IBR Plan Ends July 1: Borrowers Face New Student Loan Repayment Rules

@Roy, this matter is related to regulation and policy changes in student loan repayment programs, so I’m assigning it to you.

Key Event:
The Biden administration's SAVE student loan relief program, which capped payments at 5% of income and shielded borrowers from accumulating interest, ends on August 1, 2025. Borrowers will now transition to the Income-Based Repayment (IBR) plan, which can require payments up to 15% of income. Additionally, Trump’s "Big Beautiful Bill" introduces the Repayment Assistance Plan (RAP) starting in July 2026, but its impact on monthly payments remains uncertain. The changes could result in significantly higher monthly bills, creating financial strain for millions of borrowers.

Student Loan Repayment Landscape to Shift as Biden's SAVE Plan Ends and New Legislation Takes Effect

Washington, D.C. - Millions of federal student loan borrowers will face significant changes to their repayment plans as the Saving on a Valuable Education (SAVE) plan, a hallmark of the Biden administration's relief efforts, concludes. Interest on these loans is set to resume on August 1, 2025, and borrowers are being prompted to transition to other repayment options, primarily the Income-Based Repayment (IBR) plan, ahead of new legislation that will further reshape the student loan system.

The SAVE plan, which had enrolled nearly 7.7 million borrowers, offered more affordable monthly payments, often as low as $0, and prevented loan balances from growing due to unpaid interest. However, following legal challenges, the program was blocked by federal courts, leading to a period of forbearance for enrolled borrowers. With the interest-free forbearance ending, those still on the SAVE plan will see their loan balances increase if they do not switch to a new plan.

Transition to Income-Based Repayment (IBR)

The Department of Education is urging former SAVE enrollees to switch to the IBR plan to remain in a legally compliant repayment program. This transition could lead to a substantial increase in monthly payments for many. Under the SAVE plan, payments for undergraduate loans were capped at 5% of a borrower's discretionary income. In contrast, the IBR plan can require payments of up to 15% of discretionary income.

For borrowers working towards Public Service Loan Forgiveness (PSLF), remaining in forbearance under the now-defunct SAVE plan may necessitate a "buy back" of these non-payment months to ensure they count towards the required 120 qualifying payments for forgiveness.

"One Big Beautiful Bill" and the New Repayment Assistance Plan (RAP)

Further complicating the student loan landscape is the "One Big Beautiful Bill" signed into law by President Trump. This legislation will phase out most existing income-driven repayment (IDR) plans, including Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR), by July 1, 2028.

In their place, a new Repayment Assistance Plan (RAP) will be introduced and available to borrowers starting July 1, 2026. Key features of the RAP include:

• Monthly payments calculated at 10% of the borrower's adjusted gross income.
• A minimum monthly payment of $10.
• A provision that waives any interest not covered by the borrower's monthly payment.
• Loan forgiveness after 30 years of qualifying payments.

Current borrowers who wish to remain on an income-driven plan must switch to IBR by July 1, 2028, or they will be automatically moved to the new RAP plan. It is important to note that switching from IBR to another plan, including the RAP, could trigger interest capitalization, where any accrued unpaid interest is added to the principal loan balance.

The new legislation also brings changes for those with Parent PLUS loans, as it will limit their access to income-driven repayment options.

Most of the sweeping changes included in the "Big Beautiful Bill" are scheduled to be implemented between July 1, 2026, and July 1, 2028. Borrowers are encouraged to use the Loan Simulator on the official Federal Student Aid website to estimate their monthly payments under the available plans and to stay informed about the evolving repayment landscape.

Roy, for your article, focus on explaining the key shifts in the student loan repayment system—what's happening and why it matters. Start with a clear summary of the end of Biden's SAVE plan and the impact on borrowers transitioning to new repayment options like IBR. Avoid overwhelming the reader with all the legislative details; instead, provide concise context on the upcoming changes under Trump’s "One Big Beautiful Bill," emphasizing the introduction of the RAP plan. Highlight practical implications, like increased monthly payments and potential challenges for PSLF participants. Keep the explanation clear and relevant—avoid redundancy or overly technical jargon. Lead with the facts that matter most to borrowers navigating this transition.

Headline: SAVE Plan Ends August 1: Borrowers Face Higher Student Loan Payments Under New Rules

• Federal student loan payments to increase as SAVE plan ends in August 2025.
• Trump’s Repayment Assistance Plan (RAP) introduces new options starting mid-2026.

Federal student loan bills are set to rise significantly for millions of borrowers as the Biden administration’s Saving on a Valuable Education (SAVE) plan concludes on August 1, 2025. The plan, which capped payments at 5% of discretionary income and prevented unpaid interest from accruing, will be replaced by the more expensive Income-Based Repayment (IBR) plan. Under IBR, borrowers could see payments surge to 15% of discretionary income—tripling the savings offered under SAVE.

The shift follows legal challenges to the SAVE plan and legislative changes introduced under Trump’s "One Big Beautiful Bill," which aims to overhaul student loan repayment systems. A new Repayment Assistance Plan (RAP), set to launch on July 1, 2026, will provide an alternative, but borrowers face immediate financial strain once SAVE ends.

As of July 2025, about 7.7 million borrowers enrolled in SAVE may struggle to adjust to the new terms. The Department of Education has strongly encouraged borrowers to transition to IBR to avoid accruing higher interest balances. While SAVE protected borrowers from unpaid interest and allowed certain low-income individuals to pay $0 per month, those benefits will no longer be available.

Borrowers pursuing Public Service Loan Forgiveness (PSLF) face additional hurdles. They may need to retroactively “buy back” forbearance months under SAVE to count toward the required 120 payments.

Starting in mid-2026, Trump’s RAP program will phase in with payments based on 10% of adjusted gross income and a minimum $10 monthly fee. The program waives unpaid interest and offers forgiveness after 30 years of payments. However, transitioning from IBR or other plans could lead to interest capitalization, increasing the principal loan amount.

Federal repayment systems will undergo further adjustments, with all changes expected to be implemented by July 1, 2028. Borrowers are encouraged to use tools like the Federal Student Aid Loan Simulator to estimate payments and stay informed about policy updates.