Should You Switch Student Loan Plans After the One Big Beautiful Bill Act? Complete Guide

The One Big Beautiful Bill Act (OBBBA) completely changed the long term outlook of federal student loans. For one, long term repayment plans are being phased out, and the new Repayment Assistance Plan (RAP) is being phased in over the coming years.

Existing borrowers need to know if they should change their repayment plan, and if so when?

We will cover who should consider swapping to a new income driven repayment plan, and who should stay put.

Borrowers who will need to change IDR plans

Anyone who is on the following repayment plans or statuses will need to change their plan eventually:

• Income-Contingent Repayment (ICR)
• Pay As You Earn (PAYE) 
• Saving on a Valuable Education (SAVE) forbearance

Under the OBBB Act, borrowers under one of these repayment plans or statuses who do not select the Income-Based Repayment (IBR) plan by July 1, 2028, will automatically move to the RAP plan starting on that date.

Who should switch out of PAYE, ICR, or SAVE forbearance now?

If you took out your first loan after July 1, 2014, you qualify for the “New IBR” version of income-based repayment. This lets you pay 10% of income for 20 years (or 10 years if you’re pursuing PSLF) before receiving forgiveness.

If the New IBR payment is similar to what you’re paying now (use our IBR calculator to check), it makes sense to switch right away to the New IBR plan on the StudentAid.gov site.

If you’re currently in SAVE payment forbearance or some other type of forbearance, you are not earning forgiveness credit. If you can afford the payments, moving out of forbearance and into IBR is the better option. 

Note that borrowers working toward PSLF who don’t qualify for New IBR may want to wait until 2026, when the RAP plan becomes available, since it could offer a lower monthly payment..

Who should wait to change to the RAP plan?

If you are not eligible for New IBR, your payments under RAP would likely be much higher compared to plans like PAYE.

For borrowers already on PAYE, it usually makes sense to wait until closer to the mid-2028 deadline to switch. The key is remembering to evaluate whether you need to switch to IBR instead before that deadline.

Who should not change to the RAP plan

If you’re close to forgiveness under IBR, and you are not eligible for PSLF, you should stick to your current plan.

Here’s why: RAP requires 30 years of payments in the private sector, compared to just 20 to 25 years under IBR.

If you’ve already made significant progress towards forgiveness, even the Old IBR plan, which requires 25 years of repayment in the private sector, may look pretty affordable compared to RAP. This is because RAP adds an extra five years of repayment.

Note that once you’ve switched to RAP, you cannot undo it.

Also, remember that if you’re on PAYE, ICR, or the SAVE forbearance, you’ll be automatically moved to RAP on July 1, 2028.

How to keep calm and know when to change your IDR plan after the OBBB Act

Borrowers should feel good about one thing: you don’t need to make an immediate decision.

You have a couple of years to figure out what IDR plan you should be on due to the way the RAP plan is being phased in, largely because of how the Senate parliamentarian constrained the OBBBA.

That said, waiting too long could end up costing you thousands — or even tens of thousands — of dollars, especially if you qualify for New IBR and don’t switch in time.  

If you need an objective review of when and whether you should switch your repayment plan, our team would love to help.