Student Loan Issues: Your Rights During the 2026 Repayment Overhaul

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, restructured federal student loan repayment going forward. For loans first disbursed on or after July 1, 2026, the only repayment options are the new Repayment Assistance Plan (RAP, an income-driven plan) and a new Tiered Standard Plan with fixed payments over 10-25 years depending on balance. Existing borrowers were not forced onto these overnight: the SAVE, PAYE, and Income-Contingent Repayment (ICR) plans stopped accepting new enrollments around July 1, 2026, but borrowers already using them have until July 1, 2028 to move to an eligible plan. The older Income-Based Repayment (IBR) plan, the Standard, Graduated, and Extended plans remain available to borrowers with no post-July-2026 loans. verify current enrollment cutoff dates directly at studentaid.gov before making a plan decision

The SAVE plan itself was separately vacated by a federal court and effectively wound down following litigation and a settlement between the Department of Education and the state of Missouri -- borrowers were placed in an interest-free forbearance while the litigation played out, and loan servicers began sending transition notices starting around July 1, 2026. verify the exact vacatur date and your own servicer's notice timeline — this has moved multiple times and is worth confirming directly

Regardless of which plan you land on, your qualifying-payment credit generally carries over: payments that counted toward Public Service Loan Forgiveness (PSLF) or IDR forgiveness under SAVE, PAYE, IBR, or ICR continue to count once you move to an eligible replacement plan. A separate PSLF final rule took effect July 1, 2026 that narrows which employers qualify (excluding organizations found to have a "substantial illegal purpose," such as supporting terrorism or aiding unlawful immigration) — most employers are unaffected, but if your employer's status is in question, that determination is made by the Department of Education, not automatically. verify how the new employer-eligibility standard applies to your specific employer

Everything above applies only to federal Direct Loans. Private student loans — from banks, credit unions, or other non-federal lenders — are a fundamentally different product: they carry none of the federal protections discussed above (no PSLF, no income-driven repayment, no administrative forbearance tied to the SAVE litigation), and disputes over a private loan are handled through the Consumer Financial Protection Bureau (CFPB) and your state's consumer-protection or attorney general's office, not through Federal Student Aid or the FSA Ombudsman. verify which loan type(s) you hold — many borrowers have both federal and private loans and need to pursue two separate paths

A number of states have gone further and enacted their own "Student Loan Borrower Bill of Rights"-style laws that add servicing standards on top of, or independent of, federal rules. California's Student Borrower Bill of Rights (effective January 1, 2021, enforced by the Department of Financial Protection and Innovation) requires licensed student loan servicers to post and process payments within set timeframes, caps certain late fees, and prohibits misapplying payments — and it applies to borrowers with federal and private loans alike. Other states, including New York, Illinois, Connecticut, and Colorado, have adopted broadly similar servicer-licensing or borrower-bill-of-rights statutes. verify whether your specific state has its own servicer-licensing law and what it adds beyond federal rules

Outside the US, income-contingent repayment for government-backed student loans is not a uniquely American design. In the UK, the Student Loans Company administers income-contingent Plan 2 and Plan 5 loans: Plan 2 (loans taken out 2012-2023) is repaid at 9% of income above a threshold and written off after 30 years, while Plan 5 (loans from August 2023 onward) uses a lower threshold and a much longer 40-year write-off window. The underlying design — repay a percentage of income above a threshold, with any remaining balance eventually written off — is conceptually similar to a US income-driven repayment plan, but the UK runs it as a single national scheme rather than the multiple competing federal plans (and multiple private servicers) found in the US. verify current UK thresholds and rates directly at gov.uk, since they are reviewed each tax year

Beyond adjusting your repayment plan, several narrower paths can eliminate a federal loan balance entirely. Total and Permanent Disability (TPD) discharge is available if a physician certifies you cannot engage in "substantial gainful activity" due to a condition expected to last at least 60 months or result in death — some borrowers identified by the Social Security Administration or the Department of Veterans Affairs as having a qualifying disability receive this discharge automatically, without applying. A TPD discharge can be reversed during a post-discharge monitoring period if your income later exceeds the allowed threshold, so verify current monitoring-period rules before assuming a TPD discharge is unconditionally final.

Closed School discharge applies if your school closes while you're enrolled, or shortly after you withdraw, and you meet the program's specific timing and enrollment requirements. Borrower Defense to Repayment is a separate path for federal Direct Loan borrowers whose school engaged in substantial misrepresentation, a substantial omission of fact, a breach of contract, aggressive or deceptive recruitment, or was subject to certain court judgments — it is fact-specific and requires its own application. verify current eligibility criteria and processing timelines for both programs at studentaid.gov, since the standards have been revised more than once

Discharging a student loan in bankruptcy is possible but requires proving "undue hardship," which most federal courts assess under the three-part Brunner test: you cannot maintain a minimal standard of living if forced to repay, that hardship is likely to persist, and you have made good-faith efforts to repay. Historically, fewer than 1% of borrowers who pursued this succeeded, but since November 2022 the Department of Justice and Department of Education have used a streamlined attestation-form process directing government attorneys to consent to discharge when the facts clearly support it, rather than opposing every case by default — meaningfully raising the realistic odds compared with the pre-2022 baseline. verify current DOJ/Department of Education guidance before assuming a specific outcome

For most borrowers, the realistic "win" here is administrative: staying on (or getting placed on) a plan that matches your income and preserves PSLF/IDR credit, and getting a servicer error corrected before it snowballs into a credit-report problem. It is rarely a lump-sum payout.

Because this area changed substantially in 2025-2026 and parts of the transition were still being implemented and litigated as of this writing, treat any specific number, deadline, or plan-eligibility rule you read anywhere (including on this page) as something to re-confirm at studentaid.gov before acting — including on this page's own dates. verify all specific 2026 dates and thresholds directly before relying on them

If your issue involves alleged fraud by a school (not just a servicer/repayment dispute), a separate path — Borrower Defense to Repayment — may apply and has its own process and evidentiary standard; that is a different claim from a plan-transition or servicer-error dispute.