By David Nahmias | December 10, 2025

It’s December—the month when we naturally start reflecting on the year we’ve had and the year to come. For student loan borrowers, it’s been remarkably dizzying. In the less than 12 months since President Trump was inaugurated, the student loan system has experienced dramatic upheavals: from repeated uncertainty about Income-Driven Repayment (IDR) plans to the attempted evisceration of the U.S. Department of Education (ED) itself. As we at Protect Borrowers prepare to wish Good Riddance to 2025, we offer a recap of what’s happening in student loan land—and what borrowers need to know to manage their debt. With total student debt now topping $1.8 trillion, this market is huge, and its volatility poses an existential threat to the U.S. consumer economy, not to mention the welfare and livelihoods of the millions of Americans and their families with student debt. 

No More Savings from SAVE

Some of the most significant changes for student borrowers this year have involved IDR plans. IDR plans limit the monthly amount that borrowers pay to a percentage of their discretionary income. Borrowers who are enrolled in IDR plans can have the remaining balances of their student loans cancelled after 20 or 25 years of repayments—and after 10 years of working in a government or nonprofit job through the Public Service Loan Forgiveness (PSLF) program. 

Most important to highlight is that the most generous IDR plan, the Saving on a Valuable Education (SAVE) Plan, is no longer available for borrowers to enroll in. That plan, unveiled by the Biden Administration in 2023, included the highest income threshold yet and provided subsidies to borrowers to help account for ballooning interest payments that surpassed the amount of principal they owed. Last year, a federal court temporarily blocked the SAVE plan—leaving the 7+ million borrowers who were already enrolled in SAVE in a lurch. The block was reaffirmed earlier this year. ED automatically placed SAVE borrowers in an administrative forbearance while the litigation over the SAVE plan continues, meaning that borrowers don’t owe any monthly payments. Although at first this forbearance was interest-free, ED started charging interest again on those loans this August. We know from a court filing in a separate case that this time in the SAVE forbearance can be counted toward PSLF through the PSLF Buyback program. 

Just this week, ED and the states challenging SAVE reached a settlement that would end the SAVE plan permanently, and with it, end the limbo that the millions of SAVE borrowers have been in. The settlement still needs court approval, but if the judge signs off, SAVE will go away, and any borrower currently enrolled in SAVE will need to enroll in another IDR plan—although ED has not clarified how this will work.

✅ If you’re enrolled in SAVE, stay tuned for updates. There is nothing preventing you from enrolling in another IDR plan before the court approves the settlement and SAVE is formally extinguished. Federal Student Aid’s Loan Simulator can help you calculate your options.

Reclaim The Driver’s Seat For Other Income-Driven Repayment Plans … For Now

Borrowers of federal student loans who are in repayment can, for now, continue to sign up for the other Income-Driven Repayment (IDR) plans, thanks to a court-supervised agreement with ED. Those plans are: Income-Based Repayment (IBR) plan, Income Contingent Repayment (ICR) plan, and Pay As You Earn (PAYE) plan.

Earlier this year, the Trump Administration quietly eliminated the IDR enrollment application from ED’s website and ordered its contracted loan servicers to stop processing IDR applications. The American Federation of Teachers, represented by Protect Borrowers and the law firm Berger Montague, sued ED in March to restart the process. In response to our lawsuit, ED is now processing IDR applications once again, and, critically, processing applications for loan cancellation. That means that borrowers with decades-old student loans who have been paying them can continue to obtain debt cancellation long promised to them. 

Restarted IDR cancellation is especially welcome today because of a coming change next year to the income tax code. Starting in 2026, any remaining loan balances that ED wipes away under IDR cancellation are considered taxable as regular income. What this “tax bomb” means is that when borrowers file their taxes in 2027 and beyond, borrowers whose loans are forgiven after 2025 may suddenly see a hefty tax bill that they can’t afford. Critically, in accordance with a settlement in our lawsuit with ED, borrowers can rely on the 2025 tax status (i.e., no taxation) if their loans become eligible for IDR cancellation in 2025 but their loans are not actually cancelled by ED until 2026 or later. In other words, they will not be subject to the tax bomb because ED simply didn’t process their cancellation in time. These borrowers should not have their cancelled loans treated as income for federal tax purposes, and certainly shouldn’t be taxed simply because ED was slow to act.

✅ If you are enrolled in SAVE but qualify for cancellation under IBR or ICR—if your loans are 20 or 25 years old—you should switch out of SAVE now to benefit from cancellation.

✅ If you qualify for IDR cancellation and haven’t yet applied, submit your application as soon as possible—you must be enrolled this year to avoid possible tax penalties in the future.

✅ If you are enrolled in SAVE and work for the government or a 501(c)(3) nonprofit and want to continue accruing credit toward PSLF, or you want to get credit toward IDR cancellation, you should enroll in another IDR plan because the SAVE forbearance does not automatically count for either IDR or PSLF cancellation. You can count the time you were in SAVE for PSLF purposes through the PSLF Buyback, but only once you are close to getting 120 qualifying payments.

… But Buckle Up for Big Changes Next Year

Unfortunately, IBR plans will stay in flux for the next few years, so borrowers should get ready to grin and bear it. The One Big Beautiful Bill Act (OBBBA), enacted by Congress through budget reconciliation and signed by President Trump this summer, made significant changes to the student loan landscape for new and existing borrowers. First, the law eliminates three existing IDR plans and replaces them with just two plans: the Income-Based Repayment (IBR) Plan and a new but, for most, more expensive plan, the Repayment Assistance Plan (RAP). The OBBBA is also replacing the current Standard repayment plan with a new, tiered Standard plan. Borrowers with no new loans before July 1, 2026, will be able to access all the old IDR plans and old Standard plan through June 2028. At that point, they will have to choose between the new Standard plan, RAP, and IBR, whereas a new borrower or old borrower who consolidates on or after July 1, 2026, will only have access to the new Standard plan and RAP. We discussed these new plans in a blog earlier this year. ED is now undergoing a rulemaking process to flesh out the specifics of the new plans.  

Thanks to the OBBBA, borrowing to pay for higher education is likely going to get much more expensive—at a time when increasing household expenses are stretching already tight American budgets. Apart from the changes to IBR, the OBBBA also placed new borrowing caps on federal student loans that students can obtain, and it altogether eliminated the federal Grad PLUS loan program for incoming graduate students. Students will likely have to turn to the riskier private loan market to cover gaps in their costs of attendance. 

✅ If you’re planning to consolidate your loans, be sure to submit the application months before the July 1, 2026, cutoff date to ensure you maintain access to the IDR plans through June 2028. The consolidation loan must be completed by July 1, 2026. 

✅ If you are a Parent PLUS borrower, have not consolidated your loans, and want to access IDR plans, you must complete a loan consolidation by July 1, 2026, and then enroll in ICR, after which point you will be able to enroll in IBR and stay enrolled in IBR going forward.

Public Service Workers Should Expect More Turbulence, But Keep Weathering The Storm

2026 will also likely see more uncertainty for PSLF and public service workers. Created by Congress in 2007, PSLF allows public service workers like nurses, teachers, social workers, and first responders to have the remainder of their student loans cancelled after 10 years of working for a government or nonprofit 501(c)(3) employer. Earlier this year, the Trump Administration issued a regulation that would harness PSLF to further its radical agenda. If the rule goes into effect on July 1, 2026, as scheduled, it would allow ED to unilaterally disqualify employers from PSLF eligibility for 10 years if they engage in so-called “illegal” activities that it doesn’t like: advocating for immigrants, supporting gender-affirming care for minors, promoting diversity, and engaging in peaceful protest. Just after ED finalized its illegal PSLF rule, Protect Borrowers and Democracy Forward sued ED on behalf of 14 local governments and civil society organizations to block the rule. A group of 22 states and another group of nonprofit organizations also sued the rule in separate lawsuits. We anticipate rulings in the three cases before the July 1 effective date, and likely appeals mean borrowers should prepare for some whiplash. 

But so far, there are no changes presently to PSLF, and, even if the rule does go into effect, it only applies prospectively. That means that ED will not disqualify employers and payments made during time spent at those employers for activities engaged in before July 1. 

✅ Borrowers currently in repayment and expecting to seek PSLF, and  students intending to enter public service upon graduation understandably are considering changing jobs because of the rule. At this time, there is no need to change course. We expect the rule to be struck down before it takes effect, and will keep borrowers updated.

✅ Complete and submit PSLF forms (also known as employment certification forms) for your current and previous employers to make sure your payments count toward PSLF. 

✅ If you have completed 10 years of public service, complete the same form to apply for forgiveness. 

Keep Calm and Carry On Through The Blizzard 

The turmoil borrowers are enduring is occurring amid truly unparalleled chaos in the entire federal government, including those agencies that administer the student loan program and provide guardrails against fraud and abuse in the system. In particular, the Trump Administration has taken a wrecking ball to ED, which administers the federal student loan system, and the Consumer Financial Protection Bureau, which oversees private student lenders and student loan servicers like MOHELA and operates a consumer complaint database to help informally resolve disputes. While only Congress can formally abolish these departments, the Administration is doing its absolute best—notwithstanding several court orders—to shut down the agencies by broadly firing staff, ignoring statutory obligations, stopping critical investigations and enforcement actions against corporate lawbreakers, redistributing responsibilities to other departments, and in the case of the CFPB, allowing the agency to run out of money altogether. We can’t say we weren’t warned (Project 2025 openly called to abolish both agencies—check pages 319 and 839) but the speed with which the administration has attempted to eliminate the top regulators and watchdogs for student borrowers is astonishing. 

✅ If you experience an issue with your federal student loans, you can use our Congressional Casework Tool to get help from your representatives in DC. If you live in a state with a Student Loan Ombudsperson, you can also contact them for assistance.

Finally, it is worth noting that while the Administration refuses to uphold the law and enforce its obligations to protect students and borrowers, it expects borrowers to satisfy theirs, or face devastating consequences. Earlier this year, ED announced it would start collecting on defaulted student loan debt. Getting caught up in debt collection proceedings can ruin a borrower’s credit score, and the government can withhold their tax refunds or other public benefits and garnish their wages—which forces borrowers further into debt. We estimated that 5 million student loan borrowers defaulted on their debts in just October alone, and we fear millions more will face this fate.

2025 was a tough year for Americans, especially the vast majority of us who owe debt. Sadly, the student debt crisis facing our country is only expected to exacerbate in the coming years. Rest assured, however, that in 2026, Protect Borrowers will stay committed to monitoring this crisis and speaking out for the interests of the millions of student borrowers who are caught in the middle. 

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David Nahmias is a Fellow with Protect Borrowers and the Legal Director of the U.C. Berkeley Center for Consumer Law and Economic Justice.