Student loan borrowers may qualify for lower bills under IBR change

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

Previously, borrowers needed to prove a “partial financial hardship” — or income below a certain level — to get into the 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, servicers will hold IBR applications that would otherwise be denied,” the guidance says.

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

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 share of their discretionary income and cancel any remaining debt after a certain period, typically 20 years or 25 years.

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

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

The easier access to IBR comes while other affordable repayment plans are going away. Trump’s tax and spending package overturned the Biden administration’s Saving on a Valuable Education, or SAVE, plan. It also phases out the Income-Contingent Repayment plan, or ICR, and the Pay as You Earn plan, or PAYE, as of July 1, 2028.

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

Under the terms of IBR, borrowers pay 10% of their discretionary income each month — although that share rises to 15% for certain borrowers with older loans.

Debt forgiveness is supposed to come after 20 years or 25 years, depending on when you took out your loans. (Older loans are subject to the longer timeline.)

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

Many borrowers currently enrolled in ICR will find they have lower monthly payments under IBR, Kantrowitz said. But if you’re in PAYE and borrowed after July 1, 2014, your monthly bill likely 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 plan leads to debt forgiveness after 30 years, compared with the typical 20-year or 25-year timeline on other plans. But it will offer the lowest monthly bill for some borrowers due to that longer timeline.

There are several tools available online to help you determine how much your monthly bill would 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 Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.

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