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Federal Student Loan Changes in the One Big Beautiful Bill Act

The information below is general in nature and may affect each borrower’s strategy differently. A personalized student loan analysis with Hippocratic Financial will be the best way to determine your strategy.

Important Updates and Changes Taking Immediate Effect

  • The changes outlined here make federal loan consolidation after July 1, 2026, a bad choice 
    for the overwhelming majority of borrowers
  • Processing times vary widely across all loan servicers, with some applications/requests
    taking weeks while similar submissions take months to process, even at the same servicer
  • The Income-Based Repayment (IBR) plan no longer requires a partial financial hardship
    (e.g., income limit) to apply
  • Interest accrual begins for borrowers in the SAVE (Saving on a Valuable Education) forbearance

Changes After July 1, 2026

  • Only the Repayment Assistance Plan (RAP) or the Standard plans will be available for borrowers 
    with ANY new loans (including new consolidations)
  • RAP is a new plan that is eligible for Public Service Loan Forgiveness (PSLF) and offers 
    30-year IDR forgiveness
    • Payment Calculation is based strictly on a percentage of Adjusted Gross Income (AGI), and the calculation changes based on income brackets. Minimum payment is $10.
    • Payment is reduced based on tax dependents, not family size
    • Payments are not adjusted proportionally for spouses who both have federal loans
    • Provides both an interest and principal subsidy for some borrowers
  • Standard repayment terms are changed for borrowers with any new loans after July 1, 2026
  • Parent Plus Loans must be consolidated before July 1, 2026, to access any IDR plan

Changes After July 1, 2027

  • Economic Hardship Deferments and Unemployment Deferments will no longer 
    be available for new loans after this date
  • Forbearance is limited to up to 9 months during any 24-month period for new loans

Changes After July 1, 2028

  • The Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans are eliminated.
  • All borrowers must enroll in IBR, RAP, or Standard repayment plans

This information is presented by longtime CAPAdvantage participant Hippocratic Financial. 

Have questions or want to schedule an analysis? Email Andrew Van Treeck, CFP, at andrew@hippocratic.com 

Hippocratic Financial is a comprehensive, physician specialized wealth management firm that integrates Investments, Retirement Planning, Insurance, Tax, Legal, and Student Loan Services.

For more information, visit: https://hippocratic.com