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Sweeping Student Loan Reforms Advance Through Regulatory Process
The Department of Education has moved forward with major regulatory changes that will transform federal student loan repayment for more than 40 million Americans. The proposed regulations, advanced earlier this month, implement provisions of the “One Big, Beautiful Bill Act” that President Donald Trump signed into law last summer. These developments follow recent coverage of the federal student loan repayment overhaul that highlighted the initial stages of this transformation.
Congressional Republicans passed the legislation on a party-line vote, directing the Department of Education to establish regulations facilitating implementation of substantial changes to federal student loan programs. The department convened the Reimagining and Improving Student Education (RISE) committee to review proposed regulations, with the committee meeting in October to discuss provisions that will fundamentally alter repayment options for millions of borrowers. This regulatory advancement comes amid other significant financial service developments and technological changes affecting American consumers.
Elimination of Traditional Fixed Repayment Plans
The legislation brings dramatic changes to fixed federal student loan repayment plans, which are plans not tied to a borrower’s income. Currently available options include the 10-year Standard plan, 25-year Extended plan, consolidation Standard plan of up to 30 years, and Graduated repayment plans where payments start lower and increase over time.
Under the new law, these repayment plans will be eliminated for borrowers who take out new federal student loans or consolidate existing loans on or after July 1, 2026. After that date, the only fixed repayment option will be a new tiered Standard repayment plan with terms ranging from 10 to 25 years, depending on the loan balance size.
The Department of Education clarified during the RISE committee meeting that borrowers with existing federal student loans who don’t take out new loans or consolidate after the cutoff date will maintain access to “legacy” fixed repayment options, regardless of when they enter repayment. This grandfathering provision represents a significant protection for current borrowers.
Income-Driven Repayment Transformation
The legislation implements substantial changes to income-driven repayment (IDR) plans that will have profound and lasting effects. IDR plans allow borrowers to make payments based on their income and family size, historically providing a path to loan forgiveness after 20-25 years of repayment. These changes are part of broader technological and financial transformations occurring across multiple sectors.
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Under the new system, three of the four existing IDR plans (ICR, PAYE, and SAVE) will be sunsetted by July 1, 2028. The IBR plan will remain with modifications, and a new Repayment Assistance Plan (RAP) will launch in 2026. RAP features a 30-year repayment term before forgiveness eligibility—significantly longer than existing IDR plans—but includes a principal and interest subsidy that stops future balance growth.
During a transition period of up to two years, ICR, PAYE, SAVE, IBR, and RAP will all coexist. However, by July 2028, only IBR and RAP will remain as IDR options. Current borrowers would maintain IBR eligibility unless they take out new loans or consolidate after July 1, 2026, in which case they would only be eligible for RAP.
Critical Clarifications and Committee Decisions
The Department of Education provided several important clarifications during the RISE committee meeting regarding IDR plan transitions. Officials confirmed that borrowers selecting RAP won’t be locked into that plan if they remain eligible for IBR, allowing movement between IBR and RAP even after other plans sunset in 2028.
For existing Parent PLUS borrowers seeking grandfathering into IBR, the department specified they must consolidate loans before July 1, 2026, enroll in ICR before July 1, 2028, and make one payment under ICR before switching to IBR. These procedural requirements mirror the complexity seen in other emerging digital platforms and systems.
Committee negotiators raised concerns about whether payments made under REPAYE and SAVE plans—currently challenged in court—would count toward RAP forgiveness. The Department confirmed qualifying payments would count but opposed referencing the specific plans in regulations due to potential court invalidation. Instead, the department proposed removing references to specific plans to clarify that payments under any IDR plans would count toward RAP forgiveness.
Automatic Placement and Borrower Transitions
The statutory text leaves uncertainty about borrowers enrolled in plans sunsetting by 2028. The Department’s proposed regulations indicate these borrowers must affirmatively switch to IBR or RAP—the only IDR options available after July 1, 2028. Those who don’t apply to switch will be automatically placed in the tiered Standard repayment plan.
Specifically, borrowers with Direct Loans disbursed before July 1, 2026, who are in phased-out plans must transition to an eligible plan by July 1, 2028, or be automatically moved to the standard plan. Borrowers with loans disbursed on or after July 1, 2026, who don’t select a plan will automatically be placed in the new tiered standard plan. These automated processes reflect broader trends in digital system implementations across industries.
Regulatory Timeline and Next Steps
The proposed regulations implementing student loan repayment changes under the “One Big, Beautiful Bill Act” are not yet finalized. The conclusion of the first RISE committee hearing and text adjustments represent the initial major step in advancing new rules. The committee will reconvene for its final work period on November 3-7, 2025, to further discuss issues and vote on proposals.
The Department allowed negotiators to submit proposed amendments until October 10, 2025, and will circulate revised regulatory text before the next session. If RISE committee members reach consensus on proposed changes, the Department of Education generally must accept the committee’s recommendation. Without consensus, the department maintains more flexibility in statutory interpretation. This regulatory process unfolds alongside other significant technological and security developments affecting global systems.
As these changes progress toward implementation, borrowers face a complex landscape of new options, deadlines, and transition requirements that will fundamentally reshape student loan repayment for generations. The coming months will prove critical in determining the final form of these transformative regulations and their impact on millions of Americans carrying student debt.
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