The new rules just dropped

Quick housekeeping before the news: my AMA is this Saturday at 11:00 AM Eastern. Bring whatever you’ve been sitting on — IDR, PSLF, default, collections, refi, parent PLUS, the SAVE wind-down. If you don’t know who to ask, ask me.

Three things landed on my desk this week, and they tell one story.

The biggest one came in this morning. The Department of Education dropped the final rule implementing the student loan provisions of the One Big Beautiful Bill Act — officially called the Working Families Tax Cuts Act. They’ve been working on these regs since the RISE Committee started negotiating last fall.

The rule landed today, and most of it kicks in on July 1, 2026.

A few pieces matter for almost everyone reading this.

1/ Repayment plans. Two new plans become available July 1, 2026 — a Tiered Standard plan and a new income-driven plan called the Repayment Assistance Plan (RAP). Anyone taking out a loan after that date will only have those two options. The older income-driven plans — PAYE, ICR, IBR — sunset on July 1, 2028. One nuance worth flagging: if you’re currently enrolled in IBR, you stay in IBR. The sunset closes new enrollments; it doesn’t kick existing borrowers out.

2/ Married borrowers. RAP prorates the income calculation across both spouses. Under the older income-driven plans, when both spouses have federal loans, each spouse’s payment was calculated based on the full household income — the same dollars appearing on both borrowers’ bills. RAP splits it. For a lot of couples, that meaningfully changes the math on whether to file taxes jointly or separately, and it’s one of the more concrete wins in the new plan.

3/ Rehabilitation. Starting July 1, 2027, you can rehabilitate a defaulted loan twice instead of once. That limit applies per loan, not per borrower. The process gets cleaner too — at the time you sign your rehab agreement, you can opt into an IDR plan that takes effect automatically once rehab finishes, so there’s no servicer-call gap on the back end.

4/ Parent PLUS. For the first time, Parent PLUS has loan caps — $20,000 per year and $65,000 per dependent over the lifetime. And here’s the wrinkle: Parent PLUS borrowers can’t use RAP. With the older income-driven plans closing to new enrollments, any Parent PLUS borrower who isn’t already in an IDR plan will only have Tiered Standard going forward.

The fact sheet covers more — caps for graduate and professional students, the end of Grad PLUS for new borrowers, sunset of economic hardship and unemployment deferments, the new $10 minimum payment under RAP, and full interest waivers when on-time payments don’t cover accruing interest. The full picture: RISE final rule fact sheet. The Department’s press releaseis here.

On another note, Sen. Gillibrand (D-NY) sent a letter to the Department of Education last week, pressing it on the backlog of IDR and PSLF Buyback applications. The court-mandated status report showed nearly 554,000 IDR applications still outstanding at the end of March. Her question — and it’s the right one — is what happens when 7 million SAVE borrowers are pushed into a 90-day window to pick a new plan, and the agency can’t keep up with the queue. You can read her letter here and the press release here.

PBS picked up the same thread this week. Their piece quotes advocates and economists who say we’re heading toward the worst default rates in decades, and the data is starting to back them up. Around 16% of borrowers in repayment are now seriously delinquent — more than 90 days late — compared to about 10% before the pandemic. If you want a sense of how widespread this is, the piece is worth your time: As student loan defaults rise, experts worry about what’s next.

Put those three together, and the picture is simple: the rules are changing, the agency running them is buried, and more borrowers are sliding into trouble every month. If you’ve got something pending — a recertification, a forgiveness application, a default fix — this is the worst time to wait.

If you’re in default, or staring down the SAVE transition, or just trying to figure out which lever to pull next, bring it to the AMA Saturday.

Here’s the registration link: https://stanleytate.typeform.com/ama-monthly?utm_source=newsletter

Or if you’d rather talk it through one-on-one, you can book a call here: https://www.tateesq.com/book-a-call

Quick update on the Pennsylvania case — the one where we’re reopening a 2013 bankruptcy to discharge student loans the family still has.

The judge was hostile. She was shocked that I interpreted the rules as allowing you to reopen a case at any time to discharge student loan debt. She was also under the impression we’d have to argue the facts as they were when the case closed. I had to tell her plainly that the rules say “any time” and mean it, and that you evaluate the facts as they are today — the old discharge order is just the hook that gets you back in court.

She ordered me to submit a memorandum answering a few questions. I did. Now we wait.

What’s frustrating is that my clients took a day off work and drove out for a hearing that yielded nothing but skepticism about a routine procedure.

For context, I reopened a 20-year-old case in Connecticut earlier this year and a 2010 case in the Northern District of Georgia this week. There’s nothing exotic about this.

I expect she’ll rule against us anyway. We’ll appeal if she does.

The lesson, if you’re ever hiring a lawyer for this kind of work: make sure they know the procedure cold. The law is the same everywhere; the judge in front of you isn’t.

I’ll keep you posted. Memorandum here if you want to read it.