Millions of federal student loan borrowers will soon face steep hikes in their monthly payments, a new analysis from a borrower advocacy group warns. On average, payments could climb by $400 or more each month.
The increases stem from the One, Big Beautiful Bill Act (OBBBA), which President Trump signed into law in July. The legislation will phase out several repayment plans designed to keep payments affordable by linking them to a borrower’s income. Once those plans disappear, borrowers will have access to just two income-driven options—both of which could be more costly than the current most affordable choices. The impact will be especially harsh on borrowers who take out new federal loans or consolidate existing ones beginning next summer.
“The OBBBA will have financially devastating consequences for borrowers, students, and their families and will make paying for college more expensive and risky,” said Protect Borrowers in its new analysis published earlier this month. “Millions of borrowers will be pushed toward costlier federal loan repayment plans, regardless of when they took out their loan.”
Here’s a breakdown of who might see higher student loan payments as a result of the OBBBA, and when.
Student Loan Payment Increases For Current Borrowers
Income-driven repayment plans (also known as IDR plans) are a lifeline for many student loan borrowers, offering them affordable payments based on a formula applied to their income and family size. Payments are typically recalculated every year and are adjusted based on changes to income. Historically, borrowers would be entitled to student loan forgiveness for any remaining balance after 20 or 25 years in repayment, depending on the plan.
Under the OBBBA, three of the four existing income-driven repayment (IDR) plans—ICR, PAYE, and SAVE—will be eliminated. These options won’t vanish immediately but will be phased out by July 2028 at the latest. Some could disappear sooner, especially the SAVE plan, which remains tied up in a legal battle that could strike it down in federal court well before 2028. Earlier this summer, the Trump administration also resumed charging interest for SAVE borrowers, pressuring them to move to another program.
Once these plans sunset, borrowers who want to keep payments tied to income while working toward eventual loan forgiveness will have to switch to either the Income-Based Repayment (IBR) plan—currently the only IDR option preserved under OBBBA—or a new program called the Repayment Assistance Plan (RAP). RAP will come with a generous interest subsidy and could provide lower payments than IBR for certain borrowers. However, it will also require a 30-year repayment period before borrowers qualify for forgiveness, keeping them in debt far longer than any existing option. RAP is slated to roll out by next summer.
For many borrowers, especially those enrolled in SAVE, both IBR and RAP could lead to higher monthly payments than the legacy plans they replace.
“A typical single borrower with a bachelor’s degree would pay $3,425 more per year compared to the SAVE Plan,” wrote Protect Borrowers in its new analysis. “The IBR Plan would force them to pay $473 each month, compared to $188 under the SAVE Plan—a monthly increase of $285.”
Higher Student Loan Payments for New Borrowers
Starting July 1, 2026, borrowers who take out new federal student loans or consolidate existing ones will lose access to the IBR plan. Their only option will be the Repayment Assistance Plan (RAP), the sole income-driven plan that allows payments tied to income and offers a path to forgiveness. While RAP may produce lower monthly payments than IBR in some cases, it will often cost more than SAVE or PAYE.
“For new borrowers, the OBBBA eliminates all current IDR plans and replaces them with a single income-cognizant plan, which is available to borrowers who do not want to repay their balance under the Standard Plan (see above),” Protect Borrowers said in its analysis. “This Repayment Assistance Plan forces borrowers to make more expensive monthly payments than almost every current IDR plan that it replaces.”
The group examined the case of a borrower supporting a family of four. On average, this borrower would pay $4,824 more each year under RAP compared to the SAVE plan. “The RAP Plan would force them to pay $435 each month, compared to $33 under the SAVE Plan—a monthly increase of $402,” the analysis explained. The projection uses the median 2024 income of a bachelor’s degree holder, which the Bureau of Labor Statistics reported as $80,236.
Higher Student Loan Payments For Parent PLUS Borrowers
Parent PLUS borrowers stand to be among the hardest hit under the OBBBA changes. Those who consolidate their loans before July 1, 2026 and enroll in the ICR plan could later transition to IBR by 2028, which in many cases would be more affordable than ICR.
However, all other Parent PLUS borrowers—including those who miss the consolidation deadline or take on new loans on or after July 1, 2026—would lose eligibility for any income-driven repayment plan. Since ICR (historically the only IDR option for Parent PLUS loans) will be repealed, these borrowers won’t qualify for IBR or RAP, the two remaining IDR programs.
“Borrowers who receive disbursements on new loans or on a new consolidation loan on or after July 1, 2026, won’t have access to IBR, ICR, or PAYE even if they were previously enrolled in any of those plans,” the Department of Education explained in updated OBBBA guidance. “We strongly encourage borrowers who must consolidate their loans in order to access the IBR, ICR, and PAYE Plans to apply for their consolidation loan at least three months before July 1, 2026, to ensure that their consolidation loan is disbursed before July 1, 2026.”
Parent PLUS borrowers who cannot access any IDR plan would be left with only the Standard plan, which comes with much higher payments.
“A typical Parent PLUS borrower would pay $1,427 more per year under the Standard Plan compared to the ICR Plan,” Protect Borrowers said in its analysis. “The Standard Plan would force them to pay $250 each month, compared to $131 under ICR—a monthly increase of $119.”
When Higher Student Loan Payments Will Kick In
The rise in student loan payments won’t hit everyone at once, but borrowers will begin to see changes in their monthly bills over the next several months and years. Although the OBBBA doesn’t formally eliminate ICR, PAYE, and SAVE until July 2028, those who take out new federal loans or consolidate existing ones starting next summer will already face fewer repayment choices. The SAVE plan could also vanish well before 2028 if a court strikes it down in the ongoing legal battle. Adding to the pressure, the Trump administration has resumed interest accrual for SAVE borrowers.
“Borrowers in the SAVE Plan will see their loan balances grow when interest starts accruing on August 1,” the Department of Education said in a July statement. “When the SAVE Plan forbearance ends, borrowers will be responsible for making monthly payments that include any accrued interest as well as their principal amounts.”
The department has urged SAVE borrowers to switch quickly to another repayment plan, especially if they want to continue working toward forgiveness under IDR or Public Service Loan Forgiveness. But, as Protect Borrowers pointed out, moving to another plan could mean significantly higher monthly payments.
Leave a Comment