Major federal student loan changes took effect July 1, 2026: the SAVE repayment plan is being phased out for nearly 7 million borrowers, Grad PLUS loans were eliminated for new borrowers, and new loans lost eligibility for unemployment-related deferment.
The SAVE Plan Is Ending
Borrowers enrolled in the SAVE (Saving on a Valuable Education) repayment plan — close to 7 million people — must move to a different repayment plan. Many SAVE borrowers have been in an administrative forbearance since 2024 while the plan faced legal challenges, and they now face higher monthly payments once they transition to an alternative plan.
If you’re on SAVE, this doesn’t happen automatically without consequence — borrowers need to actively select a new repayment plan rather than assume they’ll be moved to the best option for their situation by default.
A New Repayment Plan: RAP
The same set of changes creates a new income-driven repayment plan called RAP, alongside changes to existing repayment plan options. RAP is positioned as one of the replacement options for borrowers leaving SAVE, though it is a different plan with its own terms — borrowers shouldn’t assume RAP works identically to SAVE just because it’s also income-driven.
Grad PLUS Loans Are Gone for New Borrowers
The federal reconciliation law (the One Big Beautiful Bill Act) eliminated the Grad PLUS loan program for anyone borrowing for the first time after July 1, 2026. Graduate and professional students who haven’t already taken out a Grad PLUS loan can no longer use that program going forward; the law also placed new limits on Parent PLUS borrowing.
PSLF Rule Changes Got Partially Blocked
New Public Service Loan Forgiveness rules were scheduled to take effect July 1, 2026, but a court granted summary judgment and vacated those rules on June 30, 2026 — one day before they were set to start. One specific PSLF-related change did take effect anyway: Parent PLUS loans issued on or after July 1, 2026 are not eligible for income-driven repayment plans or PSLF, regardless of the vacated rule. Borrowers should check current, post-ruling guidance rather than assume the originally announced PSLF changes are all in effect.
Deferment Options Narrowed
New federal student loans disbursed after these changes are no longer eligible for economic hardship or unemployment deferment — options that previously let borrowers pause payments without accruing certain fees during a job loss or financial hardship. This applies to new loans going forward; borrowers should verify how it affects loans they already hold versus loans taken out after July 1, 2026.
What Borrowers Should Do Now
If you’re on SAVE, check your loan servicer account for your options and deadlines rather than waiting for a decision to be made for you. If you’re about to borrow for graduate school, confirm whether Grad PLUS is actually still available to you (it generally isn’t, for first-time borrowers after July 1, 2026) before assuming it’s part of your financing plan.
Frequently Asked Questions
Do I have to do anything if I’m on the SAVE plan?
Yes — you’ll need to select a new repayment plan rather than assume you’ll be automatically enrolled in the best option. Check with your loan servicer directly.
Can I still get a Grad PLUS loan?
Not if you’d be borrowing for the first time after July 1, 2026 — that program was eliminated for new borrowers under the reconciliation law.
Did the new PSLF rules take effect or not?
Most of the new PSLF rules were vacated by a court on June 30, 2026, one day before they were scheduled to start. However, the restriction on Parent PLUS loans (issued July 1, 2026 or later) being ineligible for PSLF and income-driven repayment did take effect. Check current Department of Education guidance for the latest status.
Source: Major July Changes to Federal Student Loan Repayment — National Consumer Law Center