Confused About Your Student Loans? Here's What You Need to Know

In college I worked in financial aid, and if there's one thing that job taught me, it's that student loan repayment has always been confusing. I'd sit across from students and parents as they navigated the complexities of college aid and tried to make sense of it all. The rules were confusing, the acronyms were endless, and the "right" answer was different for almost everyone.

So when the One Big Beautiful Bill Act (OBBBA) passed and started rewriting federal student loan repayment, I wasn't surprised it caused a wave of questions. The good news? In some ways, this overhaul actually simplifies things. The bad news? Getting there involves some real deadlines, and if you don't pay attention, you could end up on a plan you didn't choose.

The student loan repayment plans are changing.

What is the OBBBA?

The One Big Beautiful Bill Act is a 2025 federal law that made sweeping changes to how student loans are borrowed and repaid. For borrowers, the income-driven repayment (IDR) plans are being condensed down to just two options going forward — the Repayment Assistance Plan (RAP) and Income-Based Repayment (IBR).

That means plans like ICR (Income-Contingent Repayment) and PAYE (Pay As You Earn) are on their way out with the SAVE (Saving on a Valuable Education) plan already removed.

What Happened to the SAVE Plan?

The OBBBA originally scheduled SAVE, PAYE, and ICR to sunset by **July 1, 2028**. But SAVE's story didn't end there — a separate legal challenge to the SAVE plan resulted in a federal court vacating it in March 2026, effectively ending it ahead of the statutory deadline. As of Wednesday, July 1st, borrowers who were in SAVE forbearance have 90 days to choose a different repayment plan.

For Existing Borrowers Prior to July 1, 2026:

If you're currently on one of the legacy IDR plans (ICR, PAYE, or SAVE), here's the timeline that matters:

- **You can keep using your current plan (apart from SAVE) or switch between existing options until July 1, 2028.**

- If you were on the SAVE Plan with loans issued prior to July 1, 2026, you can still enroll in either ICR or PAYE.

- By July 1, 2028, everyone still on a legacy plan will need to have transitioned to either RAP or the Standard Repayment Plan.

If you don't make a choice by July 1, 2028, you'll be automatically enrolled in RAP.

For New Borrowers

If you take out a new federal student loan on or after **July 1, 2026**, your income-driven repayment options are limited to RAP from day one. Legacy plans like IBR (for pre-existing loans), PAYE, ICR, and SAVE simply aren't available to you. Your repayment choices come down to RAP or the new tiered Standard repayment plan.

This matters most for current students, incoming freshmen, and anyone about to take out new loans for a graduate or professional program — the flexibility older borrowers had to shop between plans won't apply to you.

The New Repayment Options:

Since these are now the two main paths forward, here's a quick rundown of each.

Repayment Assistance Plan (RAP)

RAP is the new plan created by the OBBBA.

- Monthly payments are calculated using a sliding scale based on your Adjusted Gross Income (AGI), generally ranging from about 1% to 10% of income

- Unpaid interest doesn't pile up — it's subsidized so your balance doesn't grow from negative amortization

- There's a small monthly payment matched toward your principal to help you make progress on the balance

- Forgiveness is available after **30 years** of qualifying payments

Standard Repayment Plan

The Standard Repayment Plan is the basic repayment plan for federal direct loans.

- Payments are fixed and made for up to 10 years for non-consolidated loans

- Payments are fixed and made for up to 30 years for consolidated loans

Which one is "better" really depends on your income, loan balance, and how close you are to forgiveness. If you're already deep into a repayment timeline and close to forgiveness, switching plans can sometimes cost you more time than it saves you in interest — so it's worth running the numbers before you make a move.

What About Loan Forgiveness?

If you are working towards Public Service Loan Forgiveness (PSLF), you must be employed by a qualifying organization, have Federal Direct loans, make a total of 120 qualifying monthly payments, and be enrolled in an Income Driven Repayment (IDR) Plan. Therefore, if you have loans prior to July 1, 2026, you have until July 1, 2028 to switch to the new RAP plan. For any new borrowers working towards PSLF, there is only the RAP Plan that qualifies for PSLF.

If you are working towards loan forgiveness through your current IDR Plan, when you switch over to RAP, your years of contributing towards payments will transfer to RAP, but will be extended now to 30 years (compared to 20 or 25).

What Should You Do Right Now?

If you were on the SAVE plan, you need to make a decision on which repayment option you want to switch to. You will automatically be switched to the Standard Repayment Plan if you don't make the change.

If you're on a legacy plan, you don't need to panic or make a decision today. But you also shouldn't ignore the notices from your loan servicer between now and 2028. Understanding where you land, what your current plan is, and how RAP or IBR would actually affect your monthly payment can help you avoid getting defaulted into a plan you didn't choose.

Conclusion

Student loan repayment has been a moving target for years now, and this is just the latest shift. The system is consolidating, which should mean less confusion long-term, but the transition itself takes some attention. If you're unsure which plan you're currently on or how these changes affect you, that's a completely normal place to be — reach out to your loan servicer, or a financial professional, to walk through your specific situation.

Visit https://studentaid.gov to learn more.

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 Important Disclosures: Infinity Financial Services is a registered investment advisor offering investment advisory services through Core Planning, LLC. Registration does not imply a certain level of skill or training. This blog is for personal finance education, not advice, and you should consult with your own adviser before taking action. Please click here to read the full disclosures.