US student loan repayment rules changing July 1 with fewer options for borrowers

Major changes to US federal student loan rules are set to take effect on July 1, with experts urging borrowers to review their repayment plans before options become more limited.

According to federal announcements and student loan advisers, several repayment programmes will close to new borrowers, while others will gradually phase out over the coming years.

Borrowers enrolled in the SAVE repayment plan could also be automatically moved to a different option if they fail to act within the required timeframe.

The Department of Education said borrowers who do not choose a new repayment plan within 90 days of being contacted by their loan servicer will automatically be placed into either the Standard Repayment Plan or the new Tiered Standard plan.

Borrowers with Parent PLUS loans are also being advised to consolidate their loans before July 1 in order to remain eligible for income-driven repayment programmes and Public Service Loan Forgiveness.

Jack Wallace, director of government and lender relations at Yrefy, warned borrowers to review their accounts immediately through studentaid.gov.

“If you wait, your available choices could narrow,” Wallace said.

The changes will also affect graduate borrowing limits and eliminate some repayment plans for future borrowers.

Under the new rules, most new borrowers after July 1 will only have access to two repayment options: the Standard Repayment Plan and the new Repayment Assistance Plan.