Class of 2025: New Student-Loan Rules May Have Changed Your Playbook

Congratulations—you’re about to cross the stage just as Congress finalizes the biggest student-loan overhaul in a generation. On July 2–3, 2025, the Senate and House passed the “One Big Beautiful Bill,” which:

• Shrinks repayment choices to two: a 10-year Standard plan and a new Repayment Assistance Plan (RAP) with payments that rise from 1 % to 10 % of income.
• Eliminates today’s IDR menu (SAVE, PAYE, IBR, ICR) for future borrowers—but lets anyone already enrolled before July 1, 2026 keep their plan – sort of.
• Tacks forgiveness onto year 30 under RAP instead of 20–25 years.

Your first 6-months action plan

Typically, you will graduate and have a 6 month grace period before you have to begin making Loan payments. Over the next half-year you’ll want to treat the grace period like a launch pad, not a vacation:

1. Inventory every loan. Pull your NSLDS report and make sure each balance is a Direct Loan. (If anything still says FFEL or Perkins, plan to consolidate so it’s RAP-eligible and PSLF-countable.)
2. Confirm your grace window. Most dental, medical, vet, and other grad-school borrowers get a full six months after classes end; residents finishing training often don’t. Mark the exact payment-due date on your calendar.
3. Plan to get into an Income Driven Repayment – for now. Because a $500k+ balance makes the 10-year Standard plan absurdly high, you’ll likely have to use an income-driven option—either one of the legacy plans (if you qualify) or the new RAP.
4. Set a reminder for Month 3. Historically you can’t file the IDR paperwork until your grace is winding down; submitting the application three months after graduation gives your servicer plenty of time to process it before the first bill drops.

What are your Options (Considerations for Residents to Follow)

1. IBR for New Borrowers/2014 Version.

• Payment is 10% of discretionary income (that’s gross income minus 150 % of the poverty line).
• Taxable Forgiveness happens after 20 years
• Able to File Separately
• No interest Subsidy
• To be eligible, all of your loans (including undergrad) must have been borrowed after 7/1/2014.

The 20 year forgiveness window can be very valuable and I would suggest switching to this. It gives you the most flexibility and if you don’t end up paying the money off, forgiveness happens the soonest.

2. The New RAP Plan

• Payment is 1 %→10 % of AGI, not Discretionary Income (no poverty shield). Scales based on income. Most likely 10% of AGI for most of my readers (Income >100k)
• Taxable Forgiveness after 30 years
• Able to File Separately
• 100% interest Subsidy on unpaid interest.
• All new borrowers must be in this plan

For anyone planning to pay their loans off quickly, this plan is very advantageous since there is no interest accrual. It’s also very valuable for anyone in a holding pattern or a specialty residency that plans to pay their loans off.

What I if you have loans from before July 2014?

Congress rewrote Income-Based Repayment (IBR) in 2014. If you had any balance outstanding on July 1, 2014, you’re automatically slotted into “Original IBR.”

• Payment is 15 % of discretionary income (that’s gross income minus 150 % of the poverty line).
• Taxable Forgiveness after 25 years.
• Able to File Separately

Borrowers who had zero balance on that date—and only started borrowing again after it—qualify for “New IBR” at 10 %/20 years. The brand-new bill explicitly protects that lower-cost version for the post-2014 crowd, so the cutoff matters more than ever.

But I’m going to a tuition-based residency and I will have to borrow money in the fall. Which repayment plans can I choose from?

You’ll no longer be eligible to repay any of your loans under existing income-driven plans like IBR or SAVE. Instead, under the final version of H.R.1, you’ll be required to choose from just two repayment options for your entire federal loan balance: either the 10yr standard repayment plan, or the new Repayment Assistance Plan (RAP). Once you take out a post-7/1/26 loan, all of your loans—old and new—must be repaid under the same plan, so you can’t leave your old loans in IBR while putting the new ones in RAP.

If your eligible for New IBR, that’s a significant trade off for borrowing loans for residency. But the interest subsidy from the RAP plan is also very valuable.