Student loan payments are increasing. Here’s what borrowers can do

Student loan borrowers are facing an unprecedented rise in monthly payments as the Department of Education races to implement sweeping changes to repayment plans. The reforms stem from a combination of Trump administration policy changes, regulatory updates, court settlements and statutory changes as part of the One Big Beautiful Bill Act (OBBBA) that Republican lawmakers and President Trump signed into law in 2025.

Millions of Americans are affected by these changes. Savings on Education Value (SAVE) borrowers receive notices warning them to switch to another income-driven repayment (IDR) plan, or they may be forced into an unaffordable standard repayment plan. Meanwhile, OBBBA will see the phasing out of Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans. And Parent PLUS Loan borrowers who did not take steps to consolidate their loans by July 1, 2025, now find themselves deprived of IDR plan options, while those who did so before the deadline must enroll in an IDR plan by 2028 to effectively be “grandfathered.” inside. »

Following sweeping reforms to federal student loan repayment plans, many borrowers are reporting large increases in their monthly payments. According to a Student Debt Crisis Center survey conducted in the summer of 2026, more than half of borrowers leaving the SAVE plan saw their monthly payments increase by $500 or more.

“This is a huge wake-up call and a desperately needed confrontation for lawmakers. Student loan payments are increasing, and with one in five borrowers in default, those numbers will only increase,” Natalia Abrams, president of the Student Debt Crisis Center, said in a statement. statement following the survey’s release in July 2026. “Immediate action must be taken by the White House, the Department of Education, and Congress to ensure that these 7 million borrowers are not left behind because of a broken system that they did not create.” »

Although it would take an act of Congress to once again change federal student loan repayment plans, there are steps borrowers can take in some cases to try to reduce or even suspend their monthly payments. Here’s a breakdown.

Adjusting AGI to Reduce Student Loan Payments Under IDR Plans

In most cases, a borrower’s monthly student loan payment under all IDR plans is typically based on their adjusted gross income (AGI), a figure on their federal income tax return. This is generally the standard and best way to calculate an IDR monthly payment.

There are perfectly legal strategies borrowers can use to try to lower their AGI. Any reduction in AGI could result in lower student loan payments under IDR plans. Such strategies may include:

• Contribute more to tax-deferred retirement accounts, such as a 401(k) or 403(b).
• Contribute to a health savings account (HSA) or similar account if your employer offers it, especially if you have regular or ongoing health care expenses.
• File taxes as married by reporting married borrowers separately; This may allow borrowers to exclude their spouse’s income from being considered when calculating their IDR payment.

Borrowers should consult a qualified tax advisor for advice on these and other strategies to reduce their AGI, as some may have tax consequences to consider. For example, filing taxes separately as married may cause some households to pay more taxes; the question would then be whether the additional tax liability is high enough to offset the savings from lower student loan payments under an IDR plan.

Use alternative income-to-payment documentation for IDR plans

Although the AGI figure from a borrower’s federal tax return is generally the best way to calculate an IDR payment for federal student loans, this is not always true. If your financial situation has changed or your income has decreased since your last tax return (for example, if you recently separated or divorced, lost your job, or started working part-time), your tax return does not necessarily have to be used as the basis for paying your IDR.

Instead, borrowers can use “alternative income documentation,” something other than a tax return, to calculate their monthly IDR payment. These documents can be a pay stub, a letter from an employer, or even a self-certified statement, as long as the documents are clear and dated within 90 days of the borrower’s signature on the IDR application.

Borrowers also do not have to wait until the annual IDR recertification deadline (which is typically every 12 months) to update their IDR payment. Federal law allows borrowers to request a recalculation of their IDR payments at any time if their financial situation has deteriorated. So do not hesitate to exercise this right if your income has declined and your current IDR payment is based on outdated income information.

Stopping Student Loan Payments Can Have Serious Downsides

For some borrowers, no amount of strategic planning can make their student loan payments affordable right now, even under IDR plans. Between soaring prices and a national cost-of-living crisis, many Americans are struggling to pay their regular bills.

Borrowers should be aware that missing payments on federal student loans can have serious consequences. After 270 days of default, a federal student loan can go into default. Not only can a default destroy a borrower’s credit, but it can also have extreme financial repercussions, as the government has powerful tools to force defaulting borrowers to make their payments. Recent reports suggests that the Trump administration prepare to resume administrative garnishments on federal wage and benefit offsets against delinquent federal borrowers in the coming months; These programs allow the government to garnish a portion of a defaulting borrower’s wages and/or benefits without a court order.

Use forbearance to defer student loan payments if necessary

Borrowers who cannot afford their student loan payments under a repayment plan, including IDR plans, may want to consider deferment or forbearance instead. These are federal programs that allow borrowers to temporarily defer student loan payments while keeping the loans in good standing and avoiding default.

“Unfortunately, there may be times when you cannot afford to make your student loan payments. You may be temporarily unemployed or unable to keep up with your student loan payments for other reasons,” the National Consumer Law Center (NCLC) states in its report. website. “The good news is that in some cases you can pause your payments, at least for a while.”

Borrowers have up to 36 months of general or “discretionary” forbearance during their federal student loan repayment period. Student loan servicers have discretion whether or not to approve forbearance. Borrowers also receive an additional 36 months of “mandatory” or “student debt burden” forbearance, available in 12-month increments. This type of forbearance is available if the total amount you owe each month on all your federal student loans is 20% or more of your total monthly gross income. But abstention in all its forms can have certain disadvantages.

“In many cases, your interest will continue to accrue on your loans even while your payments are suspended and will be added to your principal when you resume repayment,” NCLC said. “Interest accumulates quickly and is often the reason loan balances grow so high and become unaffordable. You should consider all potential consequences before requesting a deferment or forbearance.”

Additionally, forbearance periods generally do not count toward student loan forgiveness in most cases, making debt relief even further out of reach for borrowers. But if the alternative is defaulting on your student loans, opting for forbearance for now may be a prudent decision, at least for now. Borrowers should, however, try to return to regular repayment as soon as they can.