Trump Student Loan Repayment Plan Explained: How Much Could You Save Under New Proposal?

WASHINGTON—Former President Donald Trump’s Education Department has launched negotiations to replace existing income-driven repayment options with a single “Repayment Assistance Plan” (RAP) that could dramatically change how 43 million federal student-loan borrowers pay back their debt. The proposal, rolled into Trump-backed legislation dubbed the “One Big Beautiful Bill Act,” would: • cap monthly bills at 10 % of discretionary income, • raise the threshold that defines “discretionary” income, effectively lowering payments for many low- and middle-income borrowers, and • shorten forgiveness timelines to 15 years for undergraduate debt and 20 years for graduate debt, while eliminating interest capitalization when borrowers switch plans. Impact on current borrowers If adopted, RAP would replace the SAVE, PAYE, REPAYE and IBR plans, automatically enrolling borrowers who do not select an option before payments resume in July 2026. Analysts say the streamlined structure could simplify repayment but also revoke certain benefits—such as interest subsidies and family-size adjustments—built into SAVE and PAYE. Legal and political pushback Teachers’ union AFT and consumer-advocacy groups sued the administration last week, arguing that the Education Department lacks authority to scrap existing plans without a formal rule-making process. Republicans on Capitol Hill, meanwhile, have signaled support, framing RAP as a fiscally responsible alternative to broad debt cancellation. Timeline and next steps Negotiators are expected to meet through December, with a final rule due by November 2026. Until then, borrowers remain in a post-pause transition period: interest restarted on September 1 and full payments resume October 2025 under the previously announced “on-ramp” schedule. What borrowers should do now • Verify your current repayment plan and recertify income before March 1 2026. • Consider consolidating multiple loans to lock in a fixed rate before RAP rates reset annually. • Track lawsuit outcomes; a court injunction could delay or block RAP’s rollout. • Keep records of qualifying payments if you pursue Public Service Loan Forgiveness, as PSLF counting rules may change when RAP takes effect. Bottom line Trump’s student loan repayment overhaul is moving quickly and could redefine what affordable repayment looks like for millions. Borrowers should monitor negotiations, prepare documentation, and use the Education Department’s loan-simulator tools to estimate future bills under the proposed Repayment Assistance Plan.