What Borrowers Need to Know Before the July 2026 Student Loan Deadline

If you’re one of the millions of Americans with federal student loans—or you’re a parent planning for your child’s education—there’s a major deadline you can’t afford to ignore. Thanks to sweeping new legislation signed in July, called the “Big, Beautiful Bill,” the federal student loan system is about to undergo its biggest shakeup in decades.

While some of the biggest changes don’t hit until July 1, 2026, borrowers have a limited window to protect themselves and make strategic moves. Here’s what you should be doing now to get ahead of the coming transition.

Brace for Bigger Payments—Start Budgeting Now

The new law eliminates several of today’s most affordable income-driven repayment (IDR) plans—SAVE, PAYE, and ICR—and introduces a new option called the Repayment Assistance Plan (RAP). By July 2028, only RAP and the older Income-Based Repayment (IBR) will remain.

For many, this means higher monthly payments. For example:

• Under SAVE, a borrower earning $50,000 might pay ~$140/month.
  
• Under IBR, that jumps to ~$344/month.
  
• RAP may reduce it slightly (~$210/month), but it comes with its own drawbacks.
  

What to do now:
Review your repayment plan and anticipate increases. If you’re in SAVE, consider switching sooner rather than later, especially if you’re aiming for loan forgiveness programs like PSLF, where every qualifying payment matters. Also, be aware that interest is resuming on SAVE loans since August, making a switch even more urgent.

Weigh the Pros and Cons of RAP

The upcoming RAP plan offers some fresh benefits:

• Interest won’t balloon your balance if payments don’t cover it.
  
• A $50 monthly principal subsidy helps chip away at the loan.
  

But there are downsides:

• It stretches repayment to 30 years before IDR forgiveness (longer than current options).
  
• Lower-income borrowers may actually pay more under RAP.
  
• Payments aren’t adjusted for inflation, meaning they could eat up a bigger slice of income over time.
  

What to do now:
Stay informed. RAP isn’t open yet, but it’s coming. As details emerge, assess whether RAP or IBR will be a better fit for your financial future.

Parent PLUS Borrowers: Consider Consolidation—Soon

Parents with PLUS loans are in a tough spot. Currently, the only way to access income-driven repayment is by consolidating into a federal Direct Loan. Under the new law, if you consolidate before July 1, 2026 and enroll in an IDR plan before July 1, 2028, you can get into IBR.

If you wait too long, you may be locked out entirely, stuck with only the Standard plan—no forgiveness, no income-based options.

What to do now:
If you hold Parent PLUS loans, act now:

• Explore consolidation.
  
• Consider whether enrolling in ICR will be sustainable.
  

Talk to an expert if you’re unsure—this window is closing fast.

Think Twice Before Taking on New Loans After July 2026

Starting July 1, 2026, any new federal loans will have much stricter repayment choices:

• Only RAP and the Standard plan will be available.
  
• Existing borrowers who take out new loans will lose access to IBR.
  

For Parent PLUS borrowers, the impact is even harsher: new loans will be confined to the Standard plan, shutting the door on income-driven options entirely.

What to do now:
If you’re considering returning to school or financing education for a child, weigh the risks carefully. You may need to:

• Reconsider your timeline.
  
• Explore alternative funding (like scholarships or employer tuition benefits).
  
• Think twice about taking on federal loans under the new rules.
  

Prepare for a Tougher Dispute Process

On top of the repayment changes, the law slashes funding for oversight and dispute resolution:

• The CFPB will have reduced resources.
  
• The Department of Education is cutting staff, including key ombudsman teams.
  

This means if something goes wrong—misapplied payments, servicing errors—you may have fewer places to turn for help.

What to do now:

• Learn how to contact your state student loan ombudsman (if available).
  
• Keep records of all loan communications.
  
• Know how to reach your congressional representative’s office—they can often help escalate serious issues.
  
  

Final Thoughts: Take Action Before the Clock Runs Out

While July 2026 may sound far away, the reality is: borrowers need to start planning now. The choices you make today will determine whether you lock in more flexible repayment terms or face higher costs and fewer protections down the line.

If you’re employed by a company that partners with PeopleJoy, you may already have a valuable advantage. Through your workplace benefits, you could have access to expert student loan guidance, repayment support, or even employer-sponsored contributions—all designed to help you navigate these upcoming changes with confidence.

Not sure if you’re eligible? Check your company’s benefits portal or connect with your HR team to see if PeopleJoy’s services are available to you.

At PeopleJoy, we’re here to help partner employees reduce financial stress, make informed decisions, and get the most out of their student loan benefits—especially as the student loan landscape shifts.

👉 Reach out through your employer’s benefits platform to get started with PeopleJoy.