The passing of the One Big Beautiful Bill Act (OBBBA) has established some significant changes to Parent PLUS Loans, including new annual and aggregate limits for new borrowers starting July 1, 2026. Also, repayment options for future Parent PLUS Loan borrowers will diminish significantly in the coming months. Here are the details.
The End of Income-Driven Repayment
Currently, if Parent PLUS Loan borrowers are interested in Income-Driven Repayment (IDR), which fixes their monthly loan payment to their income and includes Income-Contingent Repayment (ICR) and Income-Based Repayment (IBR) options, they must consolidate their loans into a Federal Direct Consolidation Loan. Under the OBBBA, the new consolidation loan containing the Parent PLUS Loan MUST be disbursed by June 30, 2026 to take advantage of IDR, which means borrowers should aim to consolidate by April 1, 2026 to ensure there is enough time to process and disburse the loan by that June 30th deadline. Borrowers can apply to consolidate on the Federal Student Aid website.
Any Parent PLUS borrower who takes a new Federal Direct Student Loan or Parent PLUS Loan or who consolidates on or after July 1, 2026, will be barred from entering an IDR plan, even on their prior consolidated Parent PLUS Loans. These Parent PLUS Loans, consolidated or not, will be restricted to the Standard Repayment Plan, which requires fixed payments over a term based on how much the borrower owes. Term options include 10, 15, 20, or 25 years.
Public Service Loan Forgiveness
Another reason for Parent PLUS Loan borrowers to be aware of this new key deadline is to maintain eligibility for Public Service Loan Forgiveness (PSLF). PSLF is only accessible to Parent PLUS Loan borrowers if they:
- Consolidate into a Federal Direct Consolidation Loan
- Enter into an ICR plan, which is the only repayment plan immediately available to consolidation loans that contain a Parent PLUS Loan
- Transition to an IBR plan, which borrowers are eligible to do before July 1, 2028
Parent PLUS Loan borrowers who don’t consolidate into a consolidation loan disbursed by July 1, 2026 have no pathway to PSLF, as they will no longer be eligible for any IDR plans. The same applies for those who do consolidate by the deadline, but then borrow again after that date.
New PLUS Loans
Once a parent consolidates a Parent PLUS Loan into a Direct Consolidation Loan, if that parent takes out a new Parent PLUS Loan on or after July 1, 2026, all of their loans will lose eligibility for IDR. For families that still need to borrow, it may be best to borrow from another lender, rather than take another PLUS Loan.
Key Takeaway
What does this all boil down to? If you’re a Parent PLUS Loan borrower, and you would like to take advantage of a repayment plan that bases your monthly payment on your income, you must consolidate your loans by approximately April 1, 2026 in order for your loan to be disbursed by June 30, 2026.
Keep in mind that Parent PLUS Loan borrowers who have a disbursed consolidation loan by that June 30, 2026 deadline don’t need to be enrolled in ICR before June 30, 2026. As long as they have a disbursed consolidation loan, they can enroll in ICR later. Borrowers only need to make one payment under ICR before June 30, 2028 to maintain eligibility for IBR.
You can learn more about these regulations on the Federal Student Aid website here. And you can find out more about Federal Direct Consolidation Loans and apply for one on the Federal Student Aid website here.
