Top 10 Changes for Student Loan Borrowers Under the Big Beautiful Bill

The Senate parliamentarian forced major rewrites to the One Big Beautiful Bill Act of 2025 (OBBBA), which would dramatically reform the state of student loans in the US.  We’ll summarize the top 10 changes affecting borrowers, particularly those with six-figure balances.Quick look at the big changes for student loans under the One Big Beautiful Bill Act The biggest changes under the OBBBA are the elimination of PLUS loans, the elimination of the Income-Contingent Repayment (ICR) statute and all the income-driven plans that go with it, and the very low caps on borrowing for school after July 2026.We’ll cover the most important changes below.Top 10 changes affecting six figure borrowers under OBBBA Here’s the borrowers most significantly affected by the reform provisions Congress has put forward: Borrowers on Pay As You Earn (PAYE) Borrowers who have ever at any point had Parent PLUS Loans Borrowers pursuing Public Service Loan Forgiveness (PSLF) Borrowers who will need to borrow after July 2026 Here’s the top changes.  1.

Medical residency counts again for PSLF  In the original Senate version of the OBBBA, they had a section that blocked PSLF for residents and fellows.  That whole section was eliminated in the new version after the parliamentarian rulings, so presumably, up to the $200,000 med school borrowing limit for loans made under the Repayment Assistance Plan (RAP) could be PSLF eligible now post-July 2026.2.Married filing separate is added to the Repayment Assistance Plan (RAP)  The new RAP plan previously did not allow filing taxes separate for married borrowers.  That would have introduced a large marriage penalty, and thankfully, the Senate decided to add the ability to file separate back into their bill, mirroring the House version.3.

New IBR is protected If you’re on the New Income-Based Repayment (New IBR) plan, you would get to keep it.The prior version of the Senate bill actually included this already, but the parliamentarian made it clear that had to be the case versus it being an option (the House version did not protect New IBR).So that means new borrowers as of July 2014 until July 2026 will have access to a plan that allows them to pay 10% of their income for 20 years in the private sector, and 10% in the public.4.

Parent PLUS borrowers now have until July 2026 to consolidate  Parent PLUS borrowers want to make sure they do not fall under the “excepted consolidation loan status” in the bill, and these borrowers now have an easy way to accomplish that so they can access the affordable Income Based Repayment plan.They simply will need to have consolidated before July 2026, AND be in some type of Income-Contingent Repayment (ICR) or income-driven repayment (IDR) plan before July 2028.  If you miss those cutoffs, though, you could be stuck.The safe thing to do is get on any IDR or ICR plan you can access if you’re a Parent PLUS borrower, and just ride it out.5.

There’s no more need for double consolidation The point of double consolidation was to get access to more affordable repayment plans like Saving on a Valuable Education (SAVE), PAYE, and IBR that were cut off to Parent PLUS borrowers.However, the need to do this goes away with this Senate bill if it goes into law.Parent PLUS borrowers on an ICR plan or any IDR plan would simply be moved into the IBR plan if they’re consolidated by July 2026 and enrolled in an IDR plan on a consolidated loan before July 2028.If you can’t afford an IDR or ICR plan, then and only then should you ask for a forbearance after consolidating, since that’s the more important thing to accomplish with the sooner July 2026 cut-off date.

But even then, the risk would be on you to remember to sign up for an IDR plan by June 2028, or you’re cut off from affordable repayment options.  That’s why we do NOT recommend getting on forbearance after consolidating after a Parent PLUS borrower.It’s only something to do if you don’t have the financial ability to pay the ICR amount short term.And the risk would be yours to bear if you decided to do that.The safe thing to do is to get on an IDR or ICR plan and don’t be tempted by forbearance.

It’s not worth the stress of remembering to re-enroll in IDR or ICR later.6.You might get stuck on the RAP plan if you borrow after July 2026 We’re still interpreting the Senate bill, but we think if you borrow anything after July 2026 for school, you could be forced to pay the whole thing on the RAP plan.  That could be something to think about for anyone who needs to borrow for the 2026-2027 school year, whether that’s worth it or not.Because 10% of income for 20 years under New IBR is very different from 10% of income for 30 years under RAP.

So, if you had a way to avoid RAP, it might be worth it if you’re enrolled in school with one year left to go between 2026-2027 school year.7.PAYE might survive at least for a couple more years We think ICR plans like PAYE might survive until July 2028, when everyone is forced to switch out and go to IBR.  The problem is that the court injunction currently in place blocks forgiveness under PAYE because it’s in the ICR statute.  Probably the best thing for PAYE borrowers is to stay on PAYE until we know more, unless you can get into New IBR, in which case, switch because New IBR is far more stable and more permanent.8.

New borrowing limits are low, real low Borrowing limits for students entering a program after July 2026 are just $100,000 for grad school and $200,000 for professional school under the Senate’s revised bill.  Folks starting programs after July 2026 will be subject to those limits.  It’s not a huge impact for the 2025-2026 school year, but borrowers in their first or second year of professional school need to pay attention and probably have a talk with an independent expert before borrowing after July 2026.I expect many graduate and professional schools will form alliances with private student loan companies to make the process of borrowing as easy as possible.  Grad and professional schools have an incentive to tell you, “Don’t worry, everything is okay, there’s nothing to see here.” Just keep in mind that no one at those schools faces any real consequences or accountability if those statements end up being totally incorrect.So, like I said, anyone borrowing after July 2026 needs to be careful and fully informed.9.

There’s a template now for codifying the SAVE plan if Democrats ever get unified control Now that old IDR and ICR plans are being consolidated and eliminated long term, the new RAP plan could simply be modified and turned into the SAVE plan if Democrats ever have the White House and both chambers of Congress.Borrowers should be thinking about that possibility before rushing into any specific courses of action, such as impulsively refinancing or aggressively paying off their loans.Paying off loans might be a reasonable response to all the chaos surrounding the student loan program, but it wouldn’t be crazy to see how the 2026 midterms go first before making a large, irreversible decision, such as refinancing $500,000 of federal loans, for example.10.

IBR forgiveness survives and is here to stay If unified Republican control of Washington wasn’t able to axe income-based repayment and the forgiveness terms associated with it, then IBR is not going away.Borrowers who were depending on IBR can be confident in the future of this program and can continue to plan their finances with some amount of certainty that their debt is an income tax worst-case scenario, until a borrower wants it to be a debt that they simply pay off because that’s a better deal.Why future legislative changes are highly likely When and if some version of the OBBBA passes, future changes to student loans are highly likely.  Many graduate and professional school programs will close under the new loan limits, and many undergraduate programs and colleges will likely also close or significantly downsize.There could be many unintended consequences in local economies of shrinkage like this, many of which representatives would be unlikely to anticipate until it happens.

What I’ve seen from doing student loans for approximately 10 years is that when something major gets messed up with legislation, Congress eventually changes it, but only when they’ve exhausted all other options.Keep in mind that at the time I wrote this, the Senate bill was still a proposal that had to go back to the House, so we will update this post if any of the above changes.And if you want an expert consultation to talk through all this, talk to our team.