The Department of Education published new guidance last week on key changes that are coming for student loan borrowers after passage of the “One, Big, Beautiful Bill.” The new information provides important updates on major reforms that will impact millions of Americans.
The “Big, Beautiful Bill” that Republican lawmakers passed and President Trump signed in July will make unprecedented changes to the federal student loan repayment system. Several popular programs will be phased out, while other repayment plans will be tweaked or updated. The bill also will create a new repayment plan that will likely launch sometime in 2026.
“On July 4, 2025, the One Big Beautiful Bill Act (the Act) was signed into law, resulting in changes to some federal student aid programs,” says the department in an introduction. “Some of these changes went into effect immediately, while others will go into effect later this year and beyond.”
The guidance, published on the department’s website last Friday, provides new details on some of the more near-term changes to student loan repayment programs that borrowers should be aware of. Here’s an overview.
Clarification On Changes To Key Student Loan Repayment Plan
The “Big, Beautiful Bill” will fundamentally change the federal student loan repayment system. The bill will repeal three of four existing income-driven repayment plans, a type of repayment program that offers borrowers affordable monthly payments using formulas tied to their income and a path to eventual student loan forgiveness (typically after 20 or 25 years in repayment). The bill will sunset the ICR, PAYE, and SAVE plans by July 1, 2028.
The bill preserves the Income-Based Repayment plan, or IBR, for current borrowers. As long as current borrowers in repayment don’t take out new federal student loans or consolidate their existing loans on or after July 1, 2026, they can maintain access to IBR (new borrowers will only be eligible for the Repayment Assistance Plan, or RAP, a new option created by the bill). And the Department of Education’s new guidance confirms that these existing borrowers will continue to be able to access at least ICR and IBR for some time after July 1, 2026.
“Borrowers who have eligible loans taken out before July 1, 2026, are permitted to access both the ICR and IBR Plans on or after July 1, 2026. There will be no restriction on enrolling in ICR or IBR on or after July 1, 2026, unless the borrower receives a disbursement on a new loan on or after July 1, 2026.” New ennrollment restrictions will likely go into effect sometime before July 2028.
IBR will continue to be an option for current borrowers even after ICR, PAYE, and SAVE are sunsetted. But IBR will undergo some changes under the bill. Specifically, the “Big, Beautiful Bill” eliminates the “partial financial hardship” requirement, which only permits enrollment in IBR if the borrower’s calculated monthly payment is less than the amount required to pay off their student loan balance on a 10-year Standard plan. The department’s new guidance clarifies that while the “partial financial hardship” requirement will be eliminated, IBR will retain a cap or upper limit on monthly payments equivalent to the 10-year Standard plan amount.
“Though the Act removes the requirement to have partial financial hardship to enroll in the IBR Plan, monthly payment amounts under IBR will continue to be capped at an amount equivalent to the Standard Repayment Plan with a 10-year repayment period,” says the new guidance. “This means that payments on the IBR Plan will never be higher than payments on a Standard Repayment Plan with a 10-year repayment period.”
This is critical clarification, as RAP will have no such cap. This could make IBR a pivotal option for existing borrowers whose incomes are significantly higher than their remaining loan balance.
Updated Guidance For Student Loan Borrowers With Parent PLUS Loans
The Department of Education’s new guidance also clarifies important information for Parent PLUS borrowers, who will be tremendously impacted by the bill. Parent PLUS loans are a type of federal student loan issued to the parent of an undergraduate student. The parent, not the student or child, is responsible for the loan’s repayment.
Under the “Big, Beautiful Bill,” existing Parent PLUS borrowers have a short window to act in order to maintain access to income-driven repayment and the possibility of eventual student loan forgiveness. These borrowers must consolidate their loans via the federal Direct consolidation loan program before July 1, 2026, and they must enroll in income-driven repayment before July 1, 2028. By doing so, they will be able to maintain eligibility for the IBR plan once ICR and the other plans are eliminated. All other Parent PLUS borrowers will be ineligible for any income-driven repayment option, including IBR and RAP.
The department’s guidance provides critical new information for Parent PLUS borrowers. Notably, the guidance clarifies that the Direct consolidation loan must be disbursed prior to July 1, 2026. Since the consolidation process can take anywhere from 30 to 90 days after submitting an application, that means that Parent PLUS borrowers who need to consolidate their loans in order to maintain eligibility for IBR must apply several months prior to July of next year.
“Borrowers who must consolidate in order to access the ICR and IBR Plans must have their consolidation loan disbursed no later than June 30, 2026, in order to access ICR and IBR,” reads the guidance. “Borrowers who receive disbursements on new loans or on a new consolidation loan on or after July 1, 2026, won’t have access to ICR or IBR even if they were previously enrolled in either plan.”
In addition, the department clarified that in order for consolidated Parent PLUS borrowers to enroll in IBR under the provisions of the bill, they must first enroll in ICR and make at least one payment under that plan. Some observers had assumed that Parent PLUS borrowers who had consolidated their loans would be able to enroll directly in IBR, or would be automatically moved to IBR if they had been able to enroll in PAYE or SAVE. But this appears to not be the case.
“Parent PLUS borrowers who have consolidated their parent PLUS loans into Direct Consolidation Loans and who have enrolled in the Income-Contingent Repayment (ICR) Plan immediately before enrolling in the IBR Plan” are eligible for IBR, says the guidance. “To be considered enrolled in the ICR Plan, a borrower must make one full payment after entering the ICR Plan.”
But while the July 1, 2026 deadline for Direct loan consolidation is a hard deadline, borrowers will have a bit more time to enroll in ICR.
“These borrowers don’t need to be enrolled in ICR before June 30, 2026, in order to eventually access IBR,” says the guidance. But these borrowers will have to enroll in ICR before July 1, 2028 to be eligible for IBR under the provisions of the Big, Beautiful Bill.
Other Student Loan Questions Remain Unanswered
While the new Department of Education guidance provides new insights for borrowers, many questions remain unanswered. For example, the department has not provided a specific timeline for when, exactly, the ICR, PAYE, and SAVE plans will be phased out, and has not clarified if that will happen significantly earlier than July 1, 2028. The department also did not indicate when, exactly, student loan servicers will implement the removal of the IBR plan’s “partial financial hardship restriction.”
“We will publish more information about the ICR enrollment deadlines that borrowers must meet before ICR is eliminated in order for them to continue to be able to access the IBR Plan,” said the department.
Notably, the department also did not reference in the new guidance the fact that officials have paused student loan forgiveness under the IBR plan, despite there being no legal challenge or court order requiring that. The department has not indicated when loan forgiveness under IBR will resume.