Student loan borrowers face standard plan changes

President Donald Trump’s “big beautiful bill” overhauled the so-called Standard Repayment Plan for federal student loan borrowers.

Next year, millions of current borrowers will have access to the changed program. For new borrowers, it will be one of just two options available to pay back their debt.

That may not be to their benefit, experts say: For some borrowers, the new Standard Plan will keep them in debt longer and add tens of thousands of dollars to the total they must repay.

“The design of the new plan, in which a borrower’s payment term is scaled up in five-year increments based on arbitrary thresholds, means some borrowers will face a problematic ‘cliff effect,'” said Michele Shepard Zampini, senior director of college affordability at The Institute For College Access & Success.

“A small difference in their balance will tip them into the next tier and extend their term,” Zampini said.

Here’s what to know about the changes to the Standard Plan.

The current Standard Plan is fairly simple: Borrowers typically have their debt divided into fixed payments over 10 years.

It’s often the fastest option for people to pay off their student debt, compared with the U.S. Department of Education’s other income-driven repayment plans. Historically, IDR plans cap a borrowers’ monthly bill at a share of their discretionary income, and lead to loan cancellation after a certain period — typically 20 years or 25 years. (But the recent law makes changes to those plans, too. )

The new Standard Plan will spread a borrower’s debt into fixed payments over one of four timeframes, depending on what they owe.

Those who’ve borrowed up to $24,999 will still have a 10-year repayment term. But those who owe between $25,000 and $49,999 will pay their debt back over 15 years; a balance ranging from $50,000 to $99,999 will be paid back over 20 years; and a debt over $100,000 will lead to a 25-year repayment term.

More from Personal Finance:
Trump floats tariff ‘rebate’ for consumers
Student loan forgiveness may soon be taxed again
Student loan borrowers — how will the end of the SAVE plan impact you? Tell us

The longer timelines will force people to carry debt later into their lives, when they should be preparing for retirement, said Astra Taylor, co-founder of the Debt Collective, a union for debtors.

“We anticipate an explosion of senior debtors,” Taylor said, in an earlier interview with CNBC.

Under the new Standard Plan, some borrowers with higher balances may have lower monthly bills than under the current plan because their repayment term is longer, said Zampini.

“However, many such borrowers will pay more in total over the life of the loan, as compared to the current Standard Plan,” Zampini said.

Indeed, a borrower who took out $100,000 in federal student loans would repay around $125,000 over 10 years under the current Standard Plan, according to an analysis by Kantrowitz. (He assumed a 5% interest rate.)

But under the revised plan, that same borrower would be required to pay back more than $175,000 during their 25-year term — a difference of nearly $50,000.

The modified Standard Plan will be available by July 1, 2026, according to the Education Dept.

That plan will be one of just two repayment options available to borrowers who take out student loans after that date, along with Republicans’ new IDR plan, called the Repayment Assistance Plan, or RAP.

Borrowers with loans taken out before July 1, 2026 will maintain access to some existing repayment plans, including Income-Based Repayment, or IBR, and the current 10-year Standard Plan.

But keep in mind: Even borrowers with old loans who take out a new one after July 1, 2026, will lose the existing options for that loan, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.

“If you borrow again, you will be in the world of two choices,” Buchanan said.