Federal student loan forgiveness programs are about to undergo some of the most significant updates in decades. Starting on July 1, key programs that offer borrowers a route to discharging their student loans will fundamentally change. In some cases, borrowers could be completely cut off from any relief.
The changes to student loan forgiveness programs stem in part from tax and spending legislation that congressional Republicans and President Donald Trump enacted last year through the budget reconciliation process. Some of the updates are also tied to executive actions or negotiated rulemaking by the Trump administration. Taken together, the reforms are likely to impact millions of borrowers with federal student loans.
Here’s what’s changing this summer, and what student loan borrowers need to know.
Student Loan Forgiveness Will Require More Payments Under Income-Driven Repayment Plans
One of the most significant changes to federal student loan forgiveness programs is the replacement of several existing income-driven repayment plans with a new program that will require many more years in repayment before a borrower can discharge their student loans
Currently, there are four income-driven repayment plans, all of which provide borrowers with affordable payments tied to their income, and the possibility of eventual student loan forgiveness after 20 or 25 years in repayment. But three of these plans are disappearing. The Education Department is terminating the SAVE plan this summer, while legislation passed by congressional Republicans last year will phase out the ICR and PAYE plans in 2028. Only the IBR plan will remain intact for current borrowers.
But for any borrowers who take out new federal student loans or consolidate their existing loans on or after July 1 of this year, their only income-driven repayment plan option will be the new Repayment Assistance Plan, or RAP. While Trump administration officials argue that RAP will have important benefits, including affordable payments and an interest subsidy, the program will require 30 years in repayment before borrowers can qualify for student loan forgiveness. This is far longer than the repayment terms for existing income-driven repayment plans.
“Borrowers that take on any new loan — including borrowers that consolidate an existing federal loan —on or after July 1, 2026 will only be eligible for two repayment plans: the standard repayment plan or the RAP plan,” explained the National Consumer Law Center in an analysis last year. “Unlike existing IDR plans that provide cancellation after 10-25 years, the RAP plan will only provide cancellation after 30 years of qualifying payments.”
Parent PLUS Borrowers Could Lose Student Loan Forgiveness Options Altogether
The same legislation that replaces several existing income-driven repayment plans with RAP also will substantially narrow the student loan forgiveness options for Parent PLUS borrowers. Parent PLUS loans are student loans that benefit a child pursuing an undergraduate degree, but the parent is the legal borrower, not the student.
Historically, Parent PLUS loans are ineligible to be repaid under an income-driven repayment plan. But there’s been one exception since 2006. Borrowers who consolidate their Parent PLUS loans into a federal Direct consolidation loan can access the Income-Contingent Repayment, or ICR, plan. ICR allows for student loan forgiveness after 25 years in repayment. ICR is also a qualifying repayment plan for Public Service Loan Forgiveness, or PSLF, which allows federal student loans to be forgiven in as little as 10 years if the borrower works full-time for qualifying nonprofit or government employers.
But last summer’s tax and spending legislation sunsets ICR in 2028 and bars Parent PLUS borrowers from accessing RAP, even if their student loans are consolidated. Without ICR, Parent PLUS borrowers will not be able to access income-driven repayment plans or PSLF, cutting them off from critical student loan forgiveness and affordable repayment options.
There is a narrow exception for Parent PLUS borrowers to maintain access to these programs, but the window for acting is rapidly closing. They would have to consolidate their student loans prior to July 1 of this year. Then, they would need to enroll in the ICR plan, make at least one payment under ICR, and then switch to IBR by 2028. Since borrowers have to complete their consolidation before July, and the process can sometimes take up to 90 days or more after submitting the application to consolidate, it may already be too late for some Parent PLUS loans to act.
“Only Parent PLUS borrowers that consolidate their loans before July 1, 2026 and are enrolled in any IDR plan between now and July 1, 2028 will be eligible for an income-driven repayment plan after the SAVE, ICR, and PAYE plans are eliminated on or before July 1, 2028,” said the National Consumer Law Center in its analysis. “Those borrowers will be eligible for the Income-Based Repayment (IBR) plan. They will not be eligible for RAP. Existing Parent PLUS borrowers who do not jump through these hoops in time will be locked out of income-driven repayment options, which could make it very difficult to manage their loans if they cannot afford fixed payments.”.
