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6d ago

Senate Passes Student Loan Overhaul With IDR Phase-Out and Borrowing Caps

Reshaping repayment options, capping graduate and Parent PLUS borrowing, tightening deferment rules, delaying school-based discharge policies, the package now awaits a final House vote.

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Stock image/file photo: A mortarboard laid on top of a calculator.
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Overview

  • The bill phases out popular income-driven repayment plans ICR, PAYE and SAVE between July 1, 2026 and July 1, 2028, requiring borrowers to switch to a modified IBR plan or a new Repayment Assistance Plan (RAP).
  • Graduate PLUS loans are eliminated and new caps limit graduate Stafford borrowing to $20,500 per year ($100,000 lifetime) and professional Stafford borrowing to $50,000 per year ($200,000 lifetime).
  • Parent PLUS borrowing is capped at $65,000 and becomes ineligible for income-driven repayment plans and most forgiveness programs, including Public Service Loan Forgiveness.
  • Public Service Loan Forgiveness remains available and RAP qualifies for PSLF, while Biden-era regulations expanding school-based loan discharge eligibility are delayed for ten years.
  • Economic hardship and unemployment deferments are eliminated and discretionary forbearance is restricted to nine months in any 24-month period as the bill heads to the House for final approval.