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2026-27 Changes to Federal Financial Aid

1. New repayment plan options begin July 2026
Starting on July 1, 2026, the federal student loan system will change.

2. Current income-driven repayment plans are being phased out
Currently, federal student loans are eligible for various income driven repayment plans, including PAYE, Income-Contingent Repayment, and Income-Based Repayment. For loans disbursed after July 1, 2026, however, the new RAP option will be the only income-driven repayment plan. If you’re on PAYE, ICR, or the now-defunct SAVE plan: You’ll need to switch to IBR or RAP by July 1, 2028. If you don’t switch, your loan servicer will auto-enroll you in one of those plans.

Parent borrowers
Parent PLUS loans are only eligible for income-driven repayment plans if they are first consolidated into a Direct Consolidation Loan. After consolidation, the only income-driven repayment plan available for Parent PLUS loans is the Income-Contingent Repayment (ICR) Plan. Parent PLUS loans cannot be repaid under the new SAVE Plan or other income-driven repayment plans.

3. The SAVE plan will no longer enroll new borrowers
Department of Education will no longer enroll new borrowers in SAVE and will begin transitioning SAVE borrowers into alternative plans. If your loans have been on pause due to the SAVE plan litigation, it’s time to explore your other repayment options. The Federal Student Aid Loan Simulator tool can help you compare costs on alternative plans. Look for updates after July 1, 2026.

4. Part-time enrollment will cause Subsidized AND Unsubsidized Loan awards to be prorated.

5. Prepare for the upcoming student loan changes

  • Review your current repayment plan.
  • Compare future repayment options and be proactive, otherwise the choice may be made for you.
  • Note key deadlines that may impact your loan.
  • Plan for potential tighter borrowing limits.
  • Assess your strategy as a parent borrower.
  • Consider tax implications of loan discharge.
  • Provide up-to-date contact information to receive important communications about transitioning plans and deadlines.

Federal Student Loan Types

Changes to Federal Financial Aid from the One Big Beautiful Bill Act