feedback from negotiators representing state officials, student loan servicers, and legal assistance organizations, ED clarified within the regulatory text that continued eligibility for standard, extended, and graduated is based on the date of loan disbursement, not the date at which a borrower enters repayment,” said The Institute for College Access and Success, or TICAS, in a blog post last week summarizing the RISE committee hearing. “During a non-binding pulse check used to gauge whether negotiators are close to consensus on proposed text, all negotiators gave language on fixed repayment plans a thumbs up, indicating the committee is likely to reach consensus on these provisions at the next meeting.”
If the committee reaches consensus on any topic, the Department of Education generally must accept the committee’s recommendation. Otherwise, without consensus, the department has more flexibility to implement its own interpretation of the statute.
Changes To Student Loan Income Driven Repayment Plans
The “One Big, Beautiful Bill Act” will also make substantial changes to income-driven repayment, or IDR, and these reforms will have profound and lasting effects. IDR plans allow borrowers to make payments based on a formula applied to their income and family size. Historically, these plans provided a path to student loan forgiveness, typically after 20 or 25 years in repayment. IDR plans are also typically a required component of Public Service Loan Forgiveness, or PSLF, which provides for loan forgiveness after 10 years in repayment while working in qualifying nonprofit or government employment.
Under the bill, three of the four existing IDR plans (ICR, PAYE, and SAVE) will be sunsetted by July 1, 2028. The IBR plan, which includes an older version and a newer, more affordable version for borrowers who first took out loans after July 1, 2014, will remain intact, with some modifications. The legislation also will create a new plan called the Repayment Assistance Plan, or RAP, in 2026. RAP may be more expensive for lower-income borrowers and for those who have been enrolled in SAVE or PAYE, and RAP also will have a 30-year repayment term before a borrower can qualify for student loan forgiveness, which is far longer than any existing IDR plan. But RAP also will have a principal and interest subsidy that will stop future balance growth, which is a unique benefit.
