Student loan borrowing is ‘high stakes’ as new rules take effect on July 1, CFP says. What to know Federal student loan rules are changing on July 1, impacting future borrowers by limiting repayment plans and forgiveness pathways. Borrowers taking out new loans or consolidating after this date will face stricter terms, including fewer repayment options and the loss of certain deferment benefits. Parent borrowers and those relying on specific programs like Public Service Loan Forgiveness should be particularly aware of these changes.

• New federal student loan borrowers after July 1 will have fewer repayment options: the Repayment Assistance Plan (RAP) and the Tiered Standard Plan.
• Existing borrowers maintain access to plans like the Income-Based Repayment (IBR) plan, which offers faster forgiveness and potentially $0 payments.
• Borrowing new federal student loans, even small ones, after July 1 can eliminate access to preferred repayment plans on older loans.
• Parent PLUS loan borrowers taking out new loans after July 1 will only have the Tiered Standard Plan and will lose eligibility for Public Service Loan Forgiveness.
• New borrowers after July 1 will not be able to use unemployment or economic hardship deferments.
• Consolidating federal student loans on or after July 1 will be treated as a new loan, subjecting the borrower to the new rules and limiting repayment and deferment options.