How Trump’s Big Beautiful Bill Impacts Student Loans — and What Borrowers Should Do Now
Written by
Dawn Allcot
Edited by
Jenna Klaverweiden
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Student loan borrowers should start preparing for July 1, 2026, when specific provisions of President Donald Trump’s “One Big Beautiful Bill” go into effect, marking changes from the Higher Education Act of 1965 and limiting options for borrowers on income-driven repayment (IDR) plans. The new Repayment Assistance Plan (RAP) will be the only choice, apart from the standard repayment plan, for new borrowers as well as existing borrowers who reconsolidate or take out new loans.
In this case, however, having fewer options may be a good thing for borrowers. “By streamlining options down to just RAP and the standard plan for new borrowers, the government is addressing the confusion that’s historically made it difficult for borrowers to make informed decisions,” said Ken Ruggiero, CEO of Ascent Funding.
Also see what to do if you’re falling behind on federal student loan payments, according to Suze Orman.
RAP Loan Terms Borrowers Should Understand
Borrowers who choose RAP will make payments ranging from 1% to 10% of their income, with a minimum monthly payment of $10. Ruggiero called the plan “notably flexible.” There are also built-in principal subsidies of up to $50 per month and built-in interest subsidies to prevent rising balances, which has been an issue with past IDR plans.
Loans will be forgiven after 30 years of qualifying payments. Payments through RAP may also qualify for Public Student Loan Forgiveness (PSLF) after 10 years of payments for workers who qualify.
Should You Choose RAP?
Although RAP offers some advantages, “that doesn’t necessarily mean it’s better for every borrower,” per Ruggiero.
Younger borrowers with lower income may find lower monthly payments with RAP. As their capacity to pay increases, payments will increase. “Borrowers pursuing Public Service Loan Forgiveness (PSLF) should know that RAP-qualifying payments count toward forgiveness, which is a big plus,” Ruggiero said.
If you already have a high income or if you have a smaller loan balance and just want to pay it off as fast as possible, a standard plan might be more cost-effective in the long run.
“Factors like age, income trajectory, loan size and how long someone’s been repaying all matter in this decision,” Ruggiero said.
Consult With a Professional
If you’re facing student loan debt now or planning to take out loans to finance your education, you still have nearly a year before making any decisions about RAP or the standard repayment plan. However, “it’s smart to start evaluating your options now,” Ruggiero said.
He suggested speaking to a financial consultant or your loan servicer before making any moves.
“The OBBB allocated $1 billion to help servicers upgrade their systems and improve customer service, ensuring they can provide more accurate and timely support,” Ruggiero explained. “The key is to get clarity before any decision becomes irreversible, especially for those considering loan consolidation, which could limit their repayment plan options moving forward.”
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