Student Loans in 2025: Chaos, Change, and What You Need to Know
- David Gourley
- May 21
- 4 min read
Before you get into this, know that changes will take place in the future:
When it comes to student loans in the last few years, one word comes to mind: chaos.
Between lawsuits, policy shifts, and a constant stream of “breaking news,” it’s no wonder so many borrowers feel overwhelmed, confused, or just plain stuck. As someone who’s spent the last five years helping educators and public service workers navigate this mess, I want to help break it down into manageable, accurate, and actionable information.
Let’s take a look at what we know right now and what might be coming next.
Where We Are Today with Student Loans
Millions of borrowers are currently enrolled in the SAVE (Saving on a Valuable Education) repayment plan.
The problem? SAVE is essentially dead. A federal court has blocked many of its key provisions, and as of now, all borrowers on SAVE are in a forbearance status.
That means:
No required monthly payments
No interest accrual
But also—no PSLF credit
This is important for anyone pursuing Public Service Loan Forgiveness. The time spent in SAVE forbearance isn’t moving you closer to the 120-payment mark unless you qualify for and pursue the PSLF Buyback Program, which is still available… for now.
In the last few months, we’ve started to see some progress:
Consolidation applications are being processed again.
IDR (Income-Driven Repayment) plan applications are back online.
Servicers are working, slowly, through the backlog.
Right now, borrowers still have access to repayment plans like ICR, IBR, and PAYE. But there’s concern that these plans may be phased out as early as 2026.
If you already have student loans, it’s likely that IBR will be grandfathered in, though it may default to Old IBR, which is less generous than its newer version.
And despite all the clickbait headlines, PSLF is still active. Most of the recent changes don’t apply to educators. For example, medical professionals may see some shifts in eligibility and timing, but if you're a teacher or public servant, your PSLF options remain in place.
What Might Happen Next with Student Loans?
There’s a new bill on the table proposing major changes to the student loan system. Like any legislation, what we see in the early drafts won’t be the final version. But here’s a breakdown of what’s in the bill so far when it comes to repayment options.
There would be two main repayment plans:
1. Standard Repayment
This would operate like a combination of the current Standard and Extended repayment plans.
You pay a fixed amount of a set period of time, which would fully pay off the loan by the end of the term.
Here are the terms being proposed:
Under $25,000: 10-year repayment term
$25,000–$49,999: 15 years
$50,000–$99,999: 20 years
Over $100,000: 25 years
This plan does not qualify for PSLF.
2. Repayment Assistance Plan (RAP)
This would be the new income-driven option, and it does qualify for PSLF.
Payments would be based on your Adjusted Gross Income (AGI), with a tiered system:
Under $10,000 AGI → $10/month
$10,001–$20,000 AGI → 1% of AGI annually
$20,001–$30,000 AGI → 2% of AGI annually
… up to 10% of AGI if you earn over $100,000
You also get a $600 per year credit ($50/month) for each dependent child, reducing your monthly payment.
Example: AGI = $85,000 with 2 kids→ 8% of AGI = $6,800/year or ~$567/month→ Subtract $100 for child credits → $467/month
Here’s how that stacks up with existing plans:
Old IBR → $563/month
PAYE/New IBR → $375/month
SAVE → $209/month (before the pause)
While RAP payments might be higher than SAVE or PAYE, there are some key benefits:
No interest growth – your loan balance won’t increase
Minimum $50 of principal paid per month (with gov’t help if needed)
However, the major downside is that forgiveness doesn’t come until 30 years under RAP (unless you qualify for PSLF).
Unanswered Questions
As with anything involving federal legislation and student loans, there are still plenty of unknowns:
Will married filing separately impact RAP payments?
Will current IDR credit carry over if RAP becomes the default plan?
Will borrowers on SAVE be automatically moved to RAP or IBR?
Can Parent PLUS borrowers use RAP?
Will the $50/child credit apply to each spouse if filing separately?
Will the forgiven balance be taxed after 30 years?
These are all big questions that we hope to get answers to in the coming months. And no, I’m not confident that student loan servicers will handle the transition smoothly. We’ve seen that story before.
What Should You Do Right Now?
Stay informed – Don’t rely on headlines. Understand what’s happening with your specific loans.
Check your repayment plan – If you’re on SAVE, consider whether switching to IBR makes sense.
Monitor PSLF progress – Keep submitting your employment certification annually.
Talk to a professional – Navigating this on your own can be confusing. A Certified Student Loan Professional can help you avoid costly mistakes.
Don’t panic – There are a lot of changes, but PSLF and IDR forgiveness aren’t disappearing tomorrow.
Final Thoughts
The student loan system is messy, but there are still real opportunities to get relief—especially for public servants and educators. Whether it’s through PSLF, the Buyback program, or one of the income-driven repayment plans, the key is to make smart decisions based on what’s true right now, while staying flexible for what’s ahead.
If you’re unsure where to start or what these changes mean for you, I’m here to help:
Let’s make sure you’re on the best path forward.
David Gourley is the Founder and lead Financial Planner at K-12 Planning, an independent financial planning firm specializing in finance for teachers. He served for eight years as a high school mathematics teacher before transitioning into the financial services industry. He started K-12 Planning in 2024 and his passion for serving as a fiduciary for teachers and a student loan planning expert runs deep, as his wife and several other family members have served as educators for years.
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