08/20/2025

Student Loan Update: What Now? (Part Two)

The Phase-Out of the SAVE Plan, Options Moving Forward, and More

Introduction

Recent changes in the student loan system will affect the lives and financial futures of millions of Americans, including many recent chiropractic graduates, current enrollees at chiropractic colleges across the country, and even younger potential future students who want to embark on their dream of a career in chiropractic. The overhaul of this system includes:

• Dramatically reduced repayment options (including the eventual phaseout of the most generous repayment plan)
• Lifetime borrowing limits
• The return of interest accrual (as of August 1, 2025)

The SAVE Plan – Officially Shutting Down on July 1, 2028

In August 2023, the Biden administration officially launched the SAVE (Saving on a Valuable Education) plan. This plan – believed by most student loan experts to be the most affordable student loan repayment option in history – was designed to make student loan repayment more affordable for borrowers by lowering monthly payments by basing them on income and family size, as well as providing early loan forgiveness for many low-balance borrowers.

The SAVE plan has been the subject of numerous court challenges, leaving nearly 8 million borrowers in legal limbo, subject to neither required monthly payments nor interest accruing on their loan balances.

That has officially changed. In early July, the U.S. Department of Education announced they were restarting interest accrual for borrowers with loans in the SAVE plan, beginning August 1, 2025. Because the plan is still embroiled in ongoing lawsuits, borrowers are not yet required to make monthly payments. But SAVE plan borrowers are faced with a Catch-22 that could have disastrous financial consequences down the road:

• Borrowers who don’t make voluntary payments will see their balances quickly explode, potentially by hundreds of dollars every month in interest charges alone. These borrowers should consider immediately moving to an Income-Driven Repayment (IDR) plan, such as Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), or Pay As You Earn (PAYE) Repayment, as suggested by recent Department of Education guidance. To compare available repayment plans, the Department encourages borrowers with loans in the SAVE Plan to use the Department’s Loan Simulatorto estimate monthly payments under available repayment plans, determine repayment eligibility, and learn which option best meets their repayment goals. You should also be aware, however, that these additional
• Borrowers who do make voluntary payments in SAVE will not have these payments count toward loan forgiveness under other income-driven repayment (IDR) or Public Service Loan Forgiveness plans. Under an IDR plan, monthly payments are capped at a share of their discretionary income to make payments affordable, and the debt is erased after a set number of years, typically 20 or 25.

Under the One Big Beautiful Bill Act (OBBBA), signed into law by President Trump on July 4, 2025, borrowers in the SAVE plan will be required to change plans by July 1, 2028, no matter what they decide to do in the short term, as the program will be officially shut down.

New repayment plans are expected to be launched in the coming months. For more information, see below.

Repayment Options Reduced to Two: Standard Plan and RAP

OBBBA reduces repayment options for new borrowers (after July 1, 2026) from the current seven plans to only two:

1. The Standard Plan (fixed monthly repayment amount paid over a pre-determined, fixed period of time)
2. The Repayment Assistance Plan (RAP), coming in 2026

The Standard Plan

Under this inflexible monthly repayment plan, new borrowers will be assigned a repayment window between 10 and 25 years, depending upon the size of the initial loan balance:

• Less than $25,000: Repay over 10 years
• $25,000 or more but less than $50,000: Repay over 15 years
• $50,000 or more but less than $100,000: Repay over 20 years
• More than $100,000: Repay over 25 years

Once the repayment window is determined, equal monthly “mortgage-style” payments will then be required.

The Repayment Assistance Plan (RAP)

For borrowers unsure if they can meet their repayment obligations under the Standard Plan, OBBBA created the Repayment Assistance Plan (RAP), in which borrowers will have monthly payments tied to income, like the current IDR plans. Payments will be based on the borrower’s total adjusted gross income (AGI), as follows:

• Borrowers earning $10,000 or less will be required to pay $10/month.
• Borrowers earning more than $10,000 but not more than $20,000: Payment based on 1% of AGI
• Borrowers earning more than $20,000 but not more than $30,000: Payment based on 2% of AGI
• Borrowers earning more than $30,000 but not more than $40,000: Payment based on 3% of AGI
• Borrowers earning more than $40,000 but not more than $50,000: Payment based on 4% of AGI
• Borrowers earning more than $50,000 but not more than $60,000: Payment based on 5% of AGI
• Borrowers earning more than $60,000 but not more than $70,000: Payment based on 6% of AGI
• Borrowers earning more than $70,000 but not more than $80,000: Payment based on 7% of AGI
• Borrowers earning more than $80,000 but not more than $90,000: Payment based on 8% of AGI
• Borrowers earning more than $90,000 but not more than $100,000: Payment based on 9% of AGI
• Borrowers earning more than $100,000: Payment based on 10% of AGI

RAP is expected to be rolled out prior to July 1, 2026. Current borrowers will also be able to access the RAP plan moving forward.

How Does RAP Compare to Previous Income-Based Repayment Plans?

Monthly Payments: May experts predict that monthly payments could be lower compared to current IDR plans, such as Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), or Pay As You Earn (PAYE) Repayment, but not lower than the SAVE plan. Since SAVE calculates the monthly payment amount based on income, family size, and discretionary income – defined as the difference between AGI and 225% of the poverty line amount for family size and state – not just AGI, RAP payments will be higher than those typically seen by borrowers in SAVE.

RAP also ends the $0 repayment option for the lowest-income borrowers, requiring at least $10/month, making it more expensive for those borrowers. 

For more information on the differences between RAP and current plans, see analyses from the American Enterprise Institute and the Urban Institute.

Interest and Principal: One very significant financial benefit associated with RAP is in terms of student loan interest, which is an increasing burden on current loan holders. Prior to OBBBA, federal law required that 100% of a federal student loan payment go entirely to interest prior to any portion of that payment would be applied to the loan’s principal. RAP deals with ballooning interest payments in two important ways:

• If the monthly payment is insufficient to cover the accrued interest, the plan waives unpaid interest for borrowers who make on-time payments, ensuring balances do not skyrocket over time, a common disadvantage to the current selection of IDR plans.
• For low-income borrowers, RAP provides a matching credit (up to $50) to the borrower’s principal to ensure that something is paid toward the principal balance each month. Borrowers whose monthly payments already reduce their principal balance by at least $50 would see no additional help.

Loan Forgiveness: RAP cancels unpaid outstanding balances after 360 qualifying payments, or 30 years of payments, compared to the 20 or 25 years associated with ICR, IBR, PAYE, and SAVE.

New OBBBA Borrowing Limits (as of July 1, 2026)

Another provision of the One Big Beautiful Bill Act is that professional and graduate school students (and parents) will be subject to new loan limits. These limits will make it much harder for low- and middle-income students to attend costly post-graduate programs, such as chiropractic college. The Act eliminates the current Grad PLUS loan for new borrowers, beginning July 1, 2026. This plan helps eligible graduate or professional students pay for education expenses not covered by other financial aid by allowing them to borrow up to the cost of their graduate program.

After July 1, 2026:

• Graduate student borrowing is capped at $20,500/year, with a lifetime limit of $100,000 (the current cap is $138,000).
• Professional school borrowers, such as chiropractic college students, will be capped at $50,000/year, with a lifetime limit of $200,000.
• Parents who take out Parent PLUS loans to help their children pay for college will be capped at $20,000/year and, in aggregate, at $65,000 per child.

Finally, while undergrad students won’t see any changes to their loan limits, the One Big Beautiful Bill Act sets new lifetime limits for undergraduate and graduate loans combined – $257,500.

The Association of Chiropractic Colleges (ACC) has analyzed how these provisions will affect chiropractic education:

• The $200,000 aggregate limit may be insufficient for chiropractic education, which requires extensive clinical training. Unlike some graduate programs, chiropractic students cannot work full-time during their clinical rotations, making them more dependent on federal aid. Pushing students into the private loan market means higher interest rates and fewer protections - ultimately making their debt burden even greater when they enter practice.
• The elimination of Graduate PLUS loans would create a significant barrier for students pursuing chiropractic education. These loans are essential for students who need additional funding to complete their professional training. Restricting access to federal aid will ultimately reduce the number of healthcare providers available to serve our communities.
• The proposed changes to Income-Driven Repayment plans, particularly the elimination of income protection, are concerning. Many new chiropractic graduates start their careers in underserved areas or spend years building their practices. The current IDR plans provide crucial breathing room for these healthcare providers.

Disclaimer: This article is meant to be information-only and does not constitute legal, tax, or financial advice regarding any specific matter or situation. Legal, tax, or financial information is not the same as legal, tax, or financial advice, which is the application of law or other factors to an individual’s specific matter, situation, or circumstances. Advice may be given only on the basis of specific facts relayed by a client to an attorney or financial professional. The MAC goes to great lengths to make sure our information is as accurate, useful, and up to date as possible. We recommend, however, that you consult an appropriate professional if you want or need professional assurance that our information, and your interpretation of it, applies to your specific situation.