The new rules, part of a broader fiscal reform under President Donald Trump, remove the requirement that borrowers prove “partial financial hardship” to qualify for IBR. This adjustment opens the door for a wider pool of federal student loan borrowers, including higher-income earners, to benefit from the program’s lower monthly payments. However, while these changes promise relief, they also come with new challenges, including the eventual phase-out of some existing repayment plans.
Broadening Access to Income-Based Repayment (IBR)
The most notable change involves the Income-Based Repayment (IBR) plan, which now has an expanded eligibility threshold. Previously, borrowers had to prove that their income was below a certain level or that they were experiencing financial hardship to qualify. As of December 2025, this requirement will be eliminated, meaning that even higher earners can now benefit from the plan’s lower payments.
Under IBR, borrowers typically pay 10% of their discretionary income each month, though this percentage can rise to 15% for older loans. In return, loan balances are forgiven after 20 to 25 years, depending on when the loan was taken out. According to financial literacy expert Alex Beene from the University of Tennessee at Martin, this change has the potential to benefit millions. “These plans were meant to assist those who financially needed the lower monthly payments. If you can afford to pay more, it’s smarter in the long term to pay that debt off as quickly as possible.,” Beene explained to Newsweek.
For many borrowers, this means a reduction in their monthly payments, particularly for those who previously found themselves excluded from IBR due to their income level. Experts like Mark Kantrowitz, a higher education finance specialist, note that borrowers who were enrolled in other income-driven plans such as Income-Contingent Repayment (ICR) may see lower monthly payments under IBR.
However, this change may have unintended consequences. Some financial experts suggest that while these adjustments could provide immediate relief, borrowers should be cautious about enrolling in IBR if they can afford higher monthly payments.
The New Repayment Assistance Plan (RAP)
In addition to IBR, the Department of Education is also introducing a new repayment option called the Repayment Assistance Plan (RAP), which is set to debut in July 2026. RAP will allow borrowers to make the lowest possible monthly payments, but with a significant trade-off: a longer timeline for forgiveness. Unlike IBR, which offers forgiveness after 20 to 25 years, RAP extends the repayment period to 30 years.
The extended timeline under RAP could be a game-changer for borrowers who need lower monthly payments but can manage a longer repayment horizon. However, the extended timeline also means that borrowers will face a longer road to complete repayment, which some experts warn could increase overall interest payments.
For borrowers currently enrolled in ICR, PAYE, or SAVE plans, RAP offers a potentially smoother transition. While these older plans are being phased out by 2028, borrowers who move to RAP or IBR can maintain progress toward forgiveness. According to Betsy Mayotte, president of The Institute of Student Loan Advisors, “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,“
As these changes unfold, borrowers will need to weigh the pros and cons of each option carefully. Tools are available online to help calculate monthly payments under IBR, RAP, and other repayment plans, allowing individuals to make informed decisions about their repayment strategy.
