05/01/26 Dept of Education Final Rule: “Reimagining and Improving Student Education-Federal Student Loan Program Final Regulations”

Hi everyone,

Bringing this information to your attention. The Dept of Education has released their final rule for revamping the federal student loan programs. This includes the introduction of the new Repayment Assistance Plan (RAP), the phasing out of every other repayment plan, updates to PSLF, and new borrowing limits for federal loans.

You can read the rule in its entirety here: https://www.federalregister.gov/.../reimagining-and...

Some points for us who have student loans we are still paying on:

• RAP is being introduced and is a replacement for PAYE/IBR. Any existing borrower can choose to move over to this new plan. Compared to IBR/PAYE, it features a required minimum monthly payment of $10, and scales up to 10% of your income per every 10,000 you make, max 10% (so, your payment assuming you make 100k net a year would be 10,000 divided into 12 monthly payments of $833. It stays at 10% and does not scale up any further). If you borrow any federal loans AFTER 07/01/26, your repayment plan for ALL of your loans becomes RAP. It is a 30 year repayment plan, with the same tax bomb at the end as IBR should there be money forgiven.

• Those of us who have existing IBR/PAYE loans are grandfathered in to keeping IBR/PAYE. We can freely move between RAP or IBR/PAYE terms so long as we don’t take out any further loans. For the purposes of forgiveness payments, IT WORKS ONE WAY. Payments made under IRB/PAYE DO count towards the 30 year repayment for RAP, BUT PAYMENTS UNDER RAP DO NOT COUNT for repayment under IBR/PAYE (since IBR is either 20/25 years forgiveness some were thinking of switching to RAP until they hit that number, then switch back to IBR and get the rest forgiven. That was changed in the final rule). Calculations for IBR/PAYE amounts monthly remain the same. Tax bomb still exists.

• Anyone who takes out loans after 07/01/26 will not have IBR/PAYE options available to them. This will make the only repayment options available as standard (10/30), RAP, and RAP + PSLF.

• PSLF requirements have been adjusted slightly and potentially encompass more government sites. This has always been a funkier payment method and thus I think if you are interested in this further research on your own end is required.

Anyone who is currently on the now defunct SAVE plan will be required to switch plans by 07/01/26. IF YOU DO NOT SWITCH TO ANOTHER REPAYMENT OPTION YOU WILL BE PLACED ON 10 YEAR STANDARD. That is likely the highest payment option for you. Make sure you are checking your servicer portals.

For anyone looking to take out loans in the future:

• There are now lifetime limits for federal graduate student loans. They now cap out at 100k, with some degree pathways going to 200k. Undergrad loans already have a limit.

• This is the current list of degrees with the 200k cap: Medicine (M.D.) Pharmacy (Pharm.D.) Dentistry (D.D.S. or D.M.D.) Optometry (O.D.) Law (L.L.B. or J.D.) Veterinary medicine (D.V.M.) Osteopathic medicine (D.O.) Podiatry (D.P.M., D.P. or Pod.D.) Chiropractic (D.C. or D.C.M.) Theology (M.Div. or M.H.L.) Clinical psychology (Psy.D. or Ph.D.). Obviously, many in our fields are pissed that this may limit new folx from entering the field due to having to take out predatory private loans to do it.

Overall this is going to really mess with a lot of people, especially given that the economy is not the greatest at the moment and many are struggling with basic necessities. The federal govt has been putting out more threats in going after student loan default. Remember, in Florida, defaulting on your student loans is punishable by state boards on your license. It rarely has happened in our fields but it happens all the time in the medical fields. Don’t let that be you. Get everything situated for yourselves.

I’ll answer whatever questions I can, as I myself am still reviewing this.