Education Department Updates Key Student Loan Guidance In Advance Of Huge July Changes

Key Points:

• The Education Department updated federal student loan guidance ahead of major reforms effective July 1, clarifying changes to disbursement, repayment, and loan forgiveness under the One Big, Beautiful Bill Act.
• Payments made under the new Repayment Assistance Plan (RAP) will not count toward forgiveness under other income-driven repayment (IDR) plans if borrowers switch, except when RAP payments meet or exceed the 10-year Standard Repayment Plan amount.
• Borrowers taking out new federal loans or consolidating after July 1, 2026 will lose access to legacy repayment plans (IBR, ICR, PAYE) and must choose between RAP or the Tiered Standard Plan, with the latter not qualifying for Public Service Loan Forgiveness (PSLF).
• RAP payments will count toward PSLF, but only if payments are made on time, in full, and matched with certified qualifying employment; Tiered Standard Plan payments do not qualify for PSLF.
• New federal student loan borrowing limits will begin July 1, 2026, but current students enrolled in degree programs may qualify for an interim exception until the 2029–30 award year, though repayment plan changes still apply regardless of this exception.