SAVE vs RAP: What Trump’s “Big Beautiful” student loan bill really means for you

By Kaydee Ambas, CFEI® | Published on October 21, 2025

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On July 4, President Trump signed the “One Big Beautiful Bill Act” into law. The bill, which proposes significant overhauls to many things like tax policy and federal spending, also includes significant changes to the federal student loan system.

These reforms will impact both current and future borrowers, with many provisions taking effect on July 1, 2026. Here's what’s in the bill, who it could impact, and what you should do right now.

What the Big Beautiful Bill means for student loans

The bill is a comprehensive piece of legislation that includes tax cuts, spending cuts, and changes to various social programs. Specific to student loans, it proposes the following major changes:

1. Elimination of existing Income-Driven Repayment (IDR) Plans

All current IDR plans, including the Saving on a Valuable Education (SAVE) plan, will be discontinued. Borrowers will have until June 30, 2028, to enroll in the new Repayment Assistance Plan (RAP) or the standard repayment plan.

2. Introduction of the Repayment Assistance Plan (RAP)

RAP will require payments between 1% and 10% of discretionary income, with a minimum monthly payment of $10. Loan forgiveness under RAP will occur after 30 years of qualifying payments, extending the timeline compared to previous plans. This will now be the only payment option available other than the standard repayment plan.

3. Caps on federal student loan borrowing

• Graduate Students: Annual borrowing capped at $20,500, with a lifetime limit of $100,000.
• Medical and Law Students: Annual cap of $50,000, lifetime limit of $200,000.
• Parent PLUS Loans: Lifetime cap set at $65,000 per dependent student.

The new limits restrict how much students can borrow from the federal government, but do not apply to private lenders. Students can still pursue private loans to cover remaining education costs.

4. Elimination of deferment options

Deferment for unemployment or economic hardship will no longer be available. Before, interest payments were paused during deferment. Now, standard forbearance remains an option, but interest will continue to accrue during this period.

5. Impact on Public Service Loan Forgiveness (PSLF)

While PSLF remains intact, the elimination of IDR plans like SAVE may affect borrowers' strategies for achieving forgiveness. That’s because PSLF requires borrowers to make 120 qualifying monthly payments under a qualifying plan—most of which have been income-driven. With SAVE and other IDR options phased out, borrowers will have fewer affordable pathways that count toward forgiveness, potentially increasing their monthly costs or delaying eligibility.

What’s the difference between SAVE and RAP?

While both plans are income-driven, they approach repayment, forgiveness, and borrower protections very differently.

The SAVE plan—currently paused for new enrollees due to ongoing legal challenges—was designed to be the most affordable repayment option for federal student loan borrowers. It lowers monthly payments significantly for low-income borrowers, cancels unpaid interest each month, and includes shorter forgiveness timelines for those with small balances.

RAP would simplify the formula but reduce flexibility. It ties payments to gross income using fixed brackets, enforces a minimum monthly payment of $10, and extends forgiveness out to 30 years. While it does include some protections to keep loan balances from ballooning, it lacks the more generous interest cancellation benefits of SAVE.

Here’s how the two plans compare:

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What you should do right now

Even though the new law won’t take full effect until July 1, 2026, now is the time to take stock of your student loans and prepare for what’s ahead. Here's how to get started:

1. Check your current repayment plan

Log in to your loan servicer or StudentAid.gov and confirm:

• What plan you're on (SAVE, IBR, PAYE, etc.)
• Your monthly payment amount
• How many qualifying forgiveness payments you've made (if applicable)

If you're already on SAVE or another income-driven plan, you can stay on it for now—but expect to transition out by between July 2026 and July 2028.

2. Save your documentation

Download and save:

• Your repayment history
• Any PSLF employment certification forms
• Notices of plan enrollment and income certification

This documentation may help if you need to prove eligibility or preserve benefits later.

3. Watch for updates

The Department of Education will issue more detailed guidance ahead of the transition to the new Repayment Assistance Plan (RAP). Stay subscribed to your servicer’s emails and follow official sources like StudentAid.gov.

4. Plan for the transition

If you're on an IDR plan, assess how the transition to RAP might affect your monthly payments and forgiveness timeline.

5. Think through refinancing (carefully)

If you’re not pursuing federal forgiveness and have strong credit, refinancing could still be a smart move—but you’ll lose access to federal protections. Lower rates can reduce your total loan cost, even if you don’t qualify for forgiveness.

Final thoughts

Your best move right now: stay informed and stay organized. We’ll keep monitoring developments and help you navigate whatever comes next.