Upcoming Statutory Changes to Federal Loan Repayment Plans

August 4, 2025

On July 4, 2025, a budget reconciliation bill was signed into law, which makes significant changes to federal student loan repayment options.

If all your loans were disbursed or consolidated before July 1, 2026, you will be eligible for:

  1. a new IDR plan called the Repayment Assistance Plan (RAP), which will be available next year;
  2. a modified version of the IBR plan (with no income eligibility requirement), which should be available soon; or
  3. the existing Standard, Graduated, or Extended plans.

If you are in ICR, PAYE, or SAVE, you must move into one of the above listed plans by July 1, 2028.

Many borrowers will have higher payments under IBR and RAP as compared to SAVE or PAYEIf any of your loans will be disbursed or consolidated on or after July 1, 2026:

  • Only two plans will be available: a new Standard plan and a new IDR plan called the Repayment Assistance Plan (RAP).
  • The ICR, PAYE, SAVE, IBR, old Standard, Extended, and Graduated plans will not be available.

Limited Parent PLUS Options

  1. Parent PLUS debt is NOT eligible for RAP
    • Parent PLUS Loans and Consolidation Loans that included any Parent PLUS Loans are ineligible for RAP. This includes "double consolidated" Parent PLUS Loans (i.e., Consolidation Loans that included Consolidation Loans that included any Parent PLUS Loans).
  2. Repayment options for Parent PLUS Loans will be limited
    • Parent PLUS Loans disbursed before July 1, 2026 will only have access to the old Standard, Extended, and Graduated plans.
    • Parent PLUS Loans disbursed on or after July 1, 2026 will only have access to the new Standard plan.
  3. Brief window of opportunity to consolidate to gain long-term IBR access.
    • Parent PLUS Loans can access IBR, if you:
      1. consolidate them into a Direct Consolidation Loan by June 30, 2026; and
      2. enroll in ICR or another income-driven plan at some point between July 4, 2025 and June 30, 2028.
    • If you have not previously consolidated your Parent PLUS Loans into a Direct Consolidation Loan, consider consolidating by June 30, 2026 and enrolling in ICR by June 30, 2028 to gain long term access to IBR. The U.S. Dept. of Education is making updates to its systems to enable this IBR access, but it is unclear when it will become available.
  4. Hazards of borrowing any federal loans on or after July 1, 2026.
    • If you take out or consolidate any federal loans on or after July 1, 2026, your Parent PLUS Loans, Consolidation Loans that included any Parent PLUS Loans, and double consolidated Parent PLUS loans will be restricted to the new Standard plan. In most cases, this will block you from pursuing PSLF for these loan types as you will not have access to a PSLF-qualifying repayment plan.

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