Aug 8, 2025
Few things take the shine off a hard-earned degree like a mountain of student debt. And millions of Americans are feeling the weight: The Education Data Initiative says more than 42 million borrowers owe a staggering $1.77 trillion dollars in student loan debt, with the average individual balance topping $38,000.
Many of those borrowers may soon see their monthly payments go up, thanks to a section of President Trump's “One Big, Beautiful Bill” that includes changes to current student loan repayment plans.
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Here’s what you need to know about the President’s new repayment process.
What are my new options?
After July 1, 2026, new borrowers will have two choices: A standard fixed repayment plan or the Repayment Assistance Plan (RAP).
RAP is an income-based student loan repayment plan that the Trump administration says will simplify the loan repayment process, as it will replace all preexisting income-based plans for new borrowers, such as SAVE, PAYE, REPAYE and ICR.
RAP, however, is a little less forgiving than the current income-based repayment plan. Your monthly payments will now be estimated based on your adjusted gross income (AGI), which is your total earnings before taxes after certain deductions. Additionally, RAP will no longer cap your payments at a portion of your discretionary income, and monthly payments can range from 1% to 10% of your AGI.
Plus, if you were expecting loan forgiveness after 20 or 25 years with the usual IBR plan or after 10 years with Public Service Loan Forgiveness, you need to know that RAP will have a 30-year timeline.
And you may not be able to use RAP to fund your entire education, either. In the administration’s efforts to combat the rising costs of college, Trump has lowered lifetime borrowing limits, hoping that if students can’t take on the whole cost with loans, schools will lower tuition prices. Under RAP, Parent PLUS loans have a limit of $65,000 per child, and graduate students have a lowered limit of $100,000.
Note that while all new borrowers are required to enroll in either RAP or the standard fixed plan after July 1, 2026, current borrowers can remain on the present income-based repayment plan.
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Which plan is best for me?
If you are a new borrower and aren’t planning to borrow until after July 1, 2026, you’ll have to choose between RAP or the standard fixed plan. How will you decide which one to go with?
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Consider what you can afford month-to-month. RAP offers lower payments initially, but it will start to climb when your income does. With the standard plan, you can expect the same fixed amount every month until the loan is paid off.
While payments with RAP may be lower, your total loan balance can take much longer to be paid off or forgiven versus the standard plan, which has a fixed rate up to 10 years. That could also mean a little less interest overall, assuming you’re making timely payments.
If you are already enrolled in an income-based payment plan, start preparing for incoming deadlines. Current income-driven plans such as SAVE, REPAYE, PAYE and ICR will all be phased out by July 2028, so consider switching to IBR before then if you don’t want to be on RAP or the standard plan.
How can I prepare?
Tackling student loans is a daunting task, and the idea of mounting debt makes the idea of a college education stressful for students and their parents. Mentally preparing and budgeting for student loan debt may help you prepare to take on payments after you graduate.
Make sure to track what you need to borrow each semester, and keep an eye on your loans using the National Student Loan Data System, a national database about loan and grant information. While the job market can be volatile and unexpected, try to borrow no more than what you expect your first year’s salary to be after you graduate.
While you are in school, consider making a “practice budget” based on your estimated monthly payments, which you can figure out using a loan simulator. And even better, start making small payments right after you take out the loan instead of waiting for graduation: Small payments early on can save a lot in interest later on.
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Chris Clark is a Kansas City–based freelance contributor for Moneywise, where he writes about the real financial choices facing everyday Americans—from saving for retirement to navigating housing and debt.
