More student-loan borrowers could soon become eligible for lower payments and debt relief

• Trump's spending bill removed the requirement of partial financial hardship to enroll in income-based repayment plans.
• It would open up the plan to those with higher payments or those enrolled in plans that are being eliminated.
• The Education Department said that the change could go into effect in December 2025.

A barrier to enrollment for a key student-loan repayment plan could soon be gone.

The Department of Education said in updated guidance posted to Federal Student Aid's website that it's moving forward with implementing some student-loan repayment provisions in President Donald Trump's "big beautiful" spending legislation.

The latest update pertains to the eligibility requirements for income-based repayment plans. Prior to Trump's spending legislation, IBR plans, which give borrowers monthly payments based on their incomes with forgiveness after 20 or 25 years, had to demonstrate partial financial hardship. It required that a borrower's monthly payment based on their income is less than the amount needed to pay off their full balance over a 10-year period.

That means borrowers with higher income-based payments, along with those on other repayment plans that the department is eliminating, would be eligible for IBR. Federal Student Aid's website said in its latest update that it anticipates the change will be completed in December 2025.

Borrowers who didn't have partial financial hardship and applied for IBR could get relief soon.

"In the meantime, servicers will hold IBR applications that would otherwise be denied," the guidance said. "Servicers will process those applications after the system changes are completed. We encourage borrowers who applied for the IBR Plan and were denied due to lack of partial financial hardship before we instructed servicers to hold these applications to reapply."

IBR plans give borrowers monthly payments based on their incomes with the promise of forgiveness after 20 or 25 years, depending on when they first took out the loan. The plans have been a source of contention over the past few months. Following a lawsuit filed by the American Federation of Teachers, which accused the department of delaying IBR application processing, the department agreed to continue processing forgiveness for those who reached the payment threshold.

Some borrowers who reached the payment threshold previously told Business Insider that their balances have been zeroed out.

The department is also working to implement other key repayment changes in Trump's spending legislation. It recently concluded negotiations on the repayment plan overhaul, which included replacing existing income-driven repayment plans with two options and placing new borrowing caps on graduate and professional loans.

These changes are happening as the administration moves forward with its efforts to dismantle the Department of Education. On November 18, the department announced that it is moving a series of programs to other federal agencies, including childcare programs and international education. While the announcement did not address federal student aid, some Democratic lawmakers said they're concerned about the impact of gutting the agency on student-loan borrowers.

Sen. Elizabeth Warren on Monday called on the department's Office of the Inspector General to examine "how ED's dismantling may have led to insufficient federal oversight of the student loan servicers responsible for providing critical customer service to borrowers."