On April 29, 2025, House Republicans introduced a sweeping legislative proposal that would significantly reshape the federal student loan system if enacted. This proposal includes critical changes for borrowers currently in repayment, those seeking forgiveness, and future borrowers. Below is a detailed summary of the proposed changes:
Income Contingent Repayment (ICR) updates
- Ends all current ICR-based plans, including PAYE and SAVE for new enrollees.
- Transfers borrowers in the Income Contingent Repayment Plan (ICR) or related administrative forbearance to the Income-Based Repayment (IBR) plan.
Repayment Plans by Loan Disbursement Date
Loans Disbursed Before July 1, 2026
- All current repayment options are maintained except for ICR.
- IBR Plan Updates:
- Payment requirement: 15% of discretionary income even for loans disbursed after 2012.
- Removes the standard repayment cap and partial financial hardship requirement. This means that your payments under the IBR plan can be higher than what you would pay under the 10 year Standard plan.
- Allows borrowers that have consolidated Parent PLUS loans into a Direct Consolidation loan to access IBR.
Loans Disbursed On or After July 1, 2026
- All ICR-based repayment plans and the IBR repayment plan are repealed.
- Two new plans are introduced:
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Standard Repayment Plan
- Fixed monthly payments.
- Repayment terms range from 10 to 25 years
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Repayment Assistance Plan
- Monthly payments calculated based 1%–10% of AGI, depending on your income level
- Minimum monthly payment: $10.
- You can read more about this plan proposal here: https://bysavi.zendesk.com/hc/en-us/articles/40842365080339-Understanding-the-RAP-Revised-Assistance-Plan-Student-Loan-Repayment-Option
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Standard Repayment Plan
Deferment and Forbearance Changes (Only for loans disbursed after July 1, 2025)
- Economic hardship and unemployment deferments eliminated
- Discretionary forbearance limited to 9 months per 24-month period for these loans.
- Medical and dental residency deferments allow zero interest accrual for up to 4 years.
Loan Rehabilitation
- Borrowers can use the loan rehabilitation program on their defaulted loans twice, not just once.
- For loans disbursed on or after July 1, 2025, minimum loan rehabilitation payment would be $10.
Public Service Loan Forgiveness (PSLF)
- Payments made under the Repayment Assistance Plan will qualify for PSLF.
- Payments made by new borrowers in medical or dental residency (on or after July 1, 2025) will not count as PSLF-qualifying payments.
Note: These changes are not yet law. They represent a legislative proposal and would require passage by both chambers of Congress and approval by the President before becoming official policy. Savi will keep all users updated as any policy changes are made.