Source: AVMA
Major changes to federal student loan repayment programs are set to begin July 1, 2026, under new regulations implementing the Trump administration’s “Working Families Tax Cuts Act.” Borrowers enrolled in the SAVE repayment plan will be required to switch plans within 90 days of receiving notice from their loan servicer or be automatically moved to a new Tiered Standard Plan. Two existing income-driven repayment plans—Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE)—will be phased out by July 2028.
The new system introduces two primary repayment options: the Tiered Standard Plan and the income-driven Repayment Assistance Plan (RAP). Borrowers receiving new federal loans after July 1 will generally be limited to these options. The changes also affect loan consolidation decisions, prompting organizations such as the AVMA and VIN Foundation to advise many 2026 veterinary graduates against federal loan consolidation.
Additional changes include lower borrowing limits, elimination of Graduate PLUS loans for many future borrowers, and restrictions on deferments and forbearances. The Education Department estimates the reforms will significantly reduce federal student loan borrowing and may increase reliance on private loans.
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