Big Changes In Student Loan Repayment For Washington Borrowers

If you're one of the roughly 800,000 Washingtonians who have some level of student loan debt, your repayment options are about to change.  Whether you see the new layout as positive or negative will likely depend on your individual situation.  The numbers in Washington State with regard to student loan debt is on par with the rest of the U.S. according to the website educationdata.org.

There is about $29 billion in outstanding debt shouldered by those nearly 800,000 borrowers.  Almost half of borrowers are under the age of 35 and the average amount owed is just under $37,000.  Of the approximately 10% of state residents with student loan debt, a little more than 21% owe between 20,000 and 40,000 with 2.5% owing more than $200,000 and 15.5% owing less than $5,000.

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All of that data comes into play with the major change in how student loans will be repaid moving forward under the recently passed "One Big Beautiful Bill" (OBBB) by Congress.  Borrowers should also be aware that they will have three years (by July1, 2028) to transition from their current payment plan to one of the new options.

Standard Repayment Plan

This is a current option that will be modified under the OBBB.  Right now the this plan lasts for 10 years.  Under the change implemented in the new law, this plan will allow borrowers to pay over a period of 10 to 25 years.

Repayment Assistance Plan

This option is tailored for lower income borrowers.  Those that qualify for this option can pay based on a lower percentage of their gross income (adjusted and capped at 10%).

There are other changes that those with outstanding loans need to know.  If you make regular payments on your student loan, the government is waiving the interest portion on loans if the monthly payment don't cover interest.  The short of this is if you don;t miss payments, the remaining balance on your loan won't go up simply because of accrued interest.  Another note is if you still have a balance after 30 years of payments, your loan is forgiven.

Other Things To Know If You Currently Have A Loan

Three current plans (ICR plan, PAYE plan, and the defunct Biden-era SAVE plan) will be phased out forcing borrowers on those plans to choose one of the two option discussed above.  If you don't pick your new repayment option by July 1, 2028, you'll automatically be put on the Repayment Assistance Plan.

For more information on the full impacts on student loans and different borrowing and repayment options changing under the OBBB, check out this information from the Department of Education.