A new payment plan is set to transfer your student loans. Find out if your costs will increase or decrease

A new income-driven repayment plan is set to lower overall costs for many student loan holders but raise monthly payments for low-income borrowers.

“One Big, Beautiful Bill” introduced the new Income-Based Repayment Assistance Plan, also known as RAP, which is expected to be open for enrollment by July 1, 2026. The bill also eliminates all other income-based plans for borrowers in three years. However, borrowers who take out loans before July 1, 2026, can still enroll in an income-driven repayment plan.

Previous accounts by Investopedia It has found that monthly payments under the resettlement program can be much more expensive for borrowers, including those with families. This is especially true for some low-income borrowers, who previously qualified for $0 monthly payments under IBR and must now pay at least $10 per month.

To explain exactly how the new plan will affect different types of borrowers, Investopedia I developed several examples using information and averages from the Department of Health and Human Services, Federal Student Aid, ZipRecruiter, and Indeed.

Each calculation assumes the following:

• The “average” borrower has $39,123 in direct student loans, and that’s true as of the second quarter of 2025.
• Loans have a current interest rate of 6.39%.
• The borrower receives an annual increase of 3%.

Low-income borrowers

The first example is a borrower with an annual income of $23,475 who has never been married or has children.

Under the current IBR plan, they would pay $4,512 over 20 years. This number is very low because, on For the IBR plan, payments are $0 for single borrowers making $23,475 or less and borrowers in a family of four making $48,225 or less. So this borrower’s monthly payments would range from $0 to $43, and the remaining loan balance would be forgiven after 20 years.

In a RAP, that same borrower would pay a total of $38,510 over the life of the loan. Their monthly payments will range from $39.13 to $230.50, and they will have to wait 30 years to get loan forgiveness for their remaining balance.

Now, let’s assume that this same borrower is married and has two children before you start making payments.

Since borrowers’ annual taxable income is low for a family of their size, their monthly payments will be zero for the entire repayment period. Then, their entire loan balance will be forgiven after 20 years.

In a RAP, that same borrower would pay a total of $12,287 over the life of the loan.

Although the RAP includes provisions to lower payment amounts for borrowers with children, it still requires a minimum of $10 per month. So this borrower’s monthly payments would range from $10 to $130.50, and the remaining balance would be forgiven after 30 years.

Additionally, the RAP has a new provision where the Department of Education will contribute up to $50 per month to reduce the borrower’s principal balance. However, for borrowers with low incomes and high loan amounts, this support is not enough to reduce the amount of money or the number of years they have to repay.

Bottom line: A low-income single borrower will pay on average 734% more on a RAP than on an IBR. A low-income borrower with a family would pay $12,287 on RAP compared to $0 on IBR.

Middle-income borrowers

Our second example is a borrower who begins repayment with an annual income of $68,400, which is what most recent graduates earn on average. This borrower never marries or has children.

This borrower would pay a total of $54,867 if they remained in IBR for the life of the loan. Their monthly payments range from $374 to $442, and they will pay off their loan in full after 11 years.

If this borrower was in the RAP program, they would pay a total of $55,165 on their loan. Their monthly payments range from $342 to $578, and they will end their payments after 10 years.

Let’s assume that the same borrower is already married with two children when repayment begins.

In the IBR plan, they would pay a total of $63,537, with monthly payments ranging from $168 to $384. They will also repay their loan in full after 20 years.

Comparatively, in a RAP plan, they will pay $59,437 in total and will have monthly payments ranging from $242 to $528. They will finish paying off their loan after 12 years.

Bottom line: The average borrower will not have significantly different payments under an IBR or RAP. Much depends on borrowers’ priorities and circumstances.

Ready meals

It’s clear that the changes to student loan programs in the “Big, Beautiful Bill” will have a big impact on borrowers who earn less, thanks to the elimination of $0 monthly payments and an extended repayment period.