Impending Student Loan Payment Increases Under the One Big Beautiful Bill Act

Millions of federal student loan borrowers are facing significant increases in their monthly payments due to the One Big Beautiful Bill Act (OBBBA), signed into law by President Donald Trump in July 2025. An analysis by the borrower advocacy group Protect Borrowers indicates that average monthly payments could rise by $400 or more. The OBBBA phases out several income-driven repayment (IDR) plans that have historically kept payments manageable based on borrowers' income, leaving only two options that may be more expensive.

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The OBBBA will eliminate three of the four existing IDR plans—Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Saving on a Valuable Education (SAVE)—by July 2028. Borrowers will be left with the Income-Based Repayment (IBR) plan and a new Repayment Assistance Plan (RAP), which, while offering some interest subsidies, requires a 30-year repayment period before qualifying for forgiveness. For many borrowers, particularly those currently enrolled in SAVE, both IBR and RAP could result in higher monthly payments. For instance, a typical single borrower with a bachelor's degree could see an increase of $285 per month under IBR compared to SAVE.

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Starting July 1, 2026, new federal loan borrowers will lose access to the IBR plan, leaving RAP as their only income-tied repayment option. This change is projected to cost new borrowers significantly more than existing plans. For example, a borrower supporting a family of four could face a monthly payment increase of $402 under RAP compared to SAVE. Parent PLUS borrowers are particularly vulnerable; those who consolidate loans after the deadline will lose access to any IDR plans, forcing them into the Standard repayment plan, which is substantially more expensive.

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Critics, including Protect Borrowers, argue that the OBBBA will have "financially devastating consequences" for millions of borrowers, pushing them toward costlier repayment options. The American Federation of Teachers (AFT) has filed a lawsuit against the Department of Education, alleging that the withholding of IDR plans has harmed borrowers by delaying access to repayment options and potentially leading to significant tax liabilities.

ALERT: Student Loan Payments Could Jump $400 a Month – What You Need to Know

The Department of Education has acknowledged the challenges borrowers face, stating, “We strongly encourage borrowers who must consolidate their loans... to apply for their consolidation loan at least three months before July 1, 2026.” Additionally, the department has paused loan forgiveness under IBR while it responds to court actions affecting the SAVE plan, which has further complicated the repayment landscape.

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There are discrepancies regarding the exact number of borrowers affected by these changes. While Protect Borrowers estimates millions will see increased payments, the Department of Education has not provided specific figures. Furthermore, the timeline for the implementation of these changes remains uncertain, particularly with ongoing legal challenges to the SAVE plan.

ALERT: Student Loan Payments Could Jump $400 a Month – What You Need to Know

As the OBBBA's provisions roll out, borrowers will begin to see changes in their repayment options and amounts. A motion hearing related to the AFT lawsuit is scheduled for October 31, 2025, which may influence the future of IDR plans and borrower protections. The situation remains fluid, with potential implications for millions of borrowers navigating the evolving student loan landscape.

ALERT: Student Loan Payments Could Jump $400 a Month – What You Need to Know