Report shows student loan borrowers losing relief options as cheaper bills give way to higher costs
New plans, higher payments
Changes to student-loan programs signed into law as part of President Donald Trump’s spending legislation took effect July 1. They include new income-driven repayment plans and limits on borrowing.
The report estimates that borrowers switching from SAVE to the Repayment Assistance Plan, or RAP, could pay an additional $2,163 annually on average. For a typical borrower with a bachelor’s degree and annual earnings of about $68,615, it projects monthly payments rising from $136 to $343, or $2,482 more per year; the report’s general estimate and example differ.
SAVE offered lower payments and a shorter route to debt relief. The administration eliminated it and is requiring borrowers to move to another plan, with RAP recommended as one option.
Relief comes with conditions
RAP can waive unpaid monthly interest, but borrowers must make payments on time to qualify. The plan provides no grace period for missed payments. The report describes the changes as arriving amid high inflation, stagnant wages and financial strain. Those conditions could make higher monthly bills harder for borrowers to fit into their budgets.
Parents and payment pauses
Federal student-loan default typically follows 270 days without payment and can result in wage garnishment or the seizure of federal benefits, including Social Security. Federal Student Aid’s most recent data show 9.3 million borrowers in default and another 1.5 million at risk within six months.
Key points
- The report projects an average annual increase of $2,163 for borrowers moving from SAVE to RAP.
- One example estimates payments rising from $136 to $343 per month for a borrower earning about $68,615 annually.
- Parents borrowing after July 1, 2026, face a $65,000 lifetime cap and fewer repayment choices.
- Federal Student Aid reports 9.3 million borrowers in default and 1.5 million more at risk within six months.