Earlier this month, President Donald Trump signed the so-called “Big, Beautiful Bill,” a massive budget reconciliation bill passed by Republicans in Congress that will slash taxes and cut government spending, in part by fundamentally reshaping the federal student loan system. Many borrowers currently in repayment on their student loans, as well as prospective students and families with college-bound children, will be impacted, as they will have fewer repayment options and limited student loan forgiveness pathways.

The good news is that while the changes to student loan programs are substantial, many of these reforms are not immediate. Borrowers have at least a little time to take stock of these reforms and the upcoming changes, and prepare for next steps. Here’s what borrowers should be doing.

Many student loan borrowers will eventually have higher monthly payments as a result of the new legislation. That’s because the bill repeals the SAVE and PAYE plans, two of the most affordable income-driven repayment options. IDR plans allow student loan borrowers to make payments based on a formula applied to their income, with the possibility of student loan forgiveness after 20 or 25 years. The bill also repeals the ICR plan, an older income-driven plan. But Income-Based Repayment, or IBR, would be preserved for current borrowers.

The repeal is not immediate. ICR, SAVE, and PAYE will be phased out by July 1, 2028. By or before that time, borrowers will have to choose between IBR or the Repayment Assistance Plan, a new income-driven option created by the bill. That doesn’t necessarily mean that borrowers will be able to maintain access to the legacy plans for three more years; July 1, 2028 is just the absolute final cutoff date provided under the legislation. But borrowers do have some time.

Many student loan borrowers will see higher payments under both IBR and RAP compared to SAVE or PAYE. For example, an undergraduate borrower with annual income of $60,000 would have a payment of $250 per month under SAVE and $345 per month under PAYE. But under IBR, their payments would be around $520 per month. RAP would be slightly better at around $300 per month. Furthermore, the Big, Beautiful Bill removes the “partial financial hardship” requirement for the IBR plan, which means there will no longer be a cap or ceiling on IBR payments; higher-income borrowers may see higher payments under IBR as a result.

Now is the time to start preparing for higher monthly student loan payments, particularly for borrowers in the SAVE plan. SAVE plan borrowers will almost universally have higher payments under both IBR and RAP. In addition, SAVE plan borrowers may feel more pressure to change plans sooner. For example, those who are pursuing student loan forgiveness (particularly through Public Service Loan Forgiveness) may want to consider switching to IBR now so that they can resume progress, given that the SAVE plan forbearance has blocked loan forgiveness progress. Furthermore, with the recent announcement by the Trump administration that the Department of Education will resume interest charges on student loans enrolled in the SAVE plan starting in August, SAVE plan borrowers may not want to wait to change repayment plans. And if SAVE gets struck down by the courts (which is still a distinct possibility), these borrowers could be forced into a different repayment plan much sooner than expected.

Current student loan borrowers enrolled in any of the existing income-driven repayment plans should spend some time considering whether they will want to switch to IBR or to RAP, the new option created under the bill. RAP has some real benefits, but it also has some significant drawbacks.

The RAP plan uses a different formula than the current income-driven repayment plan options. This ultimately results in the lowest-income borrowers having higher payments under RAP than they would under the existing IDR plans, while many middle and higher income earners would have payments under RAP that could be more affordable than IBR (but not as affordable as SAVE or PAYE). RAP also has some unique benefits including an interest subsidy that will prevent loan balances from ballooning if payments aren’t high enough to cover interest, and a loan principal subsidy of up to $50 per month.

But RAP also has some downsides. Notably, for borrowers not pursing PSLF, RAP has a 30-year repayment term before a borrower could qualify for student loan forgiveness. This means five to 10 additional years in repayment as compared to SAVE, PAYE, and IBR. And while some borrowers will have lower monthly payments under RAP compared to IBR, the cost of those additional years in repayment could ultimately offset those savings. Another downside is that RAP uses a tiered repayment formula, with an increasing percentage of income that is counted toward payments as the borrower’s income rises. But the RAP repayment formula is not tied to inflation, which means that over time, more borrowers will have to pay a higher percentage of their income.

RAP isn’t available yet, so no one can apply. RAP should be launched no later than July 1, 2026. Now is the time for student loan borrowers to consider the pros and cons of RAP so that they can make an informed decision, particularly borrowers who are currently in the SAVE or PAYE plans and will be forced to make a decision as those plans are phased out.

Parent PLUS loans, a type of federal student loan issued to the parent of an undergraduate student, have always had fewer repayment options compared to other federal student loans. But those options are about to get even narrower under the Big, Beautiful Bill.

In general, Parent PLUS loans are ineligible for income-driven repayment. The exception is that borrowers who consolidate their Parent PLUS loans into a federal Direct consolidation loan can access the ICR plan, the oldest and more expensive of the income-driven options. More recently, some Parent PLUS borrowers were able to “double consolidate” their loans and enroll in SAVE or PAYE.

Under the Big, Beautiful Bill, Parent PLUS borrowers who have already consolidated their loans and enrolled in any existing income-driven repayment plan would be able to switch to the IBR plan by July 1, 2028. This may actually lower the monthly payments for some borrowers, as IBR tends to be more affordable than ICR (although as noted above, it may be more expensive than SAVE or PAYE). But all other Parent PLUS borrowers would be completely cut off from any income-driven repayment option. This would also effectively block Parent PLUS borrowers from most federal student loan forgiveness programs, including PSLF.

Parent PLUS borrowers would have until July 1, 2026 to consolidate their loans in order to be “excepted” under the bill, and they would have to enroll in income-driven repayment before July 1, 2028 to be grandfathered into IBR. This may put some Parent PLUS borrowers in a bind, as income-driven repayment may not be particularly affordable for certain Parent PLUS borrowers based on their present financial circumstances. But taking these steps now could preserve access to income-driven repayment later. Now is the time for Parent PLUS borrowers to consider whether consolidating and enrolling in income-driven repayment may make sense in the long run.

While repayment plan options are narrowing for all federal student loan borrowers under the Big, Beautiful Bill, they will be even narrower for those who take out new loans on or after July 1, 2026. Doing so would limit borrowers to only the Standard plan and RAP. That means borrowers currently in repayment on their student loans who take out a new federal loan on or after July 1, 2026 would lose access to IBR (and potentially other existing repayment plans, like the Extended or Graduated plan). Importantly, this also includes current borrowers who consolidate their existing federal student loans on or after July 1, 2026.

This is particularly important for Parent PLUS borrowers. Taking out a new student loan on or after July 1, 2026 would limit Parent PLUS borrowers to only the Standard repayment plan, since even consolidated Parent PLUS loans are ineligible for RAP. These borrowers would, thus, lose access to any income-driven repayment plan option, as well as student loan forgiveness under both IDR and PSLF.

So, current borrowers should be very careful and should try to avoid taking out new federal student loans next year and beyond. If you are thinking about returning to school, or if you are a Parent PLUS borrower with additional college-bound children, this means you may need to make some difficult decisions about whether it’s worth it to rely on costlier and risker private student loans if you can’t pay out of pocket, or whether you should go to a different school (or postpone a degree altogether).

The federal student loan system appears to be steadily deteriorating as borrowers face increasing application backlogs and delays, student loan forgiveness counts appear to not be updating properly, and loan servicers are plagued by long call hold times and confusing correspondence. The Big, Beautiful Bill will increase funding for student loan servicers, but it guts funding for the Consumer Financial Protection Bureau, a federal watchdog agency that oversees the financial services sector. And this week, the U.S. Supreme Court allowed the Trump administration to proceed in laying off much of the Department of Education’s staff, impacting units like the Federal Student Aid Ombudsman Group, which has handled borrower disputes.

Taken together, this means that student loan borrowers will have fewer options when things go wrong. Borrowers should be prepared for the possibility that loan servicers, the Department of Education, and the CFPB will be unable to assist with any disputes. Now is the time to start familiarizing yourself with alternative dispute options. These can include state student loan ombudsman offices (many, but not all, states have these), as well as working with your congressperson’s office.