Federal student loan update from Cambridge Credit Counseling

Our endorsed partner offers information about critical changes coming soon to the student loan process.

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If you applied for the Income-Based Repayment Plan (IBR) over the past year but were denied because you earn too much money, it’s time to submit a new application.

The U.S. Department of Education is about to drop the requirement that applicants must have a “partial financial hardship” and this requirement should be gone by January 2026 – opening the door for everyone who wants to enroll in IBR.

If your goal is Public Service Loan Forgiveness, it makes sense to switch to IBR in January and review your tax-filing status. If you’re married, you’ll want to consider filing separately until you reach your 120th qualifying payment, which will mean your monthly student loan payment on IBR would be based on your income alone (your spouse’s income would not be part of the calculation). Maxing out your contributions to your retirement plan would also lower your Adjusted Gross Income, which would also lower your monthly student loan payment.

If you’re one of the millions of borrowers who’ve been stuck in the SAVE forbearance since last August, you will want to move into IBR. You can use the loan estimator tool at studentaid.gov to get a rough idea of what your monthly payment will be in the IBR plan, and get back on the road to making 120 qualifying payments.

Important: Any additional loans taken out after June 30, 2026 would make all your loans (including all undergrad loans already enrolled in IBR) ineligible for any plans other than the new Repayment Assistance Plan (RAP), which will debut next summer, or the Standard Plan, which would repay your loans in full and leave no balance to be forgiven after 10 years.

If you’re a federal Parent PLUS loan borrower, you will want to ensure that your Plus loans have been consolidated and you’re paying through the Income Contingent Repayment plan (ICR). You must do this and make at least one ICR payment before June 30, 2026. Please Note: This cutoff date works differently from prior federal student loan deadlines, when you typically only had to have submitted a completed application by the date in question.

Parent PLUS loan holders who haven’t already consolidated their loans will need to complete their consolidation before June 30, 2026. Considering that a consolidation can take two months or longer to complete, you may need to submit a consolidation application by the beginning of April to make sure your loans have been consolidated by the end of June and that you’ve made at least one payment on that new consolidated loan through the ICR plan.

Parent PLUS loan borrowers: If your child is still in college and you need to take out additional Parent PLUS loans, your existing Parent PLUS loans will not only become ineligible for ICR/IBR, they will also become ineligible for repayment through the RAP plan and would no longer be forgivable through Public Service Loan Forgiveness. That is why Cambridge Credit Counseling is advising anyone in this position to either have their spouse take out the additional federal loans (shielding the existing loans from damage) or consider taking out private loans for the remainder of their child’s education.

Click here for more information about student loan counseling or contact a student loan counselor toll-free at 888-254-9827.