New Federal Student Loans After July 1 Limited to Two Repayment Plans, One With 30-Year Forgiveness

Major changes to federal student loan repayment rules took effect July 1, 2026. New loans disbursed on or after that date are restricted to the Repayment Assistance Plan and a Tiered Standard Plan, eliminating access to ICR, IBR, PAYE, the 10-year Standard, Extended, and Graduated plans for the borrower's entire federal balance.

The Repayment Assistance Plan requires 30 years of repayment before forgiveness eligibility, and only on-time payments count.

Payments made under the plan do not transfer to other income-driven plans if a borrower switches. The Tiered Standard plan does not qualify for Public Service Loan Forgiveness. A temporary 1 percent interest rate reduction applies to federal Direct loans for borrowers who enroll in automatic debit by September 30, 2026, and runs through June 30, 2028.

Parent PLUS loans not consolidated by June 30, 2026, became ineligible for income-driven repayment and PSLF as of July 1. Loans consolidated by that date can still enter the ICR plan, which phases out by July 2028. Borrowers in the SAVE plan began receiving notices July 1 requiring them to select a new plan within 90 days.

Those who do not choose will be moved involuntarily into a Standard or Tiered Standard plan. The updates largely implement provisions of the One Big, Beautiful Bill Act signed by President Trump, along with executive actions by Education Secretary Linda McMahon and court orders. The Education Department stated that the changes simplify repayment and make higher education more affordable.