Student loan borrowers may qualify for lower monthly payments. Here's how

Will the 'big, beautiful bill' impact student loans?

Jon Fansmith, SVP of the American Council on Education, joins LiveNOW's Christina Evans to discuss how President Trump's 'big, beautiful bill' might impact student loans.

Many student loan borrowers could soon see their monthly payments lower, as the U.S. Department of Education finalizes implementing changes to the available repayment plans.

Previously, borrowers were required to prove a "partial financial hardship" – or income below a certain level – in order to enter the Income-Based Repayment Plan (IBR). 

But now, with the passage of President Donald Trump’s "big beautiful bill," these requirements have been updated to allow other types of borrowers to enroll.

Who may now qualify for lower monthly student loan payments

Dig deeper:

Now, borrowers who don’t have partial financial hardship can qualify for the lower monthly student loan payments.

Without this requirement, higher earners can now qualify for IBR, as will most federal student loan borrowers.

FILE: Close up of student loan application form (Getty Images)

While the revision removes the requirement of "partial financial hardship," the monthly payment amounts will continue to be capped at an amount equivalent to the Standard Repayment Plan with a 10-year repayment period. Additionally, the updated plan does not change how the borrower’s monthly payment amount is calculated.

According to Federal Student Aid (FSA), an IBR Plan is an income-driven repayment plan with monthly payments that are generally equal to 10% of the borrower’s income if they are a new borrower on or after July 1, 2014, or 15% for those with older loans.

What student loan borrowers can do

What you can do:

Borrowers who have eligible loans taken out before July 1, 2026, are permitted to access the IBR, ICR, and Pay As You Earn (PAYE) Plans on or after July 1, 2026. 

"We strongly encourage borrowers who must consolidate their loans in order to access the IBR, ICR, and PAYE Plans to apply for their consolidation loan at least three months before July 1, 2026, to ensure that their consolidation loan is disbursed before July 1, 2026," FSA wrote.

You can learn more here.

Updated plan phases out Biden’s SAVE plan

Big picture view:

Trump’s new package eliminates the Biden administration’s Saving on a Valuable Education, or SAVE, plan. It also phases out the Pay as You Earn (PAYE) plan and the Income-Contingent Repayment (ICR) plan entirely in the future. 

The Trump administration has also capped federal student loan amounts for undergraduate studies and whether the degree is considered a graduate or professional program.

Only professional degree-seekers may borrow up to $50,000 per year. While these measures aim to control rising college costs, they could constrain access to certain advanced degrees for some students.

RELATED: Trump makes some student loan forgiveness changes: What to know

A coalition of nursing and other health care organizations have been pushing back against the plan, arguing that graduate degrees in nursing, physical therapy, public health and some other fields are not considered professional programs and would not qualify.

The Education Department is defining the following fields as professional programs: pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry and theology.

Left out are nursing, physical therapy, dental hygiene, occupational therapy and social work, as well as fields outside of health care such as architecture, education, and accounting.

While the plan is still being finalized, the new student loan caps would take effect next July.