United States (Brussels Morning Newspaper) – President Donald Trump’s administration has initiated a comprehensive overhaul of the federal student-loan repayment system, introducing new repayment plans and caps. The reform aims to simplify options, impose stricter payment criteria, and target debt relief provisions, with implementation planned by July 2026.
Trump Administration Launches Student-Loan Repayment Reform
As reported by Elle Walker of Business Insider, President Donald Trump’s Department of Education has begun negotiations with key stakeholders on sweeping changes to student-loan repayment programs under the “One Big Beautiful Bill Act,” signed into law in July 2025. The process will include multiple rounds of public comments and adjustments before final rules are set, aiming for full rollout by mid-2026.
Negotiations focus on replacing the existing complex income-driven repayment (IDR) plans with two new streamlined options and establishing new borrowing caps designed to limit escalating student debt burdens.
New Repayment Plans: Standard and Repayment Assistance Plan
The first proposed plan is a “standard repayment” scheme, where monthly payments are calculated based on the total loan balance and fixed interest rates, shifting away from income-based calculations.
The second, new Repayment Assistance Plan (RAP), will base payments on discretionary income, setting monthly payments between 1% and 10% of adjusted gross income (AGI), with a minimum $10 payment and provisions to waive unpaid interest.
The RAP plan extends the repayment term to 30 years, longer than previous IDR plans, ensuring forgiveness of any unpaid balance after this term. However, critics warn this may trap low-income borrowers in debt for decades.
Elimination of Previous Income-Driven Plans
Under the reform, all existing IDR programs will be phased out as current borrowers transition to the new plans, ending options like graduated and extended repayment plans that previously allowed for partial financial hardship exceptions.
This streamlining simplifies the repayment landscape but raises concerns about affordability for many borrowers, particularly those with low or unstable incomes.
Criticism and Concerns Over Affordability
Critics, including the Institute for College Access & Success (TICAS), highlight that RAP’s new formula calculates payments based on full AGI without excluding basic living expenses, leading to disproportionate payment spikes, especially for the lowest earners.
The longer repayment term, combined with higher monthly payments required for most borrowers, may increase the risk of default and hardship, disproportionately affecting vulnerable populations.
Implementation Challenges
The Department of Education faces challenges in administering a more complex repayment framework, especially with previous cuts to loan servicing resources. Historical servicing errors could compound difficulties in borrower enrolment and compliance.
Nonetheless, the bill allocates increased funding to service management aiming to mitigate past issues.
Context of Student Debt Crisis
This overhaul arrives amid a backdrop of roughly 30% of borrowers delinquent on payments and rising concerns about the affordability of higher education financing. The administration’s reforms seek to balance fiscal responsibility with relief for borrowers, though the debate over adequacy and fairness continues.
Next Steps and Timeline
Public hearings and stakeholder input sessions will continue over the coming months. The administration targets July 2026 for implementing the new repayment plans nationwide, replacing previous systems.
Borrowers are encouraged to stay informed of evolving rules and seek guidance on transitioning between plans through official Education Department channels.
