Key points
- The Department of Education confirmed that existing borrowers will retain access to their current standard, extended and graduated repayment plans after July 1, 2026, if they do not take out new loans.
- The “Big, Beautiful” bill, signed by President Donald Trump, overhauls federal repayment structures and introduces a new “gradient standard” plan for future borrowers.
- More than 40 million Americans could be affected by these changes, representing the largest shift in payment rules in decades.
The Department of Education has confirmed that borrowers with existing federal student loans will be able to continue using existing fixed repayment plans (including standard 10-year options, extended 25-year options, and graduated options) after the new rules take effect in mid-2026.
The confirmation came during October meeting of the Reimagine and Improve Student Education (RISE) committee. (PDF file), a rulemaking group created to implement the “Big and Beautiful Bill Act.” The legislation directs the Department of Education to reform several aspects of federal student loan repayment.
Under the law, all existing fixed repayment plans for borrowers who obtain new federal loans or consolidate existing loans on or after will be canceled. July 1, 2026. Instead, these future borrowers will be placed on a new “standard tiered” repayment plan that adjusts the repayment term based on the amount of their debt.
But for millions of current borrowers, the Education Department has made clear that they can remain on current repayment plans indefinitely. As long as they do not take out new loans or consolidation after that date.
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What changes for new borrowers?
The Big, Beautiful Bill consolidates the three existing fully amortized student loan repayment options into one plan. Under the proposed “tiered modular” plan, repayment terms would be determined by the loan balance:
- Loans under $25,000:10 years
- Loans from $25,000 to $50,000:15 years
- Loans of $50,000 to $100,000:20 years
- Loans over $100,000: 25 years old
This approach aims to simplify repayment while aligning repayment schedules more closely with the amount borrowed. Monthly payments will remain fixed, but the repayment term will vary depending on the amount borrowed – providing longer terms for larger debts.
All negotiators involved in the RISE panel gave the draft language for fixed payment plans “two thumbs up” during initial consensus screening, indicating that the administration is likely to finalize this portion of the rule with broad agreement.
If the committee continues to reach full consensus at the next meeting, the Department of Education generally must adopt the agreed upon language in its final rule. Without consensus, the Ministry will have greater flexibility to interpret and implement the statute independently.
What borrowers need to know
Confirmation means that current borrowers (including those still in school or in forbearance) will retain access to existing repayment options, even if they enter repayment after 2026 because the rule is based on the loan origination date. The prerequisite is that they may not take out any new federal student loans after the July 1, 2026 deadline.
Borrowers who later return to school and take out new loans may lose access to old plans entirely, since the new disbursement will fall within the updated system. Likewise, consolidating loans after that date may result in the borrower’s entire balance being moved to the new “tiered standard” structure. This will be the case, for example, with future Parent PLUS borrowers.
The change also means loan servicers will run two sets of repayment schemes simultaneously – one for borrowers with pre-2026 loans under the old plans, and another for new borrowers under the new tiered structure.
Providers have indicated their support for this clarity, which will help prevent confusion during the transition period.
Key takeaways
The new framework represents one of the most comprehensive restructurings of federal student loan repayment in decades. While income-driven repayment plans have received the most attention in recent years, fixed repayment options remain the default for millions of borrowers.
According to our student loan statistics, more than half of borrowers are in a standard plan (although some are in deferment) and nearly One third of borrowers They currently repay their loans on standard, extended or graduated fixed plans. For these borrowers, the ability to maintain their current repayment structure can provide stability and predictability, especially given ongoing policy changes for income-based programs.
workplan:
- Keep your existing loans: Borrowers who had existing loans before July 1, 2026, can remain on existing repayment plans as long as they do not take out or consolidate new loans.
- Future loans = new rules: Any new borrowing after 1 July 2026 will fall under the new “tiered benchmark” scheme or have access to the RAP.
- Pay attention to your merge date: Consolidation after July 1, 2026 may result in all loans being transferred to the new repayment system.
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Editor: Colin Greaves
The post Standard Plans for Existing Student Loan Borrowers appeared first on The College Investor.
