As of 2025, 42.5 million people have outstanding federal student loans. Of those, approximately 12.3 million — about 29% of borrowers — are currently enrolled in an income-driven repayment (IDR) plan. These plans provide significant relief, giving borrowers more affordable monthly payments.

However, President Trump's One Big Beautiful Bill (OBBB) overhauled federal student loans and their repayment options. The changes will have a major impact on both current and future student loan borrowers. And, depending on what loans you have, you may have a limited amount of time to take action — or risk losing repayment options permanently.

The OBBB made sweeping changes, but when they go into effect varies by provision. Whether you have existing loans or plan on taking out loans in the near future, here's what you need to know.

Who it affects: Any borrower who takes out a federal student loan on or after July 1, 2026

When it goes into effect: July 1, 2026

The current loan system's standard repayment plan requires fixed monthly payments over 10 years. The OBBB scraps that design and introduces a tiered repayment schedule based on borrowers' loan balances.

The new standard repayment plan applies to borrowers who take out a new loan — even if they have existing federal loans — on or after July 1, 2026.

Who it affects: All undergraduate and graduate loan borrowers

When it goes into effect: July 1, 2026

The bill creates a new repayment plan, the Repayment Assistance Plan (RAP). Unlike the current IDR plans, the RAP requires all borrowers — regardless of income or dependents — to make payments of at least $10 per month. The new plan bases payments on the borrower's income (minus $50 for each dependent).

For example, say your AGI is $45,000 per year and you have one child. Your payment would be set at 4% of your income or $1,800 per year ($150 per month). But, because you have a dependent child, your payment is reduced by $50 per month, so your monthly payment amount would be $100.

The RAP waives interest that accrues if your payment amount doesn't cover the full amount, but borrowers will be in repayment for 30 years.

Who it affects: Undergraduate and graduate loan borrowers who take out loans on or after July 1, 2026

When it goes into effect: July 1, 2026

Borrowers who take out new loans will have just two repayment options.

"Any borrower who takes a loan on or after July 1, 2026, will only have access to the new standard and RAP repayment plans," said Scott Buchanan, executive director of the Student Loan Servicing Alliance.

New borrowers won't have access to today's IDR plans, extended repayment, or graduated repayment.

Who it affects: Undergraduate and graduate loan borrowers with existing loans

When it goes into effect: July 1, 2028

Legacy undergraduate or graduate borrowers — meaning those with existing loans — have a bit more time before they need to change their payment plans. As long as you don't take out any new loans on or after July 1, 2026, you can continue under any of the following repayment plans for the time being:

Income-Contingent Repayment (ICR)

Income-based Repayment (IBR)

Pay As You Earn (PAYE)

Saving on a Valuable Education (SAVE)

Extended repayment

Graduated repayment

However, the OBBB will phase out most of these options over time, and all borrowers in discontinued payment plans will be required to enroll in a new plan — either IBR, the new RAP, or the new Standard Repayment plan — by July 1, 2028.

Read more: Can you change your student loan repayment plan?

Who it affects: Borrowers who take out new Parent PLUS Loans on or after July 1, 2026

When it goes into effect: July 1, 2026

Under the current system, Parent PLUS Loan borrowers can consolidate their loans with a Direct Consolidation Loan and qualify for an ICR repayment plan (and if they work for an eligible employer, they can qualify for Public Service Loan Forgiveness).

The OBBB eliminates those features; anyone who takes out a new Parent PLUS Loan on or after July 1, 2026, will only be eligible for standard repayment. Parents can't qualify for alternative payment plans or PSLF.

"[Parent borrowers] will not be eligible for RAP or other old repayment plan options," said Buchanan.

"Keep in mind: The new standard plan will flex monthly payments based upon the balance of the loan, offering a lower monthly payment over a longer period for larger balances, which is different from the old standard plan that was set at a 10-year term regardless of balance.”

Who it affects: Current parent loan borrowers

When it goes into effect: July 1, 2026

Parent PLUS Loan borrowers will no longer be eligible for alternative payment plans. For existing borrowers, only those who consolidate their debt by July 1, 2026, and enroll in an IDR plan will have access to alternative payment plans.

If you have not yet consolidated your loans, you must complete the process before June 30, 2026.

"Any Parent PLUS borrower who consolidates or takes out new loans on or after July 1, 2026, would only have access to the standard plan," said Adam Minsky, a student loan attorney.

Who it affects: All student loan borrowers

When it goes into effect: July 1, 2026

For borrowers who cannot afford their payments, consolidating with a Direct Consolidation Loan could provide some relief. It gives some borrowers access to repayment plans they wouldn't otherwise qualify for, and some borrowers can qualify for 30-year terms and get more affordable payments.

Although Direct Consolidation Loans will still exist in the future, the OBBB reduces their usefulness.

"Consolidation will be an option, but one with very little practical value for most borrowers going forward after July 1," said Buchanan.

The new RAP and standard repayment plan have longer repayment terms. And consolidating on or after July 1, 2026, will cause legacy borrowers to lose access to alternative payment plans.

The OBBB completely changed federal financial aid and repayment options, and details are still forthcoming on some updates. For example, the ICR plan will be eliminated, but the deadlines borrowers must meet are unclear.

"We will publish more information about the ICR enrollment deadlines that borrowers must meet before ICR is eliminated in order for them to continue to be able to access the IBR Plan," the Department of Education said on the Federal Student Aid announcement site.

As you adjust to these changes, check in with the announcement page for the latest details. And if you need help understanding your loan options or enrolling in a different repayment plan, contact your loan servicer.

When it comes to paying for college, the federal government is one of the main providers of financial aid and support. In fact, the National Center for Education Statistics reported that 55% of undergraduate students received some form of federal financial aid, including federal grants or federal student loans.

The prevalence of federal financial aid is why the One Big Beautiful Bill (OBBB) — President Trump's sweeping bill that he signed into law in July — is such an important piece of legislation. The OBBB made many changes to federal financial aid that will affect both new and existing students and student loan borrowers.

Most of the OBBB's changes will go into effect on or after July 1, 2026. Whether you're currently in college or will be enrolling next year, here's how the OBBB may affect you.

Pell Grants are a form of federal gift aid for low-income students. Previously, you could only use Pell Grants to pay for degree-granting programs, but the OBBB changed that requirement. Now, students can use Pell Grants to pay for qualifying work training or certificate programs too.

The OBBB institutes new limits for part-time students. Going forward, the maximum a student can borrow will be reduced based on their enrollment status. However, how much it will be reduced and what maximums will apply have yet to be finalized. The Department of Education is developing these limits and will submit them for public comment later this year.

Currently, graduate and professional students can use both Direct Unsubsidized and Grad PLUS Loans to pay for their education. But, the OBBB ends the Grad PLUS Loan program, so they'll no longer be available as of July 1, 2026.

Graduate students will still be able to borrow Direct Unsubsidized Loans after that time.

One perk of Parent PLUS and Grad PLUS Loans was the ability to borrow up to 100% of the total cost of attendance. However, the OBBB set new annual and aggregate borrowing limits.

For parents taking out Parent PLUS Loans to pay for a child's undergraduate education, the limit is $20,000 per year per student, with an aggregate maximum of $65,000.

For graduate students, such as those studying for master's degrees, the maximum loan amount is $20,500 per year. An aggregate limit of $100,000 applies.

For professional students, such as those studying for Juris Doctor (JD) and Doctor of Medicine (MD) degrees, the maximum loan amount is $50,000 per year. An aggregate limit of $200,000 applies.

These new borrowing caps could leave some students with funding gaps, forcing them to seek alternative aid elsewhere.

It's not just current or incoming college students that are affected by the OBBB; the bill also made changes that will affect the 43 million people who have outstanding federal student loans.

Currently, borrowers who cannot afford the payments under a 10-year standard repayment plan can choose from several income-driven repayment (IDR) plans, which set your payments at a percentage of your discretionary income for 20 or 25 years of repayment. After completing the required payments, any remaining amount could be forgiven.

The OBBB ended these repayment plans, so existing borrowers will be transitioned out of these plans by July 1, 2028, and new borrowers won't have access to IDR plans at all. Borrowers with loans made before July 1, 2026, will still be eligible for an updated version of the Income-Based Repayment plan.

With the elimination of the existing IDR plans, borrowers will have just two options in the future: a standard repayment plan and the new Repayment Assistance Plan (RAP). The RAP extends the maximum repayment term to 30 years, and many borrowers will have a higher monthly payment under RAP than they would under the current IDR plans.

After July 1, 2026, parent borrowers will no longer be able to enroll in an existing IDR plan, and they won't be eligible for the new RAP. As a result, the only payment option is standard repayment.

With a standard repayment plan, the loans are paid off in 10 years, so parents will no longer be able to take advantage of loan forgiveness under Public Service Loan Forgiveness (PSLF).

The OBBB ends deferments related to unemployment or financial hardships, so borrowers who lose their jobs or cannot afford their payments will have fewer options for relief.

Under the current loan system, federal student loan borrowers can only take advantage of loan rehabilitation — a process to bring their loans current — once. However, the OBBB allows borrowers to rehabilitate their loans twice, giving borrowers another chance to get their loans on track.

The OBBB extended the tax break that exempts student loans discharged through total and permanent disability discharge from federal income taxes. For borrowers who become disabled, this change provides relief from an unexpected tax bill.

If you applied for the Saving on a Valuable Education (SAVE) plan, the OBBB officially ends that option. Interest has begun accruing on SAVE borrowers' loans, and borrowers are encouraged to enroll in a new payment plan. If you want to make progress toward loan forgiveness, you'll need to enroll in a new plan as soon as possible; you can apply for a new plan online at StudentAid.gov/idr/.

For PLUS Loan borrowers, consider consolidating your loans with a Direct Consolidation Loan so you can enroll in one of the current IDR plans. If you do so, you'll retain eligibility for alternative repayment plans and loan forgiveness. Otherwise, PLUS Loan will only have the standard repayment option.

Contact your loan servicer to discuss any changes to your repayment plans and what options are available.

Few people can afford to pay for college in cash. After scholarships and grants, financial experts almost always recommend using federal student loans before turning to other financing options. Historically, federal loans had lower rates, more favorable repayment terms, and more borrower protections than private student loans.

However, President Trump's One Big Beautiful Bill (OBBB) made sweeping changes to the federal student loan system and eliminated some of the benefits that made federal loans so appealing.

With these changes in mind, are federal student loans still a good idea? Here's what to know about the changes and how federal loans now compare to private student loans.

At nearly 1,000 pages long, the OBBB is a massive bill that covers many sectors of the U.S. economy, including changes to federal student loans.

If you need to borrow money to pay for college in the future, here's how federal student loans stack up against private student loans.

Most of the OBBB's provisions won't go into effect until July 1, 2026, so those taking out loans for the 2025-2026 academic year will be unaffected.

Federal student loans are available to U.S. citizens and legal permanent residents attending eligible schools; there are no minimum income requirements, and most federal loans don't involve credit checks.

Private student loans have much stricter eligibility requirements. To qualify for a loan, you usually need a reliable source of income (or a relative or friend to co-sign the loan application) and good to excellent credit.

With private student loans, lenders usually allow you to borrow up to 100% of the school-certified cost of attendance for an undergraduate degree. With federal loans, borrowing limits apply. Here's what that will look like starting July 1, 2026.

Undergraduate students: For undergraduate students, the annual maximum ranges between $3,500 and $12,500, with the maximum borrowing amount based on your dependency status and year in school. You can borrow up to a max of $31,000 for your undergrad education if you're a dependent student, while independent students can borrow up to $57,000 in aggregate.

Graduate students: If you're studying in a graduate program, such as a master's degree, you can borrow up to $20,500 annually with a total maximum of $100,000.

Professional students: Borrowers studying in a professional program, such as those in law or medical school, can borrow up to $50,000 annually with an aggregate max of $200,000.

Parents of undergraduates: Parents will be limited to $20,000 per year per student in Parent PLUS Loans, up to an aggregate maximum of $65,000.

A fixed-rate loan has the same annual percentage rate (APR) for the entirety of the loan, while a variable-rate loan's APR changes along with market conditions. Federal student loans always have fixed interest rates, while private loans can have fixed or variable rates.

Right now, private student loans can be tempting compared to federal student loans. Federal loans normally have lower interest rates, but some borrowers can qualify for lower rates on private loans if they have excellent credit.

Private loans rarely have origination or disbursement fees, but these costs are standard for federal loans. Depending on the type of federal student loan you take out, the fee currently ranges between 1.057% and 4.228%.

With most federal loans, you have six months after you graduate or drop below half-time status before you have to start making payments toward your loans. This period, known as the grace period, gives you time to get a job and get your finances in order before worrying about loan payments.

Private student loans don't always have generous grace periods; depending on the lender and the payment plan you chose when you took out the loan, you may have to make payments while you're still in school.

After the OBBB is fully enacted, new federal loan borrowers will have just two repayment plans to choose from: the standard repayment plan and the new Repayment Assistance Plan, so you'll have between 10 and 30 years to repay your loans.

Your options with a private loan are even more limited. You can typically choose a term between five and 15 years when you take out the loan, and you have to stick to that repayment plan, regardless of your income.

With the OBBB in place, federal student loan borrowers may still qualify for loan forgiveness under the Public Service Loan Forgiveness (PSLF) program. Under PSLF, if you make 120 monthly payments under the new Repayment Assistance Plan while working for an eligible nonprofit organization or government agency for 10 years, the government will forgive your remaining loans.

Private student loans aren't eligible for PSLF.

The OBBB eliminated two major protections for federal loan borrowers: unemployment and financial hardship forbearance. However, federal borrowers can qualify for other forms of deferment or forbearance, such as military service or in-school deferments.

Private student loans tend to have stricter repayment terms and fewer deferment borrower protections than federal loans, and deferment or forbearance options vary by lender.

Despite the changes the OBBB made to the federal student loan system, federal loans still have more repayment options and protections than most private loan lenders. However, a private loan may be a good option in the following circumstances:

If you reach the annual or aggregate borrowing limits for federal student loans and need cash to finish your degree, taking out a private student loan to cover the remaining balance could be a good idea. You can borrow a relatively small amount to pay for your education and complete your program.

For borrowers trying to decide between a federal loan and a private loan, one aspect to consider is your credit. If you have excellent credit and a steady source of income (or have a parent or relative who can co-sign a loan application), you may qualify for a lower interest rate with a private loan than is possible with a federal loan.

For example, if you're an adult returning to school to earn a master's degree, you may have established a solid credit history and a strong FICO credit score. Your credit could allow you to secure a loan with a significantly lower rate than the 7.94% or 8.94% currently available on federal graduate school loans.

Private student loan companies usually give their lowest-advertised rates to borrowers with excellent credit who select shorter repayment terms, such as a term of five or seven years. If you need a small loan to cover your remaining education and can comfortably afford the payments of a shorter loan term, a private loan may have a lower rate. And, thanks to the shorter term, you'll pay it off faster.

The OBBB's changes have made some borrowers nervous, and some are considering student loan refinancing to switch their federal loans into private loans.

However, think twice before refinancing. Even with the OBBB's changes, federal loans still have more protections and benefits than most private loans. And only borrowers with outstanding credit scores will qualify for the lowest refinancing rates, so student loan refinancing isn't advantageous for everyone.

Federal student loans make up the majority of education loans — they now account for over 92% of outstanding balances — and it can take 10 years or more to fully repay your loans.

According to the Consumer Financial Protection Bureau (CFPB), borrowers have reported significant issues during their repayment, including issues related to student loan servicer errors, oversights, and poor communication.

Whether your loan servicer gave you inaccurate information about income-driven repayment plans or withdrew the wrong payment amount from your bank account, knowing how to handle those issues and who to contact for help can save you headaches and financial stress.

Depending on the situation, you can handle issues by contacting your loan servicer, contacting your state advocacy organization, or hiring a legal representative.

After years of the pandemic-era federal loan payment freeze, loan payments resumed in 2023. The federal government introduced a 12-month on-ramp, giving borrowers a year to get back in the habit of making loan payments without worrying about late fees, collections activity, or wage garnishment.

However, the Department of Education resumed collections and other measures on defaulted student loans starting in May 2025.

Your loans are in default if you haven't made a payment in 270 days or more. Once that occurs, the consequences can be severe; your wages may be garnished, you may lose your tax refund or other benefits, and the default will be reported to the major credit bureaus.

More changes to your federal student loans are on the way — see how Trump’s July 2025 budget bill will alter the federal financial aid program.

Now that payments are due — and default collection activities have restarted — any errors impacting your account have more serious consequences. Unfortunately, issues are fairly common.

According to the latest Annual Report of the CFPB Student Loan Ombudsman, the CFPB received over 14,000 complaints about federal student loans in 2024 — an all-time high. The most common issues include:

Repayment problems or errors were the top complaint, making up about one-third of all complaints. These issues included payment processing mistakes, which occur when on-time payments are wrongfully reported as late or incorrect amounts are withdrawn through autopay.

Issues with the loan servicer can cause significant delays for borrowers pursuing loan forgiveness through a program like Public Service Loan Forgiveness (PSLF). In complaints to the CFPB, many borrowers reported meeting the program's payment and employment requirements, but had to wait months for forgiveness to be granted (and were wrongfully charged interest while they waited).

Income-driven repayment (IDR) plans give borrowers who cannot afford their loan payments some relief. However, many borrowers reported issues applying for an IDR plan and processing delays, leading to financial strain while they waited for the application to go through.

In some cases, student loan borrowers are entitled to a refund; for example, if they reach the requirements for PSLF, they're eligible for a refund of any excess payments and interest. Plus, borrowers were temporarily eligible for a refund of payments they made during the COVID federal payment freeze. However, many borrowers told the CFPB that their refunds were delayed for months.

Issues with your payments or accounts can cause serious issues, including damage to your credit and even wage garnishment. If you feel that your loan servicer has mishandled your account or made a mistake, taking action quickly is key.

Federal student loan borrowers are typically encouraged to file a complaint with the Federal Student Loan Ombudsman Office (the ombudsman is an impartial resource that helps resolve disputes between borrowers and loan servicers) or to contact the CFPB if there's an issue. However, President Trump has introduced major changes to the education system and the agencies in charge of overseeing federal financial aid.

In March, President Trump issued an executive order to dismantle the U.S. Department of Education. As a result, the Ombudsman Office has limited staff; according to a recent ABC News report, the Federal Student Aid Ombudsman Office has a backlog of more than 27,000 complaints after losing nearly two-thirds of its staff.

To make matters worse, CFPB efforts to protect and aid borrowers have been deprioritized, according to an April memo to staff.

For borrowers, that means help is harder to find. While you can still submit complaints via the options above, there are other actions you can take too.

If you notice any errors in the amount owed or your loan interest rates, contact your student loan servicer immediately. You can typically find their contact information on your monthly statement or via StudentAid.gov.

Before you contact your servicer, take time to review your loan documents to ensure there's actually an error.

It's a good idea to have your loan documents on hand when contacting your loan servicer. They may ask you for additional information and submit supporting documents, such as a copy of your loan statements or promissory note.

You should follow up any phone calls to your servicer with a written email or letter to help you keep track of your communication with them. This is also an opportunity for you to provide them with supporting documents to support your case.

Some states have launched their own student loan ombudsman offices or government agencies dedicated to helping student loan borrowers. As of 2025, 16 states and the District of Columbia have their own ombudsman offices. With the ombudsman, you can submit your case for review and assistance.

In cases of significant discrepancies or unresolved issues, you may want to consult with an attorney who specializes in student loan cases.

You can also escalate the issue to your state’s attorney general’s office. Your state attorney general’s office often has a section of its website or a direct phone line dedicated to consumer complaints and inquiries.