Lower student loan bills may be coming — even for high earners

Here’s some good news: If you have student loan debt, you could soon qualify for a repayment plan that comes with lower monthly bills.

The eligibility requirements for the Income-Based Repayment (IBR) Plan have been updated to allow a broader swath of student loan borrowers—including higher earners—to enroll in this plan as a result of a provision in the so-called One Big Beautiful Bill Act that passed over the summer. You may be able to switch to this plan, even if you don’t have partial financial hardship.

The U.S. Department of Education is working to update its system to implement the updates to the IBR Plan and said it anticipates that those changes will be completed this month. 

“In the meantime, servicers will hold IBR applications that would otherwise be denied. servicers will process those applications after the system changes are completed,” the Department said in an update from last month. “We encourage borrowers who applied for the IBR Plan and were denied due to lack of partial financial hardship before we instructed servicers to hold these applications to reapply.”

That said, borrowers who are freshly eligible for the IBR Plan may have to wait several more months before they start to receive their new monthly payments. That’s because the Department has pegged July 1, 2026 as the date when borrowers who have eligible loans can access the IBR and the date when there will be no restrictions on enrolling in IBR. 

The Department of Education didn’t immediately respond to a request for comment from Fast Company regarding the timing of when borrowers will begin to receive their new monthly bills.

EXPANDED ELIGIBILITY

The changes from this past summer mean that more high-income borrowers will now be eligible for this income-driven repayment plan. But the Department of Education is also scrapping three other affordable repayment plans: The Saving on a Valuable Education (SAVE) plan, the Income-Contingent Repayment (ICR) plan, and the Pay as You Earn (PAYE) plan.

Borrowers under these three plans may switch to the IBR plan, though they won’t necessarily see their monthly payments go down. Borrowers in PAYE may not see their monthly bill change much under IBR, while they’ll be higher for those borrowers currently enrolled in SAVE, Mark Kantrowitz, an expert on student financial aid, told CNBC. But many borrowers enrolled in ICR will have lower monthly payments once they switch to IBR, he added.

Though the eligibility for the Income-Based Repayment Plan has been expanded, other aspects remain the same. The monthly payment will continue to be calculated as 10% of a borrower’s discretionary income, with a 20-year repayment period, for those borrowers who first took out a loan on or after July 1, 2014. For those borrowers who took out a loan prior to that date, the monthly payment amount is calculated based on 15% of a borrower’s discretionary income, with a 25-year repayment period.

What’s more, there are still exclusions to the IBR Plan that include Parent PLUS borrowers whose loans have not been consolidated and recipients of Perkins loans and other loan programs who have not consolidated those loans.

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