New Student Loan Bill Could Mean Higher Monthly Payments for Borrowers

Millions of student loan borrowers may face higher monthly payments and longer forgiveness timelines if a new Senate bill passes, this is especially applicable on those currently on the SAVE income-driven repayment plan.

New Student Loan Bill: People who have student loans might have to pay much more every month soon, and it could take longer for their loans to be forgiven. This could happen if a new Senate bill passes. The bill wants to change how the federal student loan system works. This has made many borrowers worried, especially those who use income-driven repayment plans, like the SAVE plan, which is currently paused.

Student Loan Delinquency Is Worst in These US States

New Student Loan Bill: What it Means for Current Borrowers?

Most of the new rules in the bill would only apply to people who take out new loans after July 1, 2026. But one important part of the bill would affect about 10.3 million borrowers who already have student loans. Currently borrowers can choose from four different income-driven repayment plans:

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

The bill wants to combine all these plans into just one plan, the IBR.

This change will affect borrowers differently, depending on which plan they are on now. People in the ICR plan might pay less every month. Those using PAYE might not see much change because PAYE is similar to IBR. But for borrowers using the SAVE plan, the change could be very bad. Their monthly payments could go up a lot, and it could take much longer for their loans to be forgiven.

How the SAVE Plan Borrowers will be Affected?

The SAVE plan started in 2023 under President Biden. It was made to help borrowers pay less each month by charging a smaller part of their income. It also gave a faster way to have loans forgiven. But in July 2024, the SAVE plan was paused. Now, the new bill wants to get rid of it completely.

Student Loan Wage Garnishment Limits: How Much Can the Government Take From Your Paycheck for Student Loans?

About 7.8 million people still use the SAVE plan. If the bill passes, these borrowers would have to switch to the IBR plan. For many, this means they might pay nearly $100 more every month if they are single, and heads of households with kids might pay up to $200 more. This comes from calculations by Investopedia.

Also, the time it takes to get loan forgiveness will get much longer. With the SAVE plan, borrowers who owed $12,000 or less could have their debt forgiven after 10 years of paying regularly. But with the IBR plan, they usually have to pay for 20 years before any forgiveness happens.

This will hit low-income borrowers the hardest because they were the ones who benefited most from the SAVE plan’s lower payments and faster forgiveness.

Farheen Ashraf

Farheen Ashraf is a content writer and editor at Eduvast, where she has been contributing since 2021. She holds a Bachelor's degree in History and has developed extensive experience in researching, writing, and editing content across a wide range of subjects. Over the years, Farheen has written on business, entertainment, law, travel, lifestyle, education, culture, poetry, and human-interest topics. Her work focuses on transforming complex information into clear, accurate, and reader-friendly content that helps audiences make informed decisions. At Eduvast, she works closely with the editorial team to ensure content quality, factual accuracy, and adherence to editorial standards. Her passion for storytelling and research continues to drive her exploration of diverse subjects and emerging trends.