New Student Loan Repayment Rules Mean Higher Bills and More Time in Debt for Lowest Income Borrowers

April 30, 2026 — Press Release

On a Positive Note, Rules Ease Pathway for Borrowers To Get Out of Default

WASHINGTON – Today, the U.S. Department of Education announced new final rules that will make sweeping changes to the federal student loan program by imposing new limits on the amount students and parents can borrow and dramatically changing repayment options. Advocates at the National Consumer Law Center (NCLC) and legal aid groups previously warned that these changes would make student loans more expensive for people with low incomes and increase the already high rate of student loan default. These changes include: 

• currently, a limited amount of income needed to meet basic needs is excluded from the payment formula;  the new Repayment Assistance Plan ends this protection, resulting in higher monthly payments for the lowest income borrowers,
• sunsetting the option to temporarily postpone payments due to unemployment or economic hardship, and 
• lengthening the amount of time new borrowers will need to make income-based payments until they qualify for loan forgiveness to 30 years from 20 years. 

“These dramatic changes to repayment options, combined with the Department of Education’s plan to kick 7 million borrowers out of the SAVE plan this summer, mean that many student loan borrowers will face huge increases in their monthly payments,” said Abby Shafroth, managing director of advocacy at NCLC. “Low-income borrowers in particular are at high risk of not being able to afford their new payments and falling behind, swelling the ranks of the nearly 12 million people already behind or in default on their student loans.” 

The new rules do include one positive change that legal aid groups had advocated for, which will make it easier for borrowers to get their loans out of default and to avoid re-default. Borrowers trying to get their loans out of default through rehabilitation of their loans have been stymied by red tape, paperwork, and burdensome documentation requirements; the new rules will allow borrowers to rehabilitate their loans using a new online process that lets borrowers match their income data from the tax data. The rules will also address the well-documented problem of borrowers rehabilitating their loans only to redefault after being shunted into more expensive plans they cannot afford; the Department of Education adopted legal aid groups’ suggestion to allow borrowers to request an income-driven repayment plan at the same time that  they request to rehabilitate their loans, ensuring their payments will remain affordable after they rehabilitate their loans.     

“The process for getting out of default is an archaic, error-ridden hassle, requiring multiple phone calls, paper documentation, snail mail, and paper checks that has hindered many borrowers from getting back into good standing,” said Shafroth. “Legal aid attorneys who help borrowers navigate the repayment process identified these problems and proposed common-sense solutions, and it’s great to see the Department of Education adopt them.”

Related Resources

• Press Release: Elimination of SAVE Plan Puts More Than 7 Million Borrowers in Financial Peril, Mar. 10, 2026 
• Press Release: Legal Aid Groups Urge the Department of Education to Protect Struggling Borrowers as “Big Bill” Brings Sweeping Changes, March 3, 2026
• NCLC blog: The SAVE Plan is Ending: What Borrowers Need to Know, April 28, 2026 
• 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