Major Student Loan Repayment Changes Coming in 2026: What Borrowers Need to Know

Introduction:

The student loan system is heading into one of its biggest transitions in decades, and millions of borrowers will feel the impact. With new rules emerging from the RISE committee, directives tied to the OBBBA legislation, and the Department of Education’s plan to phase out familiar income‑driven repayment (IDR) options like ICR and PAYE by 2028, federal repayment is about to look very different.

For borrowers, these changes raise important questions: Will payments increase? Will forgiveness take longer? Should you consolidate — or wait? Understanding these updates now is the key to staying protected as the system shifts.

"I don't even know how much I'm going to have to pay"

A New Standard Repayment Plan With Higher Minimum Payments

Under OBBBA, the Department of Education is preparing a new tiered Standard Repayment Plan. Instead of the current fixed 10‑year term, repayment lengths will extend based on a borrower’s total debt stretching anywhere from 10 to 25 years.

A major point of debate was whether borrowers would see a minimum payment as low as $10, similar to Canada’s RAP model. However, the Department rejected that idea and locked in a $50 minimum payment instead.

Organizations like TICAS pointed out that while $50 aligns with today’s Standard plan, it still risks being unaffordable for lower‑income borrowers and importantly, the law does not require this amount.

RAP Will Replace Most IDR Plans for Future Borrowers

Starting July 1, 2026, new borrowers and anyone who consolidates after that date will lose access to today’s IDR programs, including IBR, PAYE, and ICR.

Instead, they’ll be funneled into the new Repayment Assistance Plan (RAP). Here’s what makes RAP different:

• A tiered income‑based payment formula

• A narrower definition of family size (meaning higher payments for many)

• A 30‑year forgiveness timeline

• Generally higher payments than SAVE and PAYE

• A subsidy structure that prevents runaway interest growth but is far less generous than SAVE

For many borrowers, RAP represents a more expensive, slower path to forgiveness which is why consolidating before July 1, 2026 may be critical.

No Marriage Penalty Under RAP

Borrowers were rightfully concerned that married couples who file jointly might see inflated payments under RAP. In response, the Department approved a major fix.

RAP payments will now be prorated based on each spouse’s share of the total household student debt.

This means:

• Married borrowers won’t be penalized for filing jointly

• Borrowers can still file separately to exclude spousal income just like under SAVE, IBR, ICR, and PAYE

For couples navigating student loans together, this removes a long‑standing financial burden.

Extra Payments Won’t Hurt Borrowers

The Department also clarified rules around making payments above the minimum. Borrowers will not be penalized for paying extra.

However, these extra payments will:

• Be applied directly to principal

• Not trigger interest subsidies or matching benefits

• Not automatically push borrowers ahead on forgiveness, unless credited month by month

Borrowers can even choose to prevent their due date from being pushed forward they just need to contact their servicer.

Updated Forgiveness Rules Borrowers Need to Know

Not all payments and pauses will count equally under the new framework.

Hardship Forbearance Will Not Count Toward PSLF

DOE confirmed that hardship forbearance including hardship periods under RAP will not count toward Public Service Loan Forgiveness.

Even more concerning: many of these months will also be ineligible for PSLF Buyback.

What Counts as an “On‑Time” Payment?

The new definition is more flexible. A payment is considered on time if it’s:

• Received on or before the due date for the current month

• But still after the due date for the previous month

This change supports borrowers with irregular pay schedules or inconsistent income.

Advance Payments Will Count Toward Forgiveness

Borrowers making advance payments will still earn credit but only one month at a time, not all at once. This prevents skipping years ahead but still allows strategic payment planning.

What Happens Next?

The RISE committee has completed its work, and the Department is moving into the implementation phase.

Timeline to Watch:

• Early 2026: Proposed rules released to the public

• 30‑day comment period: Borrowers and organizations can submit feedback

• July 1, 2026: Final rules take effect (unless overridden by H.R.1)

More regulatory activity is expected, especially around the future of the SAVE plan. With PAYE and ICR already scheduled for elimination by 2028, additional rule making may unfold as litigation continues.

What Borrowers Should Be Doing Right Now

With so many moving parts, this is an easy time to make mistakes especially if you’re thinking about consolidating, switching repayment plans, or building a PSLF strategy.

Borrowers should:

• Verify which timelines apply to their loans

• Determine whether consolidation will help or hurt their forgiveness clock

• Avoid being placed into RAP too early

• Understand how the new forgiveness definitions affect long‑term planning

This is exactly where Key 2 Debt Free steps in making sure borrowers avoid costly missteps and stay on the fastest, safest path toward becoming debt‑free.

As the system continues to change, having expert guidance isn’t just helpful it’s essential.