Parent student-loan borrowers have to act quickly to keep their affordable monthly payments.
President Donald Trump’s “big beautiful” spending legislation made sweeping changes to student-loan repayment, and loans that parents take out for their kids, known as parent PLUS, are facing a key deadline.
Currently, parents can take out loans equal to the full cost of attendance. Beginning July 1, 2026, parent PLUS borrowers will face a $20,000 annual cap and a $65,000 lifetime cap on borrowing per student. Also, loans issued after July 1 will not be eligible for income-driven repayment plans, which aim to give borrowers affordable payments based on income and offer loan forgiveness in 20 to 25 years.
This means that parent PLUS borrowers who are not on an income-driven repayment plan need to consolidate their loans into a federal direct loan before July 1 to retain access to affordable payments. The Department of Education recommends that borrowers seeking to consolidate do so “at least three months” before July 1 — that is, before April 1 — to account for any processing delays.
Once the consolidation is approved, borrowers have until July 1, 2028, to enroll in an IDR plan. After that date, existing income-driven repayment plans will be phased out and replaced with two options: a standard repayment plan, which offers fixed monthly payments for a period up to 25 years, or a new Repayment Assistance Plan, which sets payments based on income with forgiveness after 30 years.
RAP has less generous terms than existing repayment plans, and borrowers are likely to face higher monthly payments.
Parent PLUS borrowers who do not consolidate before July 1 will lose access to income-driven repayment plans, as will those who initiate a new loan after that date.
Alongside the parent PLUS changes, the Department of Education is eliminating the Grad PLUS program, which allowed graduate and professional students to borrow up to the full cost of attendance for their advanced degrees. Policy experts and lawmakers previously told Business Insider that the new borrowing caps could drive more parents and students to private lending, which could have riskier terms and higher interest rates.
A recent report from the Government Accountability Office found that the Department of Education decreased oversight over federal student-loan servicers, putting borrowers at risk of billing errors as the repayment changes are implemented. Additionally, the department recently announced that it will be transferring part of the federal student-loan portfolio to the Treasury, which advocates and Democratic lawmakers said opens the door for transfer errors.
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