Millions of Student Loan Borrowers’ Payments Could Increase Under Proposed Bill

A proposed overhaul of the student loan system could mean higher monthly payments for current borrowers.

The Senate is considering a budget bill that would overhaul the student loan system. While many of the proposed changes only apply to borrowers who take out loans after July 1, 2026, one change could increase payments for millions currently enrolled in an income-driven repayment plan.

Under the proposal, borrowers currently enrolled in one of the four existing income-driven repayment plans would be moved into the income-based repayment (IBR) plan. Nearly 10.3 million borrowers are currently enrolled in the Income-Contingent Repayment (ICR), Saving for a Valuable Education (SAVE), and Paying As You Earn (PAYE) plans and will have to transition.

If passed, this transition would likely not impact borrowers in PAYE, as the formula is similar to IBR, and would likely decrease payments for borrowers under the ICR plan. However, it could be costly for the 7.8 million borrowers who are still in the SAVE plan and were banking on the SAVE plan’s generous repayment structure.

The President Joe Biden-era income-driven repayment plan, designed to make payments cheaper and forgiveness more achievable, was only available for less than a year before it was paused in July 2024. The proposed bill would effectively kill SAVE for good and transition borrowers into a less generous repayment plan.

Monthly payments would have been almost $100 cheaper under SAVE than the IBR plan for the average single borrower, according to calculations by Investopedia. For the average borrower who heads a household of four, SAVE would have been almost $200 cheaper monthly than IBR.

Additionally, forgiveness under IBR could take longer than what SAVE offered for borrowers. Under the SAVE plan, some borrowers could have the rest of their loan forgiven if it isn’t paid off in as little as 10 years, depending on their initial loan amount. If the proposal in front of the Senate is passed and those borrowers are moved to IBR, they will receive forgiveness after making payments for 20 years.