The Trump administration’s overhaul of federal student loan repayment plans is set to take effect in 2026, and it could result in significant payment hikes for millions of borrowers. As the Education Department moves to implement new rules, the expected changes are likely to impact borrowers who were previously benefiting from income-driven repayment plans. The shift will bring about higher monthly payments for some, with particularly sharp increases for those who were using plans like SAVE or PAYE.
The new regulations are part of a sweeping reform passed by Congress in 2025, designed to streamline the repayment process by consolidating multiple options into a single plan. But while simplification is the goal, the impact on borrowers could be severe, with projections showing payments that could more than triple in some cases. As the clock ticks down to the July 2026 implementation date, here’s a look at how these changes are set to unfold and what borrowers can expect.
Key Changes: The Introduction of RAP and the End of SAVE and PAYE
The biggest shift under the new regulations is the introduction of the Repayment Assistance Plan (RAP), which will replace existing income-driven repayment plans like SAVE and PAYE. According to Adam S. Minsky, a legal expert in student loans, the SAVE plan, which has been temporarily blocked, is expected to be fully eliminated after a settlement in December 2025. PAYE, along with the Income-Contingent Repayment (ICR) plan, will also be phased out by 2028.
These income-driven plans have allowed borrowers to base their monthly payments on a percentage of their income, which for many has meant lower payments over time. Under the new rules, RAP will become the only income-driven repayment option available for new loans disbursed after July 1, 2026. While RAP aims to provide some relief by offering an interest subsidy to prevent runaway loan balances, the plan also extends repayment terms to 30 years before borrowers can qualify for forgiveness.
The switch from these older, more favorable plans to RAP could result in significant payment increases for many. For example, a borrower making $50,000 per year could have been paying around $110 per month under the SAVE plan, but would face payments around $325 per month under the new IBR plan or $210 under RAP (according to Minsky’s analysis). For borrowers making $100,000 annually, payments could jump from $315 under SAVE to $950 per month under IBR, or $830 under RAP.
Impact on Families and Non-Traditional Households
A key concern for many borrowers, especially those with non-traditional or multi-generational households, is that RAP calculates monthly payments using a narrower definition of family size. This means that only dependent children listed on a federal tax return will count towards the borrower’s family size, rather than including other supported household members like elderly parents or extended family.
This could disproportionately affect borrowers with larger, multi-generational households who previously benefited from a broader family size definition under the SAVE or PAYE plans. For instance, a married borrower with two dependent children and two elderly parents living in the same household might see their monthly payment increase from as little as $35 per month under SAVE to $335 under RAP. This could represent a tenfold increase in some cases, putting added financial strain on these borrowers.
Non-traditional families will bear the brunt of this shift, with RAP’s stricter family size rules leading to higher monthly payments. The potential financial burden on these borrowers is significant, especially when coupled with the extended 30-year repayment term required to qualify for forgiveness.
While the government’s intent is to simplify the student loan repayment system, the changes set to roll out in 2026 could make payments significantly higher for many borrowers. The transition from SAVE and PAYE to RAP is set to have the most noticeable effect, especially for families with non-traditional structures. Borrowers will need to review how the new regulations will affect their repayments to prepare for the changes ahead.
