May 18, 2026
Millions of Americans counting on income-driven repayment plans to eventually wipe out their student loan debt may be in for a shock. Recent policy shifts, including some enacted by President Trump's One Big Beautiful Bill Act, strip student loan forgiveness paths from the Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE) plans.
The changes come as the Trump administration pushes to dramatically scale back the federal government’s role in education — including efforts to dismantle the U.S. Department of Education itself. Education Secretary Linda McMahon defended that effort recently, saying Americans “reelected President Trump with a clear mandate, to sunset a 46-year-old, $3 trillion failed education bureaucracy in D.C. and return authority to where it belongs — to parents, teachers and local leaders.”
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This means these plans no longer result in total forgiveness (1) after 20 (2) or 25 (3) years of payments as they did before. That shift could leave some of the 42 million (4) Americans with Federal loan debt reeling, as their path out of student loan debt may have been extended by decades.
"We are encouraging all borrowers to evaluate their repayment options on which plan is going to be best for them moving forward," Landon Warmund, a certified student loan professional at Reliant Financial Services in Kansas City, Missouri, told CNBC. (1)
However, a new path may offer some relief. Here's what this could mean for borrowers on student loan forgiveness plans.
How this could impact your repayment plan
Income-Based Repayment (IBR) (1) remains the most reliable path to cancellation for most borrowers. Monthly payments are capped at 10% of discretionary income for loans taken out on or after July 1, 2014, or 15% for older loans. Forgiveness kicks in after 20 or 25 years, depending on when you took out the loan. In April, the Education Department also quietly removed the "partial financial hardship" (5) income requirement to enroll, meaning more borrowers now qualify.
The Biden-era SAVE plan, meanwhile (1), is gone. A federal appeals court ended the program earlier this year, leaving borrowers who relied on its lower payment thresholds scrambling for alternatives. IBR is currently the strongest replacement. The government will start sending notices on July 1, 2026 (6), informing borrowers that they have 90 days to switch plans.
Two other plans, Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE) (1), are still available for now, but no longer end in forgiveness. If either gives you the lowest possible monthly payment, you can stay in them until they expire on July 1, 2028.
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After that, you'll need to switch, and experts say you should get credit toward forgiveness for payments made in those plans when you do. "You will need to transition plans by 2028, but you can still benefit from those lower payments," Rodriguez said.
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What are your other options?
Starting July 1, a new plan called the Repayment Assistance Plan (RAP) (7) opens for enrollment. Payments range from 1% to 10% of earnings, with a $10 minimum for all borrowers. RAP also addresses one of the biggest frustrations with older IDR plans: negative amortization, where interest outpaces payments, and your balance actually grows despite making on-time payments.
Under RAP, if your on-time payment reduces your principal by less than $50, the Education Department will cover the gap, up to $50, so your balance never balloons. This could have a significant impact by helping some borrowers meaningfully reduce their loan principal.
There is, however, a tradeoff: forgiveness doesn't come until after 30 years, five to ten years longer than other IDR plans. One other catch worth noting is that it's currently unclear whether time in RAP transfers toward forgiveness if you later switch to another plan, so read the fine print carefully before enrolling.
If a 30-year timeline sounds daunting, it's worth checking whether you qualify for faster routes. The Public Service Loan Forgiveness (PSLF) program, which is available to some nonprofit and government employees, cancels remaining debt after just 10 years of qualifying payments.
"If you are pursuing PSLF, it doesn't matter which IDR plan you are in, as the PSLF program offers a 10-year path to forgiveness regardless of the plan," said Nancy Nierman, assistant director at EDCAP. (1)
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However, recently proposed rule changes to PSLF (8) may restrict eligibility for employers, potentially limiting borrowers' access to the program. Additionally, over 800,000 borrowers currently are awaiting an answer about whether the government will forgive their loans through the PSLF program, with some waiting over a year for an answer (9).
Teachers working in low-income schools may also be eligible for up to $17,500 in cancellation through the Teacher Loan Forgiveness program.
Don't overlook state-level programs either. The Institute of Student Loan Advisors (TISLA) maintains a searchable database of forgiveness programs by state (10), and many go underutilized simply because borrowers don't know they exist.
"If you are pursuing PSLF, it doesn't matter which IDR plan you are in," said Nancy Nierman, assistant director at the Education Debt Consumer Assistance Program. "Borrowers who have options should just choose the cheapest plan."
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
CNBC (1),(9); Federal Student Aid (2),(5); Bankrate (3); Education Data Initiative (4); U.S. Department of Education (6),(8); NASFAA (7); Free Student Loan Advice (10)
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Danielle is a personal finance writer whose work has appeared in publications including Motley Fool and Business Insider. She believes financial literacy key to helping people build a life they love. She’s especially passionate about helping families and kids learn smart money habits early.
