Student loan borrowers may qualify for lower bills under IBR change

Many student loan borrowers may soon have access to lower monthly payments, as the U.S. Department of Education is implementing changes to one of its repayment plans.

Previously, borrowers were required to prove “partial financial hardship” — or income below a certain level — to get into an income-based repayment plan, or IBR. But President Donald Trump’s “big beautiful bill” waived that requirement, and the change should be widely available in December, according to a recent update on the Education Department’s website.

“In the meantime, service providers will retain IBR applications that would otherwise be rejected,” the guidance said.

IBR is one of the Department of Education’s income-driven repayment plans, or IDR.

Congress created the first IDR plans in the 1990s with the goal of making student loan borrowers’ bills more affordable. The plans cap people’s monthly payments at a portion of their discretionary income and cancel any remaining debt after a certain period, usually 20 years or 25 years.

Higher education expert Mark Kantrowitz said higher earners can now qualify for IBR, as will most federal student loan borrowers, without the requirement of “partial financial hardship.”

Here’s what borrowers should know about easy access to IBR.

Access to IBR has become easier while other affordable repayment plans are falling away. Trump’s tax and spending package overturned the Biden administration’s valuable Savings on Education, or SAVE, plan. It also phases out the income-contingent repayment plan, or ICR, and the payments-as-you-go plan, or payments, by July 1, 2028.

According to an estimate by Kantrowitz, about 2.5 million borrowers are enrolled in either ICR or PAYE.

Under IBR terms, borrowers pay 10% of their discretionary income each month – although that share rises to 15% for some borrowers with older debt.

Loan forgiveness is available after 20 years or 25 years, depending on when you originated your loan. (Older loans are subject to longer timelines.)

In the past, high-income borrowers did not have access to these favorable terms.

Kantrowitz said many borrowers currently enrolled in ICR will get lower monthly payments under IBR. But if you’re in PAYE and borrowed after July 1, 2014, your monthly bill won’t change much under IBR.

Monthly bills under IBR will be higher than those under SAVE.

Starting July 1, 2026, student loan borrowers will have access to another IDR option, the “Repayment Assistance Plan” or RAP. That scheme leads to loan waiver after 30 years compared to the typical 20-year or 25-year timeline of other schemes. But because of the longer tenure it will offer the lowest monthly bills for some borrowers.

There are many tools available online to help you determine what your monthly bill will be under different plans. Borrowers should be able to move between repayment plans at any time.

You won’t lose your progress toward loan forgiveness by changing plans, said Betsy Myatt, president of The Institute of Student Loan Advisors, a nonprofit organization.

“The good news is that all of these plans cross-pollinate, so whatever ‘counts’ they have on ICR or PAYE will also count toward whatever plan they switch to,” Mayotte said.