Student-loan borrowers and parents are facing spiking payments and fewer options for relief, a new report says

A big financial hit could be coming for student-loan borrowers, a new study says.

On Monday, the Center for American Progress, a left-leaning think tank, released a report showing how President Donald Trump's student-loan repayment overhaul volition power bills and alleviation for millions of borrowers. The think container shared the study exclusively alongside Business Insider.

The student-loan changes, signed into law in Trump's "big beautiful" spending legislation, took consequence July 1 and included new income-driven repayment plans and borrowing caps. Borrowers moving from the Biden-era SAVE scheme to the new Repayment Assistance Plan, or RAP, could see their student-loan bills addition by $2,163 annually on average, the study said.

For example, the study stated a representative borrower alongside a bachelor's flat alongside earnings of concerning $68,615 annually would see their monthly payments addition from $136 to $343. That's a total addition of $2,482 annually, on average.

The findings are according to income data from the US Census Bureau's American Community Survey and the Survey of Income and Program Participation, adjusted for cost increase using the person cost index. CAP afterward estimated how much representative borrowers alongside distinct instructional circumstances would have to pay under SAVE and RAP according to those plans' rules.

The SAVE scheme allowed for lesser payments and a shorter timeline to debt relief. The Trump administration eliminated the scheme and is requiring borrowers to transition to a new plan, recommending RAP as an option. While the benefits of RAP contain waiving voluntary monthly interest, borrowers must create on-time payments — definition no grace duration — to obtain them.

Sara Partridge, affiliate director of higher learning at CAP and a coauthor on the report, told Business Insider that during SAVE allowed zero-dollar monthly payments, RAP's minimum fee is $10. "Those $0 payments were a really crucial safety that many borrowers volition battle without," Partridge said.

For example, per the report, a sole borrower without dependents earning $35,000 annually in 2026 would have $0 payments under SAVE. Under RAP, they would owe $88 monthly.

She added that these changes arrive "at a period whenever there is elevated inflation, stagnating wages, and group are mostly emotion financially strained," making it additional difficult for borrowers to fit a higher monthly invoice into their budgets.

Parents and borrowers visage risen hazard of default

Trump's student-loan repayment overhaul additionally limits parents' options. Previously, the genitor PLUS program allowed parents to get up to the complete disbursal of attendance for their kids. Now, parents who took out loans following July 1, 2026, visage a life borrowing cap of $65,000. Those new genitor borrowers volition be constricted to the costlier tiered norm repayment scheme and volition endure admission to the income-contingent repayment plan.

Along alongside higher payments, the repayment overhaul additionally eliminates all borrowers' ability to defer their debt payments in the event of financial hardship or unemployment, commencement next year.

"This is a tool that borrowers relied on to assistance them out during times whenever they were struggling," Partridge said. "And without those options, borrowers may be additional apt to rotate into delinquent on their loans or eventually default, which we cognize can arrive alongside several devastating consequences."

Defaulting on national pupil loans, which typically occurs following 270 days of nonpayment, can guide to pay garnishment and the capture of national benefits, specified as Social Security. The most latest data from Federal Student Aid showed that 9.3 myriad borrowers are in default, alongside another 1.5 myriad at hazard of defaulting in the next six months.

The Trump administration has stated that its changes are intended to simplify a complex repayment scheme and curb excessive borrowing.

Nicholas Kent, the department's undersecretary, stated in a declaration that the changes "will justify students continue to have the admission that they need for national pupil loans, during assisting forestall borrowers from taking on unmanageable debt levels that they may never be capable to repay."

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