Millions of federal student loan borrowers are being urged to take action now to avoid being locked out of a key income‑driven repayment plan.
New regulations finalized by the Department of Education will soon begin reshaping the federal student loan repayment system, and some borrowers could lose access to certain plans unless they act within the next few weeks.
The first major changes are set to take effect July 1, making timing critical for borrowers, experts said.
“The new rules around SAVE added a catch for those looking to go back to PAYE, which come July 1, [which] will make it harder or impossible to take advantage of,” Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek.
Why It Matters
Income‑driven repayment plans play a crucial role in keeping monthly payments affordable for millions of borrowers.
Losing access to lower‑payment options could mean higher monthly bills and longer repayment periods for borrowers already struggling with rising costs.
What To Know
The Education Department is rolling out sweeping changes to income‑driven repayment (IDR) plans over the next two years. The SAVE plan, which was the newest IDR option created under the Biden administration, is being terminated over the summer, forcing millions of borrowers to switch to another repayment plan.
Other existing plans are also being phased out. While PAYE and ICR remain available for now, they are scheduled to end in 2028. The IBR will continue, but only for borrowers who do not take out new federal loans or consolidate existing loans after June 30.
Meanwhile, a new plan, called the Repayment Assistance Plan (RAP), will launch this summer but comes with longer repayment timelines before forgiveness. The new regulations may quietly restrict access to the PAYE plan, which for many borrowers offers the lowest monthly payments now that SAVE is ending.
“The reality of it is the student loan repayment programs are a complete mess. The private loan servicers completely failed in their duties,” Powers said. “Lawmakers change the rules mid-game. Caught in the middle are our friends, neighbors and loved ones, simply trying to afford an over-priced education.”
Borrowers who are currently eligible for PAYE could be blocked from enrolling once the new rules take effect on July 1, even though PAYE itself is not scheduled to end until 2028.
As a result, borrowers who want to maintain access to PAYE may need to apply to switch plans before the deadline.
Who Could Be Affected
The borrowers most at risk of losing access to PAYE include those currently enrolled in SAVE, who will soon need a new plan, as well as borrowers with loans that are currently eligible for PAYE but have not yet enrolled.
Borrowers considering consolidation or new borrowing after June 30, which could affect eligibility for IBR, will also see the effects.
What Borrowers Can Do Now
Borrowers who believe PAYE may be their best option should submit an application before July 1, when the new rules are expected to go into effect.
“If you’re considering consolidation to access income driven plans, don’t wait,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek. “Processing times mean waiting past early May makes it a gamble to close before July 1. Act now.”
What Happens Next
On July 1, the Education Department’s new repayment regulations are expected to take effect. After that date, borrowers who have not already enrolled in certain income‑driven repayment plans like PAYE may find themselves locked out, even if they would have qualified previously.
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