Income-driven IDR plans like IBR and RAP could reduce US student loan payments: Here’s what to know

Many student loan borrowers in the US could soon see lower monthly bills as the Department of Education finalises changes to income-driven repayment plans. The adjustments primarily affect the Income-Based Repayment plan, or IBR, and a new option called the Repayment Assistance Plan, or RAP, which may offer the lowest monthly payments for some borrowers.

Previously, only borrowers who could prove a partial financial hardship qualified for IBR, but that requirement has now been removed. As reported by the CNBC, higher-income borrowers will also be eligible under the updated rules, expanding access to millions more borrowers.

Changes to IBR and eligibility rules
Under the revised IBR rules, borrowers pay 10% of their discretionary income each month, though the percentage rises to 15% for certain older loans. “This change means that many higher earners who were previously excluded can now reduce their monthly payments,” Mark Kantrowitz, a higher education expert, told the CNBC.

IBR is one of several income-driven repayment, or IDR, plans created by Congress in the 1990s to make federal student loan repayments more manageable. Monthly payments are capped at a portion of discretionary income, and remaining debt is cancelled after 20 or 25 years, depending on the loan’s age.

Servicers will hold applications that would have been denied under the old rules until the changes are fully implemented, the Department of Education guidance notes. Borrowers currently enrolled in the Income-Contingent Repayment plan, or ICR, may find they have lower monthly payments under IBR, Kantrowitz explained to the CNBC.

Repayment Assistance Plan offers lower monthly bills
From July 1, 2026, borrowers will also be able to enrol in RAP, an IDR plan that can lead to debt forgiveness after 30 years. Betsy Mayotte, president of The Institute of Student Loan Advisors, told the CNBC, “RAP can offer the lowest monthly payment for many borrowers because of its extended repayment timeline.”

The Department of Education’s changes coincide with the phasing out of some older IDR plans, including the Pay As You Earn plan, or PAYE, and ICR, which will end on July 1, 2028. Borrowers enrolled in these plans can move to IBR or RAP without losing progress toward loan forgiveness, Mayotte added in conversation with the CNBC.

Tools and resources for borrowers
Several online calculators can help borrowers compare monthly payments under IBR, RAP, and other IDR options. The Department of Education encourages borrowers to explore their options and switch between plans if it will reduce their monthly bills.

As US President Trump’s administration continues implementing the changes, student loan borrowers may benefit from both simplified eligibility and potentially lower payments, offering broader access to affordable repayment.
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