5 Major Rule Changes For Student Loans Are Now In Effect, Here’s What They Do

Key Points:

• As of July 1, 2026, new federal student loan borrowers and those consolidating loans lose access to previous income-driven repayment plans like ICR, IBR, and PAYE, and are limited to two options: the Repayment Assistance Plan (RAP) and a Tiered Standard repayment plan.
• RAP allows loan forgiveness after 30 years and qualifies for Public Service Loan Forgiveness (PSLF), but only on-time payments count toward forgiveness, and payments under RAP won’t transfer if switching plans; the Tiered Standard plan does not qualify for PSLF.
• A new temporary incentive offers a 1% interest rate reduction for federal Direct loan borrowers who enroll in automatic debit by September 30, 2026, doubling the previous quarter-point reduction, effective through June 30, 2028.
• Parent PLUS loans issued or consolidated after July 1, 2026, are largely excluded from income-driven repayment plans and PSLF, with repayment limited to the Tiered Standard Plan unless consolidated before June 30, 2026.
• Borrowers in the SAVE plan are being notified to switch repayment plans within 90 days due to a court ruling vacating SAVE regulations; failure to select a new plan will result in automatic enrollment in Standard or Tiered Standard plans, potentially increasing payments and hindering loan forgiveness progress.