Key findings
At a time when 1 in 5 student loan borrowers is in default, new student loan policies ushered in by the One Big Beautiful Bill Act (OBBBA) will drastically increase monthly student loan costs and eliminate important safety net protections for borrowers.
New loan limits for graduate degrees will create financing gaps for 13 percent of master’s degree borrowers and 46 percent of professional degree borrowers, forcing many borrowers to turn to more expensive private loans and cutting off access for others altogether. These shares are even higher for women and borrowers of color.
Federal student loan borrowers will have fewer repayment plan, deferment, and relief options—and parents who borrow for their children’s education will have no income-driven repayment plan options at all.
Introduction and summary
Higher education students and their families are seeing major changes to federal student loans this summer as many of the student loan policies in President Donald Trump’s signature domestic policy law, the One Big Beautiful Bill Act (OBBBA), take effect.1 This legislation takes away about $300 billion in federal support intended to reduce the financial burden imposed on low- and middle-income students for their higher education.2 Instead, these funds were directed toward lowering taxes of wealthy households and profitable corporations.3 The vast majority of the budgetary savings to the federal government from the higher education cuts come from increasing the amount borrowers pay on their student loans, both monthly and over their lifetimes. For community college borrowers, these additional payments will total $150 per month, or $1,796 annually, on average; for borrowers with a bachelor’s degree, they will come to $207 per month, or $2,482 annually, on average.4 (see Figure 1)
Roughly 42.6 million—or about 1 in 6—U.S. adults are federal student loan borrowers, collectively holding $1.72 trillion in loans.5 An estimated 12.8 million, or nearly 1 in 3, of these borrowers rely on income-driven repayment plans to afford their monthly student loan payments.6 Even before the changes in the OBBBA took effect, more than 4 in 10 borrowers reported “making tradeoffs between loan payments and covering their basic needs.”7 Meanwhile, defaults on student loans are reaching record levels, as 9.5 million—or more than 1 in 5 borrowers—are currently in default, which can have devastating financial consequences, including plunging credit scores, wage garnishment, and even tax and Social Security payment offsets.8
This report breaks down how much more borrowers are paying on average after the implementation of the OBBBA, as well as the other changes that will make repaying student loans more challenging. In addition to increased student loan costs, borrowers who require loans for graduate school may find their dreams cut short under new federal loan limits.9 Because private student loans generally require co-signers or established credit history, some borrowers may not be able to access financing for graduate education.10 Parent borrowers may similarly find themselves unable to fully finance their children’s educations with federal loans under new loan limits for parents and will have only one repayment plan option, which may leave them with unaffordable payments.11
See also
Finally, the new policies will also make student loans more burdensome by eliminating some deferment and forbearance options for borrowers experiencing hardship.12 Already, the OBBBA made it more challenging for students to get the debt relief to which they are entitled if they were misled by their colleges or their colleges abruptly closed.13
Borrowers in every state will be affected by these changes, with estimated annual increases for individual borrowers moving from the Saving on a Valuable Education (SAVE) plan to the Repayment Assistance Plan (RAP) ranging from $1,428 in Kentucky to $2,981 in Maryland. (See Appendix for full state-by-state data on average increased annual costs.)
Instead of making it more difficult and expensive for students to attend college, lawmakers should advance policies that make higher education more accessible and affordable.
6 ways federal student loans are more expensive and less flexible under Trump
The OBBBA, passed by the Republican-led Congress and signed into law by President Trump, has increased costs and administrative burdens for student loan borrowers in a variety of ways. This report outlines some of the most harmful and expensive changes that borrowers began experiencing in July 2026.
1. The new repayment plans will give borrowers fewer repayment options and increase student loan bills by $2,163 on average annually for borrowers moving from the affordable SAVE plan to RAP
One of the OBBBA’s most significant changes for student loan borrowers pertains to income-driven repayment (IDR) plans, which base a borrower’s monthly payment on their discretionary income and discharge the remaining balance after a set number of qualifying payments—typically lasting 20 or 25 years.14 The new plan created by the OBBBA, the Repayment Assistance Plan (RAP), will require higher payments than the more affordable Saving on a Valuable Education (SAVE) plan, which borrowers are now required to exit.15 Borrowers moving from SAVE to RAP will see increased annual costs of $2,163 on average nationally, with costs varying by income. The figures below show how costs will vary, on average, for borrowers of different education levels:
Average annual increased costs for borrowers moving from SAVE to RAP, by education level
$1,796
Some college or associate degree
$2,365
Graduate or professional degree
$2,163
Average for all borrowers
Note: These figures were calculated based on the median income nationally for borrowers at each education level.
In combination with the fact that borrowers were not required to recertify their incomes between March 2020 and February 2026 due to the COVID-19 repayment pause, repayment on-ramp, and administrative processing delays—and most workers will have seen their incomes increase since then—many borrowers are seeing significantly higher monthly bills this year.16
Overview of the SAVE repayment plan
As of June 2026, about 7 million borrowers were still enrolled in the Saving on a Valuable Education repayment plan, which the Biden-Harris administration introduced in August 2023.17 The SAVE plan was the most affordable federal student loan repayment plan in history, with a higher poverty line protection and lower discretionary income share than previous plans.18 However, it was successfully challenged in court by a group of Republican attorneys general and is now in the process of being eliminated.19 While Congress could have created a similar, affordable repayment plan through legislation, it enacted the more expensive RAP plan through the OBBBA in 2025.20
Starting July 1, 2026, the U.S. Department of Education began notifying borrowers enrolled in the SAVE plan that they should switch to another repayment plan within 90 days.21 Early reporting on the approximately 1 million borrowers who left the SAVE plan in the first half of July shows that about 50 percent entered Income-Based Repayment (IBR), 30 percent entered RAP, and 20 percent entered Pay As You Earn (PAYE) or Income-Contingent Repayment (ICR) plans.22
At one point, about 60 percent of borrowers in the SAVE plan had incomes below the poverty threshold where payment was required—225 percent of the federal poverty line, or about $36,000 for an individual or $74,000 for a family of four in 202623—highlighting how this plan was a lifeline for lower-income borrowers.24
Both new and current borrowers have fewer IDR plans to choose from because of the OBBBA. Borrowers with loans taken out before this July will have access to four IDR plans: RAP, Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR). They will have access to RAP and IBR indefinitely, while PAYE and ICR will be eliminated on July 1, 2028, requiring borrowers in those plans to switch out before that date.25 Borrowers will also have access to the pre-2026 Standard Plan, the Graduated Repayment Plan, and the Extended Repayment Plan. Borrowers who take out loans after July 1, 2026, only have access to two plans: one IDR plan, RAP, and the new Tiered Standard Plan.
Each of these plans offers borrowers different terms that affect their monthly payment. For borrowers moving from the SAVE plan to RAP, these changes mean significantly higher payments. Figure 1 shows how costs will increase for typical borrowers of different education levels.
These additional monthly payments will cost borrowers thousands more per year. Borrowers with some college credits or an associate degree—earning an average of $52,506 annually in 2026—would see their payments increase from $69 per month to $219 per month, for total additional costs of $1,796 yearly. These costs are even higher for borrowers with bachelor’s degrees, as a typical borrower with earnings of about $68,615 would see monthly payments increase from $136 to $343 monthly, for a total increase of $2,482 annually. Individual cases may range widely, though, with one recent survey finding that half of respondents moving out of the SAVE plan faced payments that increased by more than $500 per month.26
Across the income spectrum, student loan borrowers will pay more under the new RAP plan relative to the SAVE plan. Figure 2 shows what a borrower without dependents would pay under each plan per month (vertical axis) based on their annual income (horizontal axis).
As Figure 2 shows, RAP requires borrowers of all income levels to pay several times more per month than borrowers did under SAVE, ranging from almost four times more—$38 under SAVE versus $150 under RAP—for borrowers earning $45,000 to about 2.7 times more for borrowers earning $75,000 annually, $160 per month under SAVE versus $438 under RAP.
On top of the higher payments, RAP will also be more burdensome due to the stricter requirement that payments are “on time”—that is, paid on or before the due date.27 Depending on how stringently this requirement is enforced, even paying one day late may prevent the payment from counting toward the number of payments required to reach forgiveness. In addition, borrowers will lose the interest and principal subsidies if they pay late. This change is unnecessarily rigid and penalizes borrowers even when they pay their loan. A borrower who does not have the funds to pay on time while, for example, waiting for a paycheck would lose these crucial benefits and may remain even longer than 30 years in repayment.
At a time when half of Americans struggle to afford groceries and gas, these increases in monthly payments will unnecessarily squeeze borrowers’ budgets and force them to make choices between staying current on their loans and affording everyday necessities.28 Some borrowers may default on their student loans, cratering their credit—potentially preventing them from renting an apartment or obtaining a mortgage or auto loan. Default could even lead to the government garnishing their paychecks, tax returns, or Social Security payments.29
2. The new repayment policies will worsen racial and gender wealth gaps, as borrowers of color will pay disproportionately more over the life of their loans
As a result of these higher payments, student loan borrowers will repay significantly more over the life of their loans when moving from SAVE onto the RAP plan. As Figure 3 shows, lifetime payments under RAP will be nearly double for Black or African American and American Indian or Alaska Native borrowers, compared with what they would have been under SAVE. Meanwhile, Hispanic borrowers will pay about 1.8 times more over the life of their loans, and white borrowers will pay about 1.5 times more. Women will pay back 1.7 times under RAP what they would have under SAVE, while men will pay back 1.4 times on average.
These changes will widen the racial wealth gap and weaken the role of higher education in opening the door to upward economic mobility. For communities of color, which are disproportionately low-income, a college degree is a crucial pathway for upward socioeconomic mobility.30 However, wealth and income gaps create barriers in access to higher education—particularly for Black student borrowers, who take out loans at higher rates and with larger initial sums and therefore carry more risk.31
Historical policies and practices of systemic exclusion across housing, education, and employment have inhibited communities of color from developing generational wealth.32 As a result, the median Black and Hispanic households held $44,100 and $62,120 in net worth in 2022, respectively, compared with $284,310 for non-Hispanic white households; both groups have less than 25 cents for every dollar in wealth of white households.33 In addition to inheriting less wealth, Black and Hispanic full-time workers earned about 80 cents for each dollar earned by white workers in 2026.34 Earning one-fifth less means having vastly less discretionary income after paying for essential living expenses such as rent and groceries.
Since RAP squeezes discretionary income more than SAVE did by removing the income protection threshold entirely,35 borrowers of color will be more likely to be forced to sacrifice economic security—such as savings and retirement funds—or wealth building, such as homeownership or entrepreneurship, just to afford their student loan payments.36 Paying a higher share of income over a now-extended 30 years prevents borrowers of color from buying homes, saving for retirement, or investing in businesses. Instead of building wealth, a generation of professionals of color will spend their working lives repaying their student loans, deepening the wealth gap for the next generation.
Women, similarly, will face greater lifetime repayment increases than men under RAP relative to the SAVE plan. Women already held approximately 50 to 60 percent of the wealth of men in the 2010s and earned just 85 cents for each dollar earned by men in the United States in 2024.37 Now, their paths to upward economic mobility that rely on student loan borrowing will be made relatively steeper under these new laws.
3. New loan limits will reduce access and increase interest costs for graduate school for many borrowers, disproportionately affecting women and students of color
The OBBBA also enacted new limits on federal student loans for graduate programs, creating two new categories of post-baccalaureate programs with two different sets of loan limits. “Graduate” programs, which include most master’s and research doctoral programs, have an annual cap of $20,500 and an aggregate cap of $100,000.38 “Professional” programs, which include programs such as medicine and law, have annual caps of $50,000 and aggregate caps of $200,000. There are also new lifetime caps for all direct federal student loan borrowing of $257,500 per borrower—excluding PLUS loans borrowed on behalf of a child.
The new graduate loan limits create financing gaps for student borrowers across program types, as shown by an Urban Institute July 2025 analysis.39 More than half of borrowers who enroll in Master of Public Health programs and about one-third of borrowers in Master of Science and Master of Social Work programs, for example, would exceed the annual borrowing limits after the new law goes into effect, according to these estimates. Even with the higher loan limits for professional programs, more than half of borrowers training to be medical doctors and nearly three-quarters of those training to be dentists will face financing gaps.
Furthermore, the gaps in financing will fall along lines of race and gender, leading to greater shares of women students and students of color facing gaps and being forced to turn to the private student loan market, as shown in Figure 4. Private student loans have fewer consumer protections than federal student loans and do not come with many of the benefits of federal loans. For example, they may have variable interest rates and may not offer the deferments, forbearances, repayment plan options, or targeted cancellation pathways that federal loans do.40 Private student loans are also less regulated and transparent, increasing the risks students face of falling prey to predatory financing options.41
One estimate indicates that as many as 40 percent of Americans would struggle to access private student loans due to not meeting underwriting requirements, potentially shutting off access for some students entirely.42 Graduate degrees are a proven pathway to upward mobility, opening access to high-paying, high-benefit careers in fields such as health care or law.43 However, access to those opportunities is not equal: Women, Black borrowers, and Pell Grant recipients are more likely to rely on Graduate PLUS loans than their peers.44 Under the OBBBA, tighter loan limits would make graduate school less affordable and could even widen existing wage and wealth gaps by pushing these degrees further out of reach for the very students who often need them most to achieve the same economic returns as their peers.
The stakes are especially high in health care, where diverse practitioners are essential to meeting workforce needs and improving outcomes for patients and communities.45 Graduate and professional degrees are required credentials for many of these careers, and a significant share of medical and other health-profession students rely on Graduate PLUS loans to finance their training.46 Restricting access would not only make it harder for underrepresented students to enter these fields but could also deepen shortages in critical professions that families and communities depend on.47
4. Parent borrowers will have fewer repayment options
In addition, parents borrowing for their children’s education will have fewer repayment options, beginning with loans borrowed for the 2026-27 school year. Under the new federal rules, Parent PLUS loans that originated on or after July 1, 2026, will no longer be eligible for the ICR pathway that previously served as the program’s only income-based backstop.48 Instead, borrowers will be limited to the new Tiered Standard Plan, in which the borrower’s loan term is based on the amount of the principal.49 (see Table 1)
Many Parent PLUS borrowers struggle to repay loans they took out to help their children attend college.50 The prior structure at least allowed parents to consolidate and seek a monthly payment tied to income, which could substantially reduce repayment obligations during periods of financial hardship, such as unemployment or disability.51 Without that option, families taking on debt they later cannot comfortably afford will lack options to adjust their payments, increasing the chances of delinquency and default.
As Figure 6 shows, families in the lowest two income quintiles will see increased payments without the ICR plan, the one IDR plan parent borrowers could previously access. Under ICR, families in the lowest income quintile with one or two children would have $0 payments. After the OBBBA, the only plan new parent borrowers have access to, the Tiered Standard Plan, will dramatically increase their payments by hundreds of dollars per month if their borrowing levels are at the median or higher. Families in the second income quintile would have benefited from ICR as well, particularly those whose borrowing approaches maximum levels.
This change in policy is particularly worrisome as many borrowers and their families may not fully appreciate that this repayment protection is no longer available, and as a result, families may depend on fragmented information to make borrowing decisions. In turn, parents may take out loans based on details that are outdated and do not provide a full picture of what they are borrowing, which could place them at greater financial risk.
5. The OBBBA eliminates essential elements of the student loan safety net, including unemployment or economic hardship deferments
The OBBBA also introduces major changes to key consumer protection measures that can prevent struggling borrowers from falling into delinquency or default.52
Starting July 1, 2027, borrowers who take out loans will no longer be eligible to access key deferment options for periods of economic hardship or unemployment; and borrowers seeking a forbearance period will be capped at nine months during any two-year period.53 Deferment and forbearance are key safeguards that allow borrowers to temporarily pause or reduce their student loan monthly payment during periods of financial difficulty or when their monthly payments would otherwise be unaffordable.54 Missing a student loan payment is an early sign of borrower distress: Borrowers become delinquent immediately after missing a single payment and remain delinquent until they either pay the past-due amount or make alternative repayment arrangements—for example, by placing loans in a temporary repayment relief option.55 If any borrower remains delinquent for more than 90 days, their credit will be negatively affected and they will risk going into default.56
Economic hardship and unemployment are a common reason borrowers defer their loans, particularly those borrowers who struggle in repayment. One study found that 1 in 5 borrowers who never defaulted relied on these protections, while this share increased to 1 in 4 borrowers for those who did eventually default.57 Having deferment options during periods of financial difficulty provides a safety net, and the removal of such a tool will likely result in more borrowers finding themselves in one of the most devastating student loan outcomes: default.58
Furthermore, the OBBBA makes another major change to the income-driven repayment system by eliminating the $0 monthly payment for borrowers with low incomes in the new RAP—which is the only income-driven plan to which borrowers with loans taken out after July 1, 2026, have access.59 Unlike older IDR plans that allowed borrowers whose incomes fell below a protected threshold between 100 and 225 percent of the federal poverty line, depending on the plan, to qualify for $0 payments, the new RAP sets monthly payments between 1 and 10 percent of total adjusted gross monthly income, with a $10 minimum payment for all borrowers.60 For example, a single borrower without dependents earning $35,000 per year in 2026 would have had $0 payments under the SAVE plan but will owe $88 per month under RAP.61 Consequently, more vulnerable borrowers will likely be shifted into repayment plans with higher monthly payment amounts that they cannot afford.
For very low-income families, finding an extra $10 a month to make their student loan payment can be challenging, and the repercussions of delinquency and default are significant.62 Studies find that student loan bills can directly compete with basic household needs and necessities.63 For example, one analysis found that more than a third of student loan borrowers reported challenges paying for health care expenses because of their education debt.64 With this tool taken away, more borrowers will struggle to repay their loans. These changes will also be significantly more harmful for low-income borrowers and borrowers of color, with one study citing that Black borrowers are about twice as likely to have a $0 payment as borrowers overall.65
As a whole, these changes will result in a more punitive repayment system and weakened student loan safety net for borrowers—at a time when more and more individuals report feeling economically left behind as inflation remains high and wage growth stalls.66 Rather than alleviating the pressure many households feel, the impacts of the OBBBA changes will likely lead more borrowers to struggle financially.67
6. Under the OBBBA, students who attended institutions that misled them or abruptly closed will have to fight harder to receive relief
The changes under the OBBBA will also make it more difficult for borrowers who were deceived by their college or whose colleges unexpectedly closed to receive the student loan debt relief to which they are entitled. Specifically, they would delay the implementation of two key consumer protection regulations until 2035: borrower defense to repayment (BDR) and closed school discharge (CSD).68 Both regulations went into effect on July 1, 2023, and were important steps toward creating a more equitable and accountable higher education system.69 These regulations worked to protect students while holding institutions with proven misconduct or abrupt closures accountable for any harm caused to students.70 Delaying these rules means that the more restrictive standards from the first Trump administration will remain in effect.71
The design and purpose of BDR is to protect borrowers who enrolled in an institution based on misleading information, such as misrepresentations about the value of the degree they would be getting or possible job prospects post-graduation.72 CSD, meanwhile, protects borrowers who were unable to finish their program or degree because their college shut down without warning.73
Under the 2019 rules for BDR, borrowers who believed their schools misled them were required to provide a higher standard of proof, with the onus falling on the student to prove that their institution engaged in wrongdoing or misrepresentation.74 These regulations made it virtually impossible for defrauded borrowers to receive the relief to which they were entitled.75 While the Biden administration implemented new CSD rules to automatically grant discharges for students who attended colleges that closed, the OBBBA prevented those from going into effect until 2035, creating additional barriers for students by requiring them to individually apply.76
The CSD program serves as a life raft for students whose college shut down before they were able to complete their program and earn their degree, as the regulation gives the federal government permission to discharge the student loan taken out to attend the school and places the duty of repayment on the owner of the school, not the student.77 When used successfully, CSD means students are not left to navigate through a large debt load and no degree.
Studies show that the risk of college closures is especially high for low-income students, students of color, and students who attend for-profit institutions.78 Furthermore, a Government Accountability Office report from 2021 illustrated just how often these incidents occur, finding that almost 246,000 borrowers enrolled at more than 1,100 colleges that closed between 2010 and 2020, with 43 percent of students not completing their program before the closure.79 However, only 80,000 affected students had received debt relief through CSD, highlighting the need to minimize administrative barriers to ensure students who were harmed by these abrupt closures receive the relief to which they are entitled.80
With the delay of these key safeguards, the policy environment under the 2019 rules will transfer the risk from the institution back onto the student and, overall, make the student loan system less responsive and less capable to engage with when a college or program fails its students.
See also
Conclusion
Along with federal student loan changes, the Trump administration has cut loan servicing oversight and quality assurance measures, ultimately making it harder for borrowers to access accurate information and reliable help when problems arise. A March 2026 GAO report found that Federal Student Aid (FSA) stopped assessing servicer accuracy and call quality in February 2025, just before a sharp staff reduction nearly halved its workforce—from 1,433 to 777.81 Servicer errors such as incorrect billing statements and payment processing mistakes create serious risk of financial harm for borrowers.82
Rather than cutting federal support for students who need loans to attend college—particularly those at the lowest end of the income spectrum and those struggling with loan repayment—lawmakers should advance policies that make higher education more affordable for students from all backgrounds. Increasing funding for the federal Pell Grant and campus-based aid programs, as well as providing direct support for institutions that serve high proportions of low-income students, would help make real improvements in college affordability.
Acknowledgments
The authors would like to thank Chandler Hall and Carter Nesmith for their contributions to the data analysis in this report.
Methodology
Figure 1 and Appendix: Average monthly payments on the SAVE plan and RAP by borrower education level (state by state and U.S. average)
For both Figure 1, which uses national-level estimates for borrowers’ median incomes and corresponding monthly loan payments, and the Appendix, which uses state-level estimates, the authors calculated the additional annual costs for borrowers moving from the SAVE plan to other IDR plans by education level. To do this, they used data from the U.S. Census Bureau’s American Community Survey (ACS), “Table S2001: Earnings in the Past 12 Months (in 2024 Inflation-Adjusted Dollars),” and Survey of Income and Program Participation (SIPP), both for reference year 2024.83 ACS data provided the median income for Americans from three education levels: 1) some college or an associate degree, 2) a bachelor’s degree, and 3) a graduate or professional degree. The authors then adjusted these median earnings for inflation from 2024 dollars to 2026 dollars using the annual average CPI for the first half of 2026, which is available in the Bureau of Labor Statistics’ Consumer Price Index for All Urban Consumers (CPI-U).84
The authors then used Survey of Income and Program Participation (SIPP) data to adjust for the borrower-nonborrower income gap using variables “EDEBT_ED,” “EEDUC,” and “TPTOTINC,” after calculating the average annual income for survey respondents. The authors applied the ratio of median income for borrowers to nonborrowers at each education level in order to scale the weighted income up or down to reflect borrowers specifically, rather than the education group. For example, the median income for bachelor’s degree-holders with student loans was $4,912, while it was $4,536 for bachelor’s degree-holders without student loans, yielding a ratio of 0.924 that was then applied to adjust the ACS earnings data slightly downward. For borrowers with an associate degree, the adjustment ratio was 1.039; and for borrowers with a graduate degree, it was 0.911, indicating that borrowers with less than a baccalaureate degree had higher incomes than their nonborrower peers, whereas those with a bachelor’s or above had lower incomes than their nonborrower peers.
Next, the monthly and annual payments for borrowers of each education level under the SAVE plan and RAP were calculated based on these estimates for median annual income. The SAVE plan calculates a borrower’s monthly payment by deducting 225 percent of the federal poverty level for family size from a borrower’s monthly income and then applying an assessment rate of 5 to 10 percent, depending on the share of a borrower’s loans that are undergraduate versus graduate—with undergraduate-only borrowers having an assessment rate of 5 percent of discretionary income and graduate-only borrowers having a rate of 10 percent, and those with a mix having a weighted average rate based on their loan volume for each. To calculate the payment for graduate borrowers on the SAVE plan, the authors estimated the approximate ratio between graduate and undergraduate loans using data from the National Center for Education Statistics (NCES), National Postsecondary Student Aid Study: Graduate (NPSAS: GR, 2020), as 0.78, yielding an assessment rate of 9 percent.85
Meanwhile, the monthly payment for RAP is calculated by using a sliding-scale assessment rate based on a borrower’s adjusted gross income.86 There is no federal poverty line deduction, but there is a dependent deduction that subtracts $50 per dependent from the monthly payment.
The data for median earnings by education level in each state also come from the U.S. Census Bureau’s ACS “Table S2001: Earnings in the Past 12 Months (in 2024 Inflation-Adjusted Dollars).” In order to find state and national averages across income levels, data on the share of the population by educational attainment level from the U.S. Census Bureau’s ACS Table S1501 were used.87
Figure 6: Increased payments for Parent PLUS borrowers in the bottom two income quintiles, by family size
This figure uses the average income for families in the bottom two income quintiles to calculate their estimated payments under different plans.88 It inflates the figures for 2024 to 2026 dollars using Bureau of Labor Statistics CPI-U data.89 The average annual income for families in the lowest income quintile is therefore estimated to be $19,462 in 2026 dollars and $52,062 for families in the second-lowest income quintile.
The figure also uses data on median loan borrowing for parent borrowers from the U.S. Department of Education’s National Center for Education Statistics: “National Postsecondary Student Aid Study: 2020, Undergraduate Students (NPSAS:UG).”90 It finds median Parent PLUS borrowing levels of $23,457 for the 2020 survey year, which is $29,975 in inflation-adjusted 2026 dollars. The calculations for parent borrowers borrowing on behalf of two children assume they borrow the median amount for each child or the maximum amount for each child, respectively. The calculations assume a 9 percent interest rate.
A parent in the second income quintile borrowing for one child with median levels of borrowing would hit the ICR payment cap, which is what a borrower would pay on a fixed 12-year plan—$341. This figure is included in the chart for this borrower. Other borrowers included in the chart would not hit the payment cap.
Appendix