For millions of federal student loan borrowers—especially Parent PLUS borrowers—the future of loan repayment is on the brink of massive change.
A newly proposed Senate GOP student loan reform could wipe out existing IDR options for new borrowers, phase out Parent PLUS and Grad PLUS loans, and leave families with fewer, potentially unaffordable repayment plans. For Parent PLUS borrowers in particular, the proposed changes could mean losing access to the only affordable repayment options currently available, with devastating financial consequences.
The good news? Borrowers still have time to act. By understanding the proposal’s timeline and taking key steps now, you may still protect your repayment options and avoid being locked into costly fixed plans. This guide breaks down exactly what’s at stake and what you need to do next.
The Current Landscape: Parent PLUS Loans and Income-Driven Repayment
Parent PLUS loans are federal loans issued to parents—not students—who are helping to pay for their child’s undergraduate education. These loans usually come with higher interest rates and limited access to flexible repayment plans.
Right now, Parent PLUS borrowers only have one path to an IDR plan:
- First, you must consolidate your Parent PLUS loans into a Direct Consolidation Loan.
- Once consolidated, your only available IDR plan is the Income-Contingent Repayment (ICR) plan.
Quick ICR Recap:
- Payments are generally 20% of your discretionary income.
- Discretionary income is calculated as your AGI minus 100% of the poverty guideline—less generous than newer plans like SAVE, which use 225%.
- Loan forgiveness is typically available after 25 years (300 monthly payments) in repayment.
- Enrolling in ICR can also allow Parent PLUS borrowers to pursue Public Service Loan Forgiveness (PSLF), which offers forgiveness after as little as 10 years for those working full-time for qualifying non-profit or government employers.
The Proposed Senate Bill: A Game-Changer for Parent PLUS Borrowers
Republican lawmakers have introduced a sweeping budget reconciliation bill, often called the “big, beautiful bill,” which aims to reshape the federal student loan system and offset tax cuts. If enacted, changes would apply to all federal student loans, but Parent PLUS borrowers are among those most at risk.
Here’s how the proposed bill would affect Parent PLUS loans and repayment options:
The End of ICR for New Enrollees
The bill clearly says it would immediately shut down access to ICR for new enrollees as soon as it becomes law. This means if the bill passes, new borrowers or even existing borrowers who aren’t already in ICR would lose the chance to sign up for this plan.
New Repayment Assistance Plan (RAP)
For loans disbursed on or after July 1, 2026, the bill would:
- Eliminate all current repayment plans.
- Replace them with a new Repayment Assistance Plan (RAP).
RAP would base payments on 1% to 10% of your total AGI, and would include features like waiving unpaid interest and a matching payment-to-principal of up to $50. But here’s the kicker: Parent PLUS borrowers would not be eligible for RAP even if they consolidate their loans.
Automatic IBR Transition for Current ICR Borrowers
This is a big deal for borrowers who are already on ICR. If you’ve consolidated your Parent PLUS loans into a Direct Loan and are actively making payments under the ICR plan when the bill passes, you’d be automatically moved to IBR. For many, this could actually be a positive shift since IBR is generally considered more affordable than ICR.
Amended IBR Terms
The IBR plan that borrowers would be switched to under the proposed bill comes with some important updates, especially for loans disbursed before July 1, 2026.
- Payments would be set at 15% of discretionary income. (Right now, IBR can be 10% or 15% depending on “new borrower” status)
- There would no longer be a standard repayment cap. This is a big shift. Under the current IBR rules, your monthly payments are limited. They can’t go higher than what you’d pay on a standard 10-year plan. The new version removes that cap. So if your income goes up in the future, your payments could keep increasing without any upper limit. In some cases, you might end up paying more each month than you would under today’s IBR or even the current ICR plan.
- Loan forgiveness would still be available after 25 years (300 payments) for graduate-level debt, which includes consolidated Parent PLUS loans.
New Limits on Parent PLUS Loans
The bill would significantly restrict new Parent PLUS borrowing starting July 1, 2026. Specifically, it would impose a $20,000 annual borrowing limit and a $65,000 lifetime cap per dependent student—a major shift from current rules, which allow borrowing up to the full cost of attendance.
While future borrowing would still be allowed within these new limits, the changes effectively end the use of Parent PLUS loans as a flexible funding option for families. The draft bill does not include any exceptions based on whether a student has exhausted other loan types first.
Why Parent PLUS Borrowers Need to Pay Attention
If this bill passes, Parent PLUS borrowers who haven’t taken action could face some serious consequences:
No More Income-Driven Repayment Options
If you haven’t consolidated or enrolled in ICR by the time the bill passes, you could lose access to all IDR plans and you won’t qualify for the new RAP either.
Stuck With Less Affordable Plans
Your only remaining choices would be:
- Standard Repayment (10 years)
- Extended Repayment (for loan balances over $30,000, up to 25 years)
- Graduated Repayment (starts low, increases every two years)
These plans aren’t based on your income and could result in high monthly payments.
Increased Default Risk
Without income-driven options, many borrowers could struggle to keep up and risk default, wage garnishment, tax refund offsets, and serious credit damage.
PSLF Effectively Blocked
While technically a 10-year Standard plan qualifies for PSLF, most Parent PLUS borrowers would likely pay off the loan before reaching forgiveness. PSLF would essentially become unreachable for most.
What Parent PLUS Borrowers Can Do Right Now
If you’re a Parent PLUS borrower and haven’t consolidated or enrolled in ICR yet—time is critical.
Here’s what you should do:
- Consolidate Your Parent PLUS Loans into a Direct Consolidation Loan: This is the foundational step to unlock any income-driven repayment options for Parent PLUS loans. Ensure this is a Direct Consolidation Loan.
- Immediately Apply for the Income-Contingent Repayment (ICR) Plan: Once your Parent PLUS loans are consolidated, apply for the ICR plan for that Direct Consolidation Loan.
Doing this now can secure your spot in an income-driven repayment plan. If the bill passes, borrowers already on ICR would be moved to IBR under the new system, which is still more manageable than being locked out entirely.
A Few Things to Keep in Mind:
- This is not yet law. The bill is still a proposal and must pass both the Senate and House before becoming law. But the potential impact is serious enough to start planning now.
- IBR Changes Matter. Getting moved to IBR might sound like good news at first, especially if your income is low and you’re hoping for smaller monthly payments. But there’s an important catch you need to be aware of. The new version of IBR in this proposal would remove the payment cap. Right now, your payments are limited. They can’t go higher than what you would pay on a standard 10-year plan. Under the new rules, that limit would no longer exist. This means if your income increases in the future, your payments could keep going up too, with no maximum. In fact, your payments could eventually become higher than what you’d pay under today’s IBR or even under a standard repayment plan.
- SAVE Plan and Litigation: Right now, the SAVE plan is on hold because of ongoing litigation. In most cases, Parent PLUS loans aren’t directly eligible for SAVE (unless double-consolidated before July 1, 2025). But even that option is about to disappear for new borrowers after July 1, 2026. The double consolidation loophole is set to close by regulation on July 1, 2025, anyway.
The Senate GOP’s student loan plan could drastically limit repayment options and forgiveness paths for Parent PLUS borrowers. Acting now—by consolidating and enrolling in ICR—may protect your access to income-driven plans.
While this bill isn’t law yet, it’s moving quickly. Staying informed and taking proactive steps now could make all the difference.