One of the biggest federal student loan changes in decades is scheduled to take effect July 1, and Parent PLUS borrowers urgently need to take action before that or face irreversible consequences, experts said.
The new laws, passed last July as part of President Donald Trump’s tax and spending package, changes how families can borrow for college and how some federal loans can be repaid. It phases out several current repayment plans, creates new options and adds new borrowing caps for some loans.
For many families, the most urgent issue is Parent PLUS loans. Those loans are not going away, but parents who already have them could lose access to income-driven repayment plans and Public Service Loan Forgiveness if they fail to consolidate their loans before July 1. Experts also urge borrowers in other plans to check studentaid.gov now because some options available today may not be available later.
Parent PLUS Borrowers May Need to Act Now
Parent PLUS loans are not ending, but parents who already hold those loans and don’t borrow under a Parent PLUS loan on or after July 1 should consolidate their loans into a Direct Consolidation Loan before July 1.
Parents who do not consolidate by that date would permanently lose access to income-driven repayment plans and forgiveness programs such as Public Service Loan Forgiveness (PSLF). They would instead be limited to standard repayment plans, which can mean higher monthly payments and no path to PSLF.
The new standard repayment plan does not count as a qualifying repayment plan for PSLF purposes, according to the nonprofit National Association of Student Financial Aid Administrators organization.
Borrowers should go to studentaid.gov to review repayment options now rather than wait until the changes take effect. The consolidation must be processed and issued before July 1, said the nonprofit National Consumer Law Center (NCLC), or you lose all access to any income-driven repayment plan for any consolidation loan containing the Parent PLUS loans.
Once Parent PLUS loans are consolidated, parents have until July 1, 2028 to sign up for an income-driven repayment plan.
How Do I Consolidate My Parent PLUS Loans?
To consolidate your Parent PLUS loans, log into your account on studentaid.gov as soon as possible and complete the online application. Select which loans you want to consolidate, making sure to include your Parent PLUS loans. If your loans are in default, you’ll need to manually enter them into the online form.
You can also apply using a paper or PDF application.
Only Two Repayment Options for New Borrowers
Beginning July 1, the Department of Education said only two repayment plans are expected to be available to new borrowers: the Standard Repayment Plan and the Repayment Assistance Plan, or RAP.
The standard plan is the default option, with fixed monthly payments over 10 to 30 years depending on the loan amount and whether the loan is a consolidation loan. Monthly payments can be higher than in other plans, though total interest paid is usually lower and repayment time is usually shorter. This is the plan Parent PLUS loans will automatically roll into if parents take a Parent PLUS disbursement on or after July 1 or don’t consolidate their loans before July 1.
RAP is an income-driven plan with payments ranging from 1% to 10% of adjusted gross income, or a flat $10 a month for borrowers earning less than $10,000 a year. Remaining balances could be forgiven after 30 years of repayment.
Borrowing Limits for Parent PLUS Are Also Changing
Parent PLUS loans also will be capped at $20,000 a year per student, with a $65,000 lifetime limit per dependent, unless a borrower already has one of those loans. In that case, the parent may continue borrowing under the old limits for up to three school years, or until graduation, whichever comes first.
What Borrowers Should Do Now
Borrowers need to check studentaid.gov now. Jack Wallace of Yrefy said borrowers should look at what repayment options are available before July 1 because they may qualify for something now that would not be available later.
Parent PLUS borrowers must review whether they need to consolidate into a Direct Consolidation Loan before July 1 if keeping access to income-driven repayment and PSLF matters to your household.
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