The 2025 budget law, P.L. 119-21, rebuilt federal student loans: two new repayment plans from July 1, 2026, borrowing caps in place of Grad PLUS, fewer choices for anyone who borrows or consolidates again, and forgiveness that is taxable again from 2026. SAVE ended by court order in March 2026. This hub lays out the rules as they stand, keeps the key numbers in one place and links every DigitalWealthSource guide and tool on repaying loans and paying for college.
Rules and figures checked September 27–28, 2026 against the statute, the Code of Federal Regulations and StudentAid.gov.
Every figure here comes from the law, the Education Department's rules or the named source, checked on the dates above. The repayment math, including each plan's poverty-line and bracket tables, runs in the RAP vs IBR vs Tiered Standard calculator.
The rules you face depend on when your loans were made. If every federal loan you owe was made before July 1, 2026, you still have a choice: RAP, IBR if you qualify, or the 10-year Standard plan. A new federal loan made on or after that date, and a consolidation counts, moves every loan you owe into the new system, where the only options are the Tiered Standard plan and RAP, with Tiered Standard as the default. The move is permanent. Tiered Standard payments don't count toward Public Service Loan Forgiveness, so a public-service worker in the new system needs RAP.
SAVE ended by court order on March 10, 2026. Borrowers still in its forbearance receive a notice that gives them 90 days to choose a plan, and anyone who doesn't choose is placed on a standard plan. Forbearance months don't count toward IDR forgiveness or PSLF; public-service workers can buy them back through PSLF Buyback once they reach 120 months of qualifying employment. Interest has been building on those balances since August 1, 2025.
Paying for school changed as well. For new borrowing from July 1, 2026, Grad PLUS is gone and graduate and professional students face yearly and lifetime caps, parents face a per-student Parent PLUS cap, and students already enrolled with a federal loan for their program keep the old limits for up to three academic years. The gap between those caps and the cost of a program is now filled by savings, work, school aid or private loans, which carry none of the federal protections. On the aid side, the 2027–28 FAFSA opened on September 23, 2026.
Falling behind costs more than it did during the payment pause. Federal servicers report a loan to the credit bureaus once it is 90 days past due, and a loan defaults at 270 days. Involuntary collection, meaning wage garnishment of up to 15% of disposable pay and Treasury offsets of tax refunds, has been on hold since January 16, 2026, with no restart date announced as of September 27, 2026. Rehabilitating a defaulted loan removes the default record from credit reports; consolidating out of default does not.
Forgiveness now comes with a tax bill. The American Rescue Plan kept forgiven student debt out of taxable income only from 2021 through 2025, so a balance forgiven under IBR or RAP from January 1, 2026 counts as federal income in the year it is forgiven. PSLF, Teacher Loan Forgiveness and discharges for death or total and permanent disability stay tax-free; the 2025 law made the death and disability exclusion permanent. State treatment varies.
| Date | What happened or happens |
|---|---|
| March 10, 2026 | SAVE ended by court order; its borrowers must choose another plan |
| July 1, 2026 | RAP and Tiered Standard open; new borrowing caps apply; no Grad PLUS for new periods of instruction; a new loan moves all your loans to the new plans |
| September 23, 2026 | The 2027–28 FAFSA opened |
| September 30, 2026 | Deadline to enroll in autopay for a 1-point rate cut, kept through June 30, 2028 while you stay enrolled (0.25 point otherwise) |
| June 30, 2028 | Federal deadline for the 2027–28 FAFSA; the 1-point autopay cut ends |
State and college aid deadlines come much earlier than the federal FAFSA deadline.
Each path is a short reading order. Start at step 1 and stop when your question is answered.
For borrowers whose loans were all made before July 1, 2026 and who still have a choice.
For borrowers whose SAVE enrollment ended in forbearance.
For borrowers who are behind, in default or watching their credit score fall.
For families saving now and students heading to school or graduate school.
If every federal loan you owe was made before July 1, 2026, compare RAP, IBR and the 10-year Standard plan. RAP bases the payment on all of your adjusted gross income and never lets unpaid interest grow, but forgives only after 30 years; IBR forgives after 20 or 25 years and often costs less for families; the Standard plan costs the least in total if you can afford the payment. The RAP vs IBR calculator runs all three on your own numbers.
Every federal loan you owe moves to the new system: you can choose only the Tiered Standard plan or RAP, and Tiered Standard is the default. Consolidation counts as a new loan, and the change is permanent. RAP months don't count toward IBR forgiveness, and Tiered Standard payments don't count toward Public Service Loan Forgiveness.
Forgiveness under an income-driven plan such as IBR or RAP is federally taxable again from January 1, 2026, because the American Rescue Plan's exclusion covered only 2021 through 2025. Public Service Loan Forgiveness, Teacher Loan Forgiveness and discharges for death or total and permanent disability stay tax-free. States treat forgiven debt differently, so check your state before a large discharge.
Not yet. Involuntary collections, meaning wage garnishment of up to 15% of disposable pay and Treasury offsets of tax refunds, have been on hold since January 16, 2026, and no restart date had been announced as of September 27, 2026. Defaults still reach credit reports, and rehabilitating a defaulted loan, which takes about 10 months, removes the default record.
For new borrowing from July 1, 2026, graduate students can take up to $20,500 a year and $100,000 in total in federal loans, and professional students $50,000 a year and $200,000 in total; Grad PLUS is gone for new periods of instruction. Parents can borrow up to $20,000 a year per student in Parent PLUS, $65,000 in total. Students already enrolled with a federal loan for their program keep the old limits for up to three academic years.
The 2027–28 FAFSA opened on September 23, 2026, and the federal deadline is June 30, 2028, but states and colleges set much earlier deadlines and some state aid runs out, so file early. A student whose Student Aid Index is at least twice the maximum Pell Grant ($14,790 at the 2026–27 maximum of $7,395) receives no Pell Grant.