🎓 Student Loan Shake-Up

What the OBBB Means for Borrowers & Homeowners

📊 As of 2025, more than 42 million Americans carry federal student loan debt, with nearly a third using income-driven repayment (IDR) plans to keep payments manageable. Enter the One Big Beautiful Bill (OBBB), the Trump administration’s sweeping reform that rewrites how federal student loans are structured, repaid, and even forgiven.

While these changes are primarily about higher-ed debt, they don’t exist in a vacuum. For many families, student loan balances directly affect the ability to qualify for a mortgage, save for a down payment, or refinance. So understanding how the OBBB shifts repayment options isn’t just financial fine print — it could shape how (and when) you buy a home. 🔑

📌 What’s Changing with Student Loans

The OBBB is rolling out in phases, with the first big wave hitting on July 1, 2026. That’s when new borrowers will be limited to just two repayment options: a new tiered standard plan and the Repayment Assistance Plan (RAP).

• The New Standard Plan moves away from the fixed 10-year repayment model. Instead, payments will adjust based on how large your loan balance is, spreading out repayment for bigger debts.

• The RAP bases payments on income but requires a minimum $10 per month from every borrower, regardless of income level. Payments will last up to 30 years, though unpaid interest won’t snowball thanks to an interest waiver.

For current borrowers, the old menu of plans (PAYE, SAVE, IBR, extended, graduated, etc.) will stick around until July 1, 2028. After that, everyone transitions to either RAP, the new Standard plan, or a modified IBR.

Parent PLUS borrowers are especially affected: unless they consolidate by June 30, 2026, their repayment flexibility disappears. After that, only the Standard Plan remains on the table.

🔗 Federal Student Aid – Repayment Plan Info

🏠 What It Means for Homeowners and Buyers

So why should homeowners — or future homeowners — care about student loan reform? Simple: debt affects mortgage qualification.

Lenders look at your debt-to-income ratio (DTI) to determine if you can afford a mortgage. Student loans are often a big piece of that puzzle. Here’s how OBBB might change things:

• More Predictable Payments: With RAP capping payments to a percentage of income, borrowers may see lower, more stable monthly obligations. That could improve mortgage qualification odds.

• Longer Timelines: On the flip side, a 30-year repayment horizon means many borrowers will carry student debt for most of their working lives. That lingering obligation can weigh on financial planning, even if the monthly payment looks “affordable” on paper.

• Parent PLUS Borrowers Squeezed: Parents who don’t consolidate by 2026 could be locked into higher payments, tightening their DTI and limiting borrowing power for a new home or refinance.

• Fewer Repayment Options: Flexibility matters. When the menu of plans shrinks, it becomes harder for borrowers to “game plan” their way into mortgage readiness.

Bottom line: these changes may help some borrowers with stability but could restrict others’ ability to balance student loans and homeownership goals.

🔗 Student Loan Servicing Alliance (Scott Buchanan’s Statement)
🔗 Adam Minsky, Student Loan Attorney – Updates & Deadlines

🔮 Looking Ahead

The OBBB is reshaping how student loans intersect with household finances. Borrowers should keep a close eye on deadlines — especially June 30, 2026, for Parent PLUS consolidations — and consider how repayment choices today may affect tomorrow’s mortgage eligibility.

And as always, if homeownership is part of your long-term plan, work with both a loan servicer and a mortgage professional (👋 that’s me) to make sure your student loan strategy supports your housing goals.