How the US student loan ‘cliff effect' could add years and tens of thousands to your repayments
Millions of student loan borrowers in the US are set to face longer repayment timelines and significantly higher lifetime loan costs under a revised version of the federal Standard Repayment Plan.
The redesigned plan, introduced as part of President Donald Trump's 'big beautiful bill,' changes the way repayment terms are calculated, creating what experts call a 'cliff effect' that could burden borrowers with thousands of dollars in additional payments.
Historically, the Standard Plan required borrowers to repay their federal student loans in fixed amounts over a 10-year period, making it the fastest route to becoming debt-free among available federal options.
However, under the new law, repayment terms will now range from 10 to 25 years, depending on the borrower's outstanding balance, as reported by CNN.
Loan terms now scale by balance thresholds
Under the new structure, the length of the repayment term increases in fixed five-year increments based on loan size. According to CNN, borrowers who owe up to $24,999 will remain on a 10-year repayment track. However, those with balances from $25,000 to $49,999 will be moved to a 15-year term.
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Borrowers with debts between $50,000 and $99,999 will see their repayment period extend to 20 years, and loans of $100,000 or more will require repayment over 25 years.
Michele Shepard Zampini, senior director of college affordability at The Institute for College Access & Success, told CNN, 'The design of the new plan, in which a borrower's payment term is scaled up in five-year increments based on arbitrary thresholds, means some borrowers will face a problematic 'cliff effect'.'
She added, 'A small difference in their balance will tip them into the next tier and extend their term.
'
Longer terms increase total repayment amounts
Although the new plan may reduce monthly payments by stretching the repayment period, it significantly raises the total amount repaid over the life of the loan due to accruing interest. CNN cited analysis from higher education expert Mark Kantrowitz, who estimated that a borrower repaying $100,000 over 10 years at 5% interest would pay back around $127,279.
Under the new 25-year repayment structure, the same borrower would repay approximately $175,377—an increase of nearly $50,000.
The impact is seen across various loan sizes. For example, a $60,000 loan repaid over 20 years under the new system would cost $95,034, compared to $76,367 under the current 10-year plan. Similarly, an $80,000 loan would result in total repayment of $126,712 under the new terms, as opposed to $101,823 previously.
A $40,000 loan under the new 15-year term would cost $56,937, while the same amount paid back in 10 years would total $50,911, according to CNN data.
Repayment choices to narrow from 2026
According to the US Department of Education, the revised Standard Plan will become available to borrowers by July 1, 2026. For those who take out loans after this date, only two repayment options will be available: the new Standard Plan and a revised income-driven repayment programme called the Repayment Assistance Plan (RAP), backed by Republicans.
Borrowers with loans issued before July 1, 2026, will retain access to existing plans such as Income-Based Repayment (IBR) and the current Standard Plan. However, CNN reported that individuals who borrow again after that date—even if they hold older loans—will only be eligible for the new system for the new loans.
Scott Buchanan, executive director of the Student Loan Servicing Alliance, told CNN, 'If you borrow again, you will be in the world of two choices.'
Older borrowers could carry debt into retirement
The revised loan structure may also affect borrowers later in life. Astra Taylor, co-founder of the Debt Collective, told CNN that the changes may result in 'an explosion of senior debtors.' The longer terms mean that borrowers could still be repaying student loans well into their 50s or 60s, potentially interfering with retirement savings and financial security.
The full impact of the new plan will become clearer as it is implemented in the coming years. Until then, experts continue to analyse how balance-based repayment tiers and the resulting cliff effect will shape the financial outcomes of US student loan borrowers.
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