Warning Issued Over Student Loans as Trump Admin Policies Take Effect
Summary
Changes to federal student loan rules that took effect July 1 limit the repayment plans generally available to borrowers who take out a new Direct Consolidation Loan. New York Attorney General Letitia James warned borrowers to weigh the effects before consolidating, since some may lose access to older plans and progress toward loan forgiveness.Key Facts
- A new Direct Consolidation Loan generally gives borrowers access to the Tiered Standard Repayment Plan or the new Repayment Assistance Plan (RAP).
- Borrowers with eligible loans disbursed before July 1, 2026, may keep access to certain older repayment plans if they do not take out a new loan or consolidation loan on or after that date.
- The Income-Contingent Repayment and Pay As You Earn plans are scheduled to end no later than July 2028.
- Older income-driven plans generally allowed forgiveness after 20 or 25 years of qualifying payments; RAP requires 30 years.
- Consolidating can cause some borrowers to lose progress toward income-driven loan forgiveness.
- Parent PLUS borrowers who consolidate generally cannot use income-driven repayment plans through the new consolidation loan.
- The Tiered Standard Repayment Plan does not qualify for Public Service Loan Forgiveness.
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