2014-2026 Federal Student Loan Borrowers

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If you borrowed federal student loans for graduate school after July 1, 2014 and will finish borrowing before July 1, 2026, you're in a unique (and tricky) window. The sweeping student loan changes passed in HR1, the “One Big Beautiful Bill”, don’t completely shut the door on flexibility for you, but they do narrow the path. Whether you’re currently on PAYE, REPAYE/SAVE, or IBR, the law affects your repayment options going forward in subtle but important ways.


What Did HR1 Change?

HR1 eliminated several income-driven repayment (IDR) options for future borrowers, consolidating repayment into a more limited menu:

  • The new RAP plan (Repayment Assistance Plan), which replaces SAVE and REPAYE, and
  • A single, updated version of the Income-Based Repayment (IBR) plan

While RAP becomes the default for new borrowers after July 1, 2026, you shouldn't fall into that window as long as you finish borrowing before that date. So what does that mean? You Still Have Access to the New IBR PlanIf you borrowed federal student loans after July 1, 2014, you’re eligible for the new version of IBR as outlined in the final version of HR1. Here's what that plan offers:

  • Monthly payment: 10% of discretionary income
  • Forgiveness timeline: 20 years for graduate loans
  • Payment cap: Monthly payment can never exceed the 10-year Standard Plan
  • No poverty shield increase: Discretionary income is still calculated as AGI minus 150% of the poverty guideline

This plan is still active for existing borrowers—meaning you can enter it now, or switch into it from another IDR plan if that fits your strategy better.

What If You’re on PAYE?

If you're currently enrolled in Pay As You Earn (PAYE)—a plan long favored by graduate borrowers for its capped payments and favorable forgiveness terms—HR1 is phasing it out.

You can stay on PAYE for now, but you:

  • Will eventually be forced out when the Department sunsets the plan for active borrowers (expected in the next few years)
  • Can switch to New IBR which almost identical benefits, but with more long-term certainty now that HR1 has passed.

Should You Switch to IBR?

Here are a few reasons to consider switching from PAYE to the new IBR plan:

  • Identical payment formula: Both use 10% of discretionary income
  • Same 20-year forgiveness timeline for grad borrowers
  • IBR isn’t being eliminated—it’s now written into law under HR1
  • No interest capitalization when switching from PAYE to IBR, thanks to 2023 regulatory updates (87 FR 65904)

If you expect to qualify for forgiveness, or want to avoid the uncertainty around when PAYE will be closed, new IBR may be the more durable option.

Your Payment Will likely Increase

If you switch plans, you may be required to recertify your income. Many borrowers haven’t done that in years. If your income is higher now than it was at your last certification, expect a larger monthly bill.

You’re in a Shrinking Middle

You’re part of a group that’s increasingly rare: borrowers who started after the cutoff for old IBR, but before the full RAP plan takes effect in 2026.

That gives you a few remaining choices—but also a shrinking window to act.

This is the time to:

  • Review your current repayment plan
  • Evaluate your forgiveness strategy
  • Run a side-by-side comparison of PAYE vs IBR
  • Consider switching before PAYE is closed permanently

Need help modeling the switch or calculating your long-term repayment costs? I’ve built a calculator to compare forgiveness plans vs fixed repayment terms based on your AGI, family size, loan balance, and career path. (Coming Soon)

PAYE vs New IBR: How They Started, How They Differ, and Why Only IBR Survives

Where each plan came from:

  • PAYE (Pay As You Earn) began as part of President Obama’s 2011 “We Can’t Wait” initiative and was written into regulation in the Nov 1 2012 final rule.
  • New IBR was created by Congress in the Health Care and Education Reconciliation Act of 2010, section 2213. The law ordered the Department of Education to launch the plan on July 1, 2014.

When it comes to student loan plans, not all rules are created equal—and that’s exactly why PAYE is disappearing, while New IBR is here to stay. PAYE was created through regulation. That means the Department of Education, under direction from the Obama administration, wrote it into existence in 2012 without needing Congress to pass a new law. It was like setting a house rule—something the agency had the authority to do, but also something a future administration could undo just as easily by rewriting the regulations. New IBR, on the other hand, has a different kind of origin story. It was passed by Congress in 2010 as part of the Health Care and Education Reconciliation Act. That makes it a statute—a law written into the U.S. Code. Unlike regulations, statutes can’t be changed by executive order or agency decision. They’re built into the foundation. To alter or eliminate a statute, Congress has to pass a new law. That legal difference matters. When HR1—the “One Big Beautiful Bill”—came along, it aimed to simplify the loan repayment system. PAYE was on shakier ground because it only existed in regulation. Congress had the authority to sweep it away, and that’s exactly what it did. New IBR, with its stronger legal footing, survived the overhaul and remains a permanent option for eligible borrowers.


In short, PAYE was a powerful tool, but it wasn’t built to last. New IBR was. What makes the plans different

  • Monthly payment: Both charge 10 percent of discretionary income.
  • Forgiveness clock: Both cancel any remaining balance after 20 years for graduate debt.
  • Interest capitalization cap: PAYE limits capitalized interest to 10 percent of your original principal; New IBR has no special cap.
  • Legal footing: PAYE lives only in regulation; New IBR is embedded in statute.

Bottom line

If you meet the new-borrower test tied to July 1 2014, New IBR offers the same 10 percent payment and 20-year forgiveness that made PAYE popular, and it is not going anywhere. Borrowers who still rely on PAYE should review their strategy soon, because the plan’s sunset is now baked into statute, while New IBR is built to last.

Q & A for 08-2014 Borrowers

  • I’m in an Income Driven Repayment plan and haven’t recertified my income in years. When will I have to do it again?
    If you’re enrolled in an income driven repayment plan and haven’t recertified your income recently—likely due to pandemic-related pauses or extended administrative forbearance—you’re not alone. Millions of borrowers have seen their recertification dates re...
    Learn more
  • Will My Current Credit Toward Forgiveness Still Count?
    Yes, your existing qualifying payment count will carry over when you switch from PAYE to IBR or RAP—as long as you stay in an income-driven repayment (IDR) plan continuously.Here’s how it works:If you’ve made 120 qualifying payments under PAYE, and yo...
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  • Will My Interest Capitalize When I Switch?
    No (At least it shouldn’t). Thanks to a 2023 rule change (Federal Register 87 FR 65904), switching from PAYE to another plan doesn’t trigger capitalization as long as you still have a Partial Financial hardship. Your unpaid interest stays in a separate b...
    Learn more
  • Should I Just Pay My Debt Off?
    That depends. New IBR is the most favorable for total cost over time. So it really depends on how much debt you have relative your income. IDR may also offer more flexibility or better predictability depending on your income and career goals.You will likel...
    Learn more
  • Does new IBR cost more than PAYE each month?
    No. Both plans set your payment at 10 percent of discretionary income. For most borrowers the bill is identical.
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  • Does new IBR have the same 10 percent cap on capitalized interest that PAYE has when you lose partial-financial-hardship?
    No. New IBR does not include a special capitalization cap. The interest bucket still exists, but if capitalization is triggered by statute—for example, leaving IBR entirely—the full amount could be added to principal.
    Learn more