Federal student loans are about to go through some significant changes, and several key dates are coming up in the next few weeks. The reforms and updates stem from legislative and regulatory changes, as well as court rulings. And they will affect nearly every element of the borrower experience including loan origination, repayment, and loan forgiveness.
Millions of borrowers, prospective students, and their families are expected to see impacts from these changes in the coming months. Here’s a breakdown of some of the key upcoming dates and deadlines, and what they might mean for your student loans.
June 15 Is Key Notice Date For Discharging Student Loans Under Sweet v. McMahon Settlement
In less than two weeks, the last group of borrowers covered by the sweeping Sweet v. McMahon settlement are expected to receive notices from the Education Department that their student loans are approved for discharge. The Sweet v. McMahon settlement provides for automatic discharges for certain borrowers who submitted Borrower Defense to Repayment applications and never received a formal decision. The Borrower Defense program gives borrowers a pathway to requesting student loan forgiveness if they were misled or defrauded by their school.
The final group of borrowers is comprised of approximately 30,000 post-class applicants who submitted their Borrower Defense applications during a five-month period in 2022, just before the Sweet v. McMahon settlement was approved by a court. These borrowers also would not have attended one of the so-called Exhibit C schools (a much larger group of post-class applicants who attended a school on this court-approved list already received notices that they’ll be getting their federal student loans discharged). Post-class applicants who did not attend an Exhibit C institution and were not issued a decision on their Borrower Defense to Repayment application by April 15, 2026 should get a formal notice from the Education Department by June 15 that they qualify for a discharge.
“If you are a post-class applicant from a non-Exhibit C school who did not receive a decision by April 15, 2026, you are entitled to full settlement relief,” says the Project on Predatory Student Lending, the legal organization representing the class of student loan borrowers in the Sweet v. McMahon case, on its website. “You should receive a notice from the Department confirming your eligibility for Full Settlement Relief by June 15, 2026. Your relief should be delivered within one year of receiving that notice. In the meantime, all you need to do is make sure that your contact information is up to date on your FSA profile.”
June 30 Is Consolidation Deadline For Some Student Loans
Borrowers who need to consolidate their federal student loans should complete the process on or before June 30. That’s because any new student loan disbursements or consolidations issued on or after July 1 of this year may result in you being reclassified as a “new borrower,” which could cut you off from certain repayment and federal student loan forgiveness options.
This is particularly important for borrowers who have Parent PLUS loans, a type of loan issued to the parent of an undergraduate student. Parent PLUS loans that have not been consolidated on or before June 30 will become ineligible for income-driven repayment plans and any student loan forgiveness tied to IDR plans, including Public Service Loan Forgiveness.
“If you do not apply to consolidate Parent PLUS loans quickly, so that the consolidation loan is issued before July 1, 2026, you will not be able to pay those loans in an IDR plan moving forward,” warned the National Consumer Law Center in a blog post in April. “If your loan is disbursed on or after the July 1, 2026 deadline, it will change the repayment options available on all of the Direct Loans you owe. You will NOT be able to sign up for any IDR plan for the consolidation loan containing the Parent PLUS loans. If you take on any loan after July 1, 2026 any consolidation loans that contain Parent PLUS loans will only be eligible for the new Tiered Standard Plan.”
But the consolidation process can take four to six weeks on average to complete after a borrower submits their application. So, at this point, it may already be too late to consolidate. Parent PLUS borrowers with pending consolidation applications should monitor their application to ensure that the consolidation is disbursed on or before June 30. If it looks like the consolidation won’t be completed by then, borrowers may want to consider cancelling their application prior to the cutoff date.
“Before the consolidation is completed, the servicer will send you a letter listing which loans should be consolidated and telling you that it will finish processing the consolidation application if it does not hear from you within 10 days,” said NCLC in its April blog post. “If you get this letter and it looks like the consolidation loan will be issued after the July 1st deadline, you can call your servicer to cancel the consolidation.”
Other borrowers may want to think twice about consolidating their student loans right now. In addition to triggering “new borrower” rules for post-June 30 disbursements, consolidation may also erase any existing credit toward student loan forgiveness a borrower has earned under income-driven repayment plans.
Big Changes For Student Loans Start On July 1
Starting on July 1, major updates start going into effect for federal student loans, and millions of borrowers are expected to be impacted. These are some of the biggest changes:
- The Education Department will begin winding down the SAVE plan, and on July 1, loan servicers will start sending notices to more than seven million borrowers whose student loans are in forbearance that they will need to switch plans within 90 days. If they don’t, the department will place these borrowers in a Standard plan, which may be unaffordable and won’t count toward student loan forgiveness in most cases.
- The department is expected to launch the Repayment Assistance Plan, or RAP, on July 1. RAP is a new income-driven repayment plan that will allow borrowers to repay their student loans based on a formula applied to their income. Payments under RAP may be lower than some other plans, but won’t be as generous as SAVE or Pay As You Earn. While RAP will have an interest subsidy to prevent loan balances from ballooning, the plan will have no cap on payments. RAP will also have a 30-year repayment term for student loan forgiveness (the longest of any federal student loan repayment plan), and restrictions on RAP payments counting toward loan forgiveness under other income-driven plans.
- New rules are currently scheduled to go into effect on July 1 that would give Education Secretary Linda McMahon the authority to limit student loan forgiveness under the PSLF program by disqualifying entire organizations whose activities the department determines have a “substantial illegal purpose.” The new rules are facing legal challenges, but so far, no court has blocked them from going into effect.
- Borrowers who take out any new federal student loans, or consolidate their existing loans, on or after July 1 will be limited to just two repayment plans: RAP, and a new Tiered Standard plan. Parent PLUS borrowers will have just a single option, the Tiered Standard plan.
- Undergraduate students and those returning to school for a graduate or professional degree will have new caps and limits on borrowing federal student loans starting on July 1. Critics have argued that these new limits will compel some prospective students and families to either turn to risky private student loans, or forego an advanced degree entirely.
Ultimately, borrowers who may be impacted by any of these regulatory or statutory changes should take stock of their federal student loans now, evaluate their options, and determine the best course of action to navigate the choppy waters ahead. Within a few weeks, the landscape for borrowing, repayment, and student loan forgiveness will look very different.
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