Broker Check

6115 Park South Drive, Suite 200, Charlotte, NC 28210

704-237-6559
Client Login

Federal Student Loans and Upcoming Timelines

Changes on the Horizon 

Changes on the Horizon 

Starting in 2026, the federal student loan system begins a multi-year overhaul that will reshape how students and families borrow for college and how repayment works afterward. The changes arrive in stages through 2028, affecting graduate students, parents, and future borrowers most directly.

Client Centered

On July 1, 2026, a new federal repayment option called the Repayment Assistance Plan (RAP) goes into effect. RAP is designed to replace several existing income-driven repayment plans over time, creating a single framework for new borrowers.

RAP replaces a complex discretionary income formula with a basic adjusted gross income formula for calculating the monthly payment. It also has two notable features: no negative amortization, and a $50/mo principal reduction subsidy if your monthly payment doesn't reduce the principal by $50.

RAP will be the only income-driven repayment plan available to borrowers taking out new loans on or after July 1, 2026. Existing borrowers will still have access to IBR (Income Based Repayment).

What is Happening

Parent PLUS borrowers using the double consolidation strategy to access income-driven repayment must have their second consolidation loan disbursed before July 1, 2026.


A consolidation disbursed on or after July 1 will be locked out of IBR, ICR, and PAYE — only RAP and the new Standard plans remain available.

Why It Matters Now

Federal guidance confirms that new consolidation loans disbursed on or after July 1, 2026 cannot access legacy IDR plans.


Consolidation processing takes 30–90 days, making early May the last safe window for applications.

Recommended Action

Apply immediately. Both consolidations must be submitted and disbursed before July 1.


Escalate with your servicer if applications are pending. Late May applications face meaningful risk of missing the deadline.

Vertical Timeline Chart
June 30, 2026
Grad PLUS Loans End

The cutoff for new Grad PLUS loans. Borrowers entering programs after this date cannot access this funding source.

Existing loans are safe.

July 1, 2026
The “New Era” Begins

RAP Launches: Repayment Assistance Plan replaces most IDR options for new borrowers.

New Loan Limits: Strict caps on Graduate, Professional, and Parent PLUS loans.

July 1, 2027
Safety Nets Tighten

New federal loans lose access to unemployment and economic hardship deferment.

Forbearance capped at 9 months per 24-month period.

Late 2027 – Early 2028
Enrollment Closes for PAYE & ICR

New enrollments for PAYE and Income-Contingent Repayment stop.

Existing borrowers may remain for now.

June 30, 2028
PAYE & ICR Sunset

These plans fully end as federal repayment programs.

Transition to the new uniform repayment structure is complete.

Have questions regarding these changes?  Please reach out!

Thank you!
Oops!

Source:  The College Investor, based on the One Big Beautiful Bill Act of 2025.

Guardian and its subsidiaries do not issue or advise with regard to student loans.  Guardian and PAS do not offer student loans to finance education nor do they offer legal to tax advice. Appropriately licensed and qualified Investment Advisor Representatives of Park Avenue Securities LLC (PAS) and Park Avenue Investment Advisory LLC (PAA) offer fee-based financial planning. 
8715470.1 Exp 1/28  

We Use Cookies

We use cookies to give you the best experience on our site. By continuing to browse, you're agreeing to our use of cookies. Find out more in our Cookie Policy.