Federal student loan rules will change on July 1, 2026, and borrowers may have fewer repayment options after that date. The changes affect repayment plans, Parent PLUS loans, graduate student loans, and loan forgiveness programs. Experts say borrowers should check their student loan accounts now instead of waiting until after July 1.
Borrowers should log in to the federal student aid website and see which repayment plan they are currently using. Jack Wallace, director of government of Yrefy, told USA Today that some repayment options available today may not be available after July 1.
SAVE plan borrowers must act before deadline
Around 7.5 million borrowers are currently enrolled in the SAVE repayment plan. According to the US Department of Education, SAVE borrowers are expected to receive notices from their loan servicers around July 1. SAVE borrowers will get 90 days to choose a different repayment plan.
Student loan payment changes ahead
Borrowers who do not choose a new plan within 90 days will be automatically moved to another repayment plan. The automatic plan could be the Standard Repayment Plan or the new Tiered Standard Plan. According to Stacey MacPhetres of Bright Horizons, standard repayment plans could lead to higher monthly payments, as noted by USA Today report.
SAVE borrowers are being encouraged to explore other income-driven repayment plans before the deadline. Borrowers working toward Public Service Loan Forgiveness (PSLF) could face problems if they stay in the SAVE plan. Payments made while remaining in SAVE may not count toward forgiveness goals. Eligible borrowers can switch to the Income-Based Repayment (IBR) plan, MacPhetres notes.
Also read: Planning to move abroad? Here’s what happens to your Social Security benefits
Parent PLUS loan deadline near
Parents with Parent PLUS loans face an important deadline before July 1. Parent PLUS borrowers must consolidate their loans into a Direct Consolidation Loan before July 1 to keep access to certain repayment benefits. According to federal rules as mentioned in the report by USA Today, consolidation is needed to remain eligible for income-driven repayment plans. Consolidation is also needed to remain eligible for Public Service Loan Forgiveness (PSLF)..
Parents who do not consolidate before July 1 will permanently lose access to income-driven repayment plans. Those borrowers may be left with only standard repayment options, which can result in higher monthly bills. The PAYE repayment plan will no longer be available for loans issued on or after July 1. The ICR repayment plan will also stop accepting loans issued on or after July 1. According to federal announcements, PAYE and ICR will be completely phased out by July 1, 2028.
PAYE and ICR plans ending
Borrowers currently using PAYE or ICR will need to move to another repayment plan by June 30, 2028. Existing borrowers with older loans may continue using those plans for now. The Income-Based Repayment (IBR) plan is also changing. New borrowers will not be able to enroll in IBR after July 1. Existing IBR borrowers with older loans can continue under grandfathered rules, as noted by USA Today.
New student loan repayment options
Experts recommend checking loan eligibility before the July 1 deadline. Starting July 1, new borrowers will have only two repayment plan choices. One option will be the Standard Repayment Plan. The second option will be the new Repayment Assistance Plan (RAP).
The Standard Repayment Plan uses fixed monthly payments. Repayment under the standard plan can last between 10 and 30 years, depending on the loan. As noted by the USA Today report, the Department of Education’s standard plan may mean higher monthly payments but less interest over time. RAP will be an income-based repayment plan. According to federal descriptions, RAP payments can range from 1% to 10% of a borrower’s income.
New student loan limits for graduate borrowers
Borrowers earning less than $10,000 a year could pay as little as $10 per month under RAP, which offers loan forgiveness after 30 years of repayment, according to federal details cited by USA Today. Graduate PLUS loans will no longer be available after July 1. Some current borrowers may continue using older Graduate PLUS rules if they received a loan disbursement before July 1. New graduate unsubsidized loans will be capped at $20,500 per year for many graduate programs, as mentioned by USA Today report.
The lifetime borrowing limit for standard graduate programs will be $100,000. Certain professional degree programs will have higher borrowing limits. Parent PLUS loans will also face new borrowing caps after July 1.
Under the new rules, Parent PLUS loans will be limited to $20,000 per year per student, as per the USA Today report. The lifetime borrowing limit for Parent PLUS loans will be $65,000 per dependent student. Some borrowers may be allowed to keep older limits under grandfathering provisions.
Experts say borrowers planning to take out loans should review the new rules immediately. According to federal guidance, a loan generally must be disbursed before July 1, 2026, to qualify for certain older rules and benefits. The biggest advice from experts is to check your repayment plan, review your options, and take action before the July 1 deadline.
