These Student Loans Are Now Cut Off From Affordable Payments And Loan Forgiveness

Key Points:

• As of July 1, major regulatory changes to student loans under the One Big, Beautiful Bill Act have limited repayment options and loan forgiveness eligibility for many borrowers, especially those with Parent PLUS loans.
• Parent PLUS borrowers who did not consolidate their loans before July 1 lose access to income-driven repayment (IDR) plans and Public Service Loan Forgiveness (PSLF), restricting them to fixed repayment plans that do not allow payment adjustments based on income.
• Borrowers who consolidated Parent PLUS loans before July 1 retain IDR eligibility but will lose it if they take out new loans or consolidate again after this date, potentially affecting their entire federal student loan balance.
• Other borrowers in income-driven repayment plans, such as the SAVE plan, are being notified to switch plans or face involuntary placement into less affordable Standard plans, with the Education Department providing a 90-day window to apply for alternatives.
• The Education Department has launched the Repayment Assistance Plan (RAP) to offer affordable payments and interest subsidies, but technical issues with the online application and plan assignments raise concerns about the department’s capacity to manage these widespread changes effectively.