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2d ago

Senate Passes Sweeping Student Loan Overhaul, Bill Heads Back to House

House approval followed by a presidential signature by July 4 would trigger Department of Education rulemaking for 2026 repayment transitions.

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Overview

  • The Senate on July 1 approved a reconciliation package that phases out most federal income-driven repayment plans and imposes borrowing caps, sending the bill back to the House for final approval.
  • President Trump has signaled his intent to sign the measure by July 4, setting the stage for Education Department rulemaking to implement new repayment timelines in 2026.
  • Between July 1, 2026, and July 1, 2028, borrowers in ICR, PAYE and SAVE plans must switch to a modified IBR option or the new Repayment Assistance Plan, which offers forgiveness only after 30 years of payments.
  • The legislation eliminates the Graduate PLUS program and caps graduate Stafford loans at $20,500 per year (with a $100,000 lifetime limit) and Parent PLUS loans at $65,000 total, while cutting off new Parent PLUS loans from most forgiveness programs.
  • Economic hardship and unemployment deferments would be removed, discretionary forbearance limited to nine months per 24-month period, and Biden-era school discharge regulations delayed for ten years.