Student Loan Payments Set to Surge Under New Law: What to Know

Student loan borrowers across the U.S. could soon see their monthly payments jump by hundreds of dollars following the signing of the One Big Beautiful Bill Act by President Donald Trump. The sweeping legislation replaces key income-driven repayment (IDR) plans—including Biden’s SAVE plan—with new repayment structures that critics say will burden millions of borrowers.

Why It Matters

• Borrowers are expected to pay thousands more per year under the new law.
• SAVE and other IDR plans are eliminated, removing income-based protections.
• Delinquency is already rising: 1 in 3 borrowers were behind on payments in 2025.
• The bill may worsen financial pressure for low-income and middle-class families.

Key Changes Under the One Big Beautiful Bill Act

• SAVE and IDR plans eliminated
• New plans introduced:
  • Repayment Assistance Plan (RAP)
    • Payments: 1%–10% of income, $10 minimum
    • Forgiveness after 30 years (longer than SAVE’s timeline)
    • Tighter rules for deferment and hardship pauses
  • Standard Repayment Plan
    • Fixed payments over 10 to 25 years
    • No income-based adjustments

Projected Impact on Borrowers (Annual Increases)

• $2,929 for typical degree-holders
• $1,761 for those with some college
• $2,808 for families of four headed by a college graduate
• Payment spikes could reach hundreds per month, experts warn

Other Major Provisions

• Loan forgiveness delayed to 30 years under RAP
• Forbearance options reduced, increasing default risk
• Caps on federal borrowing:
  • $100,000 for graduate students
  • $200,000 for law/medical students
  • $65,000 for parent borrowers
• Graduate PLUS loans phased out for new borrowers
• Pell Grant eligibility tightened

What Experts Are Saying

• Michael Ryan, Finance Expert: “That $200,000 cap for medical school? It’s like trying to buy a house with a mortgage that covers half the cost.”
• On private loans: “They lack flexibility, charge higher interest, and don’t qualify for public service forgiveness.”

What Happens Next

• Full implementation will be phased in from 2026 to 2028.
• Borrowers on SAVE may have up to one year to switch plans.
• Experts warn that up to 1.8 million borrowers could default by July 2025.
• Rehabilitation options expanded, but aggressive collections may increase.
• Financial strain from higher payments could impact homeownership, family planning, and long-term stability.

Borrowers are urged to monitor federal updates closely and review repayment options as deadlines approach.