As a result of the One Big Beautiful Bill Act (OBBA), important changes to the Income-Based Repayment (IBR) plan for student loans went into effect on July 4, 2025 and are still being put into place. With new eligibility criteria, more borrowers may qualify for IBR.
Specific Changes to IBR
Here are the biggest changes to the IBR plan you need to know about.
- Borrowers are no longer required to demonstrate partial financial hardship (PFH) to qualify
- A new category of qualifying borrowers has been added: Borrowers with Parent PLUS loans who have consolidated their loans in the Direct Consolidation Loan program and signed up for Income Contingent Repayment (ICR). This means parent borrowers will be able to switch from ICR to IBR repayment plans.
- IBR will no longer be available to borrowers who take out new federal loans (or consolidate existing loans) on/after July 1, 2026
What Does This Mean for You?
With hardship restrictions being lifted, more borrowers may qualify for the IBR plan. Here’s the breakdown of how this may impact you:
- If you’ve borrowed federal loans between July 1, 2014 and June 30, 2026, you’ll have access to IBR regardless of your income
- If you’re a Parent PLUS Loan borrower, you need to consolidate your loans no later than June 30, 2026 to be eligible for enrollment in IBR
- Under IBR, your monthly payment will consist of equal payment amounts
- Monthly payments will be no higher than what it would be under the 10-year Standard Repayment Plan
- The payment calculations will be either of the following:
- If you borrowed your loans prior to July 1, 2014, your IBR monthly payment will be based on 15% of your discretionary income, with a maximum repayment term of 25 years
- If your first loans were borrowed after July 1, 2014, your IBR monthly payment will be based on 10% of your discretionary income, with a maximum repayment term of 20 years
Why This Is So Important
Using the right repayment plan for your current situation is always a top concern. But there are some additional considerations to understand about the IBR program.
- If you have higher income and you’re looking to qualify for student loan forgiveness in the future, the IBR plan may be a good fit since the PFH requirement has been lifted.
- The Department of Education (ED) and loan servicers are still updating their systems to accommodate changes to IBR. These system updates are expected to be completed in December 2025. So if you applied previously and were denied, this may explain why. Go to the Federal Student Aid (FSA) website, or get in contact with your loan servicer again in December to have your application resubmitted.
- With changes to the SAVE (Saving on a Valuable Education) Plan—including the announcement to terminate, plus recent litigation in February 2025—many borrowers have been left scrambling as they not only resume payments, but seek loan forgiveness. Transitioning to IBR will allow you to preserve the total number of qualifying payments you have already made under SAVE, and continue your loan forgiveness countdown.
- If you have Perkins loans or Parent PLUS loans that have not been consolidated in a Direct Consolidation Loan, those loans will not qualify for IBR. As part of your overall financial plan and monthly budget, this may be something to consider.
- If you have existing loans and do not plan on borrowing any new loans on or after July 1, 2026, you can enroll in IBR. You will also be permitted to use alternative repayment plans including Standard, Graduated, Extended or the new RAP (Repayment Assistance Plan).
Changes to Repayment Plans
There has been a lot of activity around repayment plans within the student loan program. Some changes are happening now, and others are scheduled to take effect within the next year or two. Depending on the years in which you borrowed your loans, certain changes may impact you more significantly than others. Edvisors will be covering the latest news on this topic to help you stay informed.
We also highly encourage you to keep in touch with your loan servicers. Document all of your communication with them and keep a record of any changes that may be applied to your loans
