Student loan debt can create significant financial strain for those just beginning their financial journey, as well as for individuals who should be building wealth as their careers progress. Total outstanding student loan debt in the United States is approximately $1.78 trillion, averaging just under $40,000 per federal student loan borrower—about 42.7 million Americans.
Many borrowers end up paying more each month than necessary simply because they are unaware of the full range of relief options available to them. If you do not select a repayment plan, your loan servicer will typically place you on the Standard Repayment Plan, which generally requires fixed payments over up to 10 years, or between 10 and 30 years for consolidation loans.
Unfortunately, many borrowers are unaware of alternative repayment options that can lower monthly payments and, for some professions, even lead to loan forgiveness. At the same time, borrowers who are aware of these options may be hesitant to pursue them, as several of the Biden administration’s debt relief initiatives have faced legal challenges since their announcement.
The Department of Education has offered Income-Driven Repayment (IDR) plans since 1994. These plans base monthly payments on income and family size. The most widely used options have included Saving on a Valuable Education (SAVE), Income-Based Repayment (IBR), and Pay As You Earn (PAYE).
The One Big Beautiful Bill Act (OBBBA) significantly alters the federal student loan repayment landscape. Under the Act, the SAVE Plan, PAYE Plan, and Income-Contingent Repayment (ICR) Plan will be phased out and eliminated by July 1, 2028. Borrowers currently enrolled in one of these plans must transition to a new repayment option by that date. IBR will remain available, but only for loans disbursed before July 2026.
The Act also revises the Standard Repayment Plan and introduces the Repayment Assistance Plan (RAP). Under the revised Standard Repayment Plan, which applies to new loans disbursed on or after July 1, 2026, repayment repayment length will depend on the loan balance, with repayment periods extending up to 25 years for balances of $100,000 or more.
RAP is a new income-based repayment plan effective July 1, 2026, and will replace most existing IDR plans for new borrowers. Monthly payments will be calculated as a percentage of a borrower’s adjusted gross income. While RAP primarily affects borrowers with loans disbursed on or after July 1, 2026, current borrowers may opt in. Borrowers still enrolled in SAVE, ICR, or PAYE plans in 2028 will be automatically moved to RAP if no action is taken.
Despite these changes, the Public Service Loan Forgiveness (PSLF) program remains in place. PSLF forgives federal student loans for eligible public servants after 10 years of qualifying service and requires 120 qualifying payments made under an income-driven repayment plan, including the new RAP, while working for a qualifying nonprofit or government employer.
Student loan repayment is complex—not only because of the variety of loan types and repayment plans, but also because repayment strategies should align with broader financial goals. This overview highlights some of the key changes borrowers should be aware of. Consult your loan servicer to determine which options are available and appropriate for your situation.
If you have questions on how your available student loan repayment plans work with your overarching financial plan, the experts at Henssler Financial will be glad to help:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166
Listen to the December 20, 2025 “Henssler Money Talks” episode.
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