WASHINGTON – With new rules for student loans scheduled to go into effect this summer that could radically increase borrowers’ monthly payments, legal assistance groups submitted comments today urging the Department of Education to take steps to protect borrowers from devastating consequences, including defaulting on their loans. They also urged the Department to make it easier for borrowers who do fall behind to get out of default.
Legal aid groups raised concerns about several of the changes required by the Big Bill, including ending protection of income needed to meet basic needs and requiring borrowers who take out any new loans to make student loan payments even when their income is below the poverty line. The bill would also end relief programs that allow borrowers to defer payments during periods of unemployment or economic hardship. These changes could worsen the default crisis, with nearly 12 million people already behind or in default on their student loans.
“Legal aid organizations have seen firsthand how student loan rules and practices can push struggling families into default,” said Abby Shafroth, managing director of advocacy at the National Consumer Law Center. “Without proper implementation, these new rules could force people to pay more than they should. They could also cause financially distressed borrowers to fall behind and miss out on important relief options.”
The groups also sounded the alarm about eliminating access to income-based payments for most Parent PLUS borrowers after July 1. The Parent PLUS program allows parents to borrow to help their children attend college. Eliminating access to income-based payments will push more low-income parents into default, and put older parent borrowers at risk of having their Social Security benefits garnished. Very few borrowers are aware of these changes, or that they need to act now to preserve access to more affordable payments.
The Big Bill requires the Department of Education to implement these drastic changes; however, the Department can take actions to reduce the risks to borrowers. The legal aid organizations recommend that the Department:
- immediately begin communicating these major changes to borrowers, particularly parent borrowers who must act before July 1 to preserve access to income-based payments;
- improve outreach and servicing of borrowers at heightened risk of default;
- reform default and debt collection policies so they don’t push borrowers into poverty; and
- increase access to rehabilitation out of default and back into good standing, including by allowing borrowers to rehabilitate their loans online and simultaneously enroll in an income-based repayment plan.
The proposed rules are expected to be finalized this spring and implemented on July 1, 2026.
Related Resources
- Student Loan Borrower Assistance Project
- NCLC blog: Do you have Parent PLUS loans? Act now to lower your payments before options disappear, December 2025
- NCLC blog: Big Bill Means Big Changes For Student Loan Borrowers: What You Need to Know, July 2025
- NCLC Digital Library: A Consumer Practitioner’s Guide to the Reconciliation Bill, July 2025
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