If you ever wake up one morning and feel like nobody even knows you exist, missing a few monthly payments on your outstanding federal student loan can make you extremely popular in a very short amount of time. For the nearly 43 million borrowers currently carrying student debt in the United States, potential rule changes by the Trump administration on repayment assistance plans may make it more difficult to maintain a low profile through timely student loan payments.
The budget bill passed through Congress during the summer of 2025 took direct aim at fixed federal student loan repayment plans, announcing the intent to task the Department of Education with overhauling the student loan repayment system and phasing out current income-driven repayment plans (IDR) for new loans. It was brief on details, leaving millions worried about what student loan borrowers might face.
The Reimagining and Improving Student Education (RISE) committee met in early October to discuss proposals for revamping the repayment options for current borrowers and new borrowers who will require loans in the future. Signs point to RISE reaching consensus on the Standard repayment plan, which will offer different tiers for fixed repayment plans while sunsetting most of the current IDR plans. For many, particularly low-income borrowers, this could mean increases in their monthly payments, a more difficult path to forbearance, and student loan forgiveness.
Look Out! Here Come the Acronyms!
Most people seeking a higher education degree at a college or university will require loans to afford the costs. Financial aid in the form of a student loan is available through private direct loan servicers or the federal government. Federal student aid typically offers lower interest rates and doesn’t consider an applicant’s credit history, but it does have loan limits. The Free Application for Federal Student Aid (FAFSA) determines financial need and eligibility on a first-come, first-served basis. Federal loans also have a six-month grace period after graduation before monthly payments on the loan balance begin.
Private loans through credit unions, student loan firms, and banks often have higher interest rates and less forgiving terms. The interest rates can be affected by an applicant’s bad credit or lack of a credit history, which may require a co-signer to be involved. Unlike the federal government, which can garnish paychecks for delinquent accounts not making their minimum monthly payments, most states require private loan services to get a court order to extract payment through that method.
The Biden administration provided student loan forgiveness on the remaining balance of millions of former student borrowers, but President Donald Trump scuttled plans to continue the practice. An injunction in March 2025 blocked further acts of forgiveness through the Saving on a Valuable Education (SAVE) plan, and challenges from both sides of the aisle are working their way through the court system, although some are paused due to the shutdown.
The Department of Education is seeking to make three IDR programs unavailable by July 1, 2028, forcing members to shift to a different plan. Income-based repayment (IBR) plans such as the Income-Contingent Repayment (ICR) plan, the Pay as You Earn (PAYE) plan, and the SAVE plan are scheduled to be chopped. Those in SAVE have also seen accrued interest reinstated to their accounts over the summer. The plan will also eliminate the path to loan forgiveness after 10 years through the Public Service Loan Forgiveness (PSLF) program for government employees and qualifying non-profit organizations.
Will It Get a Bad Rap?
By July 1, 2026, the only fixed repayment plan will be the new Standard repayment plan. Depending on the size of the loan balance, the new Standard plan will have tiers with a 10- to 25-year repayment term. Those already enrolled in either SAVE or PAYE will eventually be moved into the to-be-created Repayment Assistance Plan (RAP).
While RAP plans to halt future balance growth on a loan with a principal and interest subsidy, it also extends the minimum period before loan forgiveness consideration to 30 years, longer than any currently offered by an IDR plan. There may also be an ICR qualifying payment required before enrollment in an IBR is permitted.
RISE’s final work period and voting session are scheduled for the first week of November, but for now, the proposed new plans are still short on regulatory clarity. This won’t help settle the nerves of those with outstanding student debt, who already have enough to worry about. The American Rescue Plan Act of 2021 is scheduled to expire at the end of 2025, which means student loan forgiveness under current IDR plans will become taxable again. That could prove difficult on lower-income households already struggling under the yoke of student debt.
Related Resources
- Consequences of a Student Loan Default (FindLaw’s Bankruptcy Law)
- The FindLaw Guide to Student Debt (pdf)
- Your Options When You Can’t Repay Student Loans (FindLaw’s Debt Relief)
