In this brief, we analyze changes the House Committee on Education and the Workforce proposed to the income-driven repayment (IDR) plans for federal student loans under the fiscal year 2025 budget reconciliation process. The bill was approved in committee in April 2025. If enacted, it would replace existing IDR plans with a new plan (the Repayment Assistance Plan, or RAP) for loans issued on or after July 1, 2026. The RAP uses a new formula for calculating monthly payments, requires 30 years of payments to qualify for loan forgiveness, and includes a monthly interest waiver and matching payments for principal reduction. Borrowers who elect the RAP would not be able to leave the program to use a different plan later, a break from current policy.

Why This Matters

IDR plans ensure that borrowers have affordable options to repay their educational debts, and the federal government has provided broad access to these plans since 2009. The House-proposed RAP differs in many ways from current IDR plans, reducing some benefits while adding new ones.

Key Takeaways

• Monthly payments under the RAP are lower than under existing IDR plans for middle-income single borrowers, but payments are higher for those earning above $80,000 or below $30,000.
• The payment formula is not indexed to inflation, and payments will be higher in the future for the same level of income today.
• Borrowers with incomes that would have been exempt from payments under current IDR plans would be expected to make payments of at least $10.
• Some middle-income borrowers will make lower total payments under the RAP than under existing options because the new interest waiver and principal payments reduce their balances over time.
• Borrowers with high debt from graduate school and low or middle incomes must repay a much higher share of their debts than under existing plans because the RAP extends the loan forgiveness point from 20 or 25 years to 30 years.

How We Did It

We estimated how much hypothetical borrowers would repay on their loans under existing IDR plans and the House-proposed RAP based on a range of incomes and debt levels. We assume borrowers hold loans at current interest rates and that their debt balances are typical of those currently enrolled in IDR for undergraduates and graduate borrowers. We assume borrowers’ incomes increase at a constant 5 percent annual rate and that they make required monthly payments on time with no additional payments or prepayments.