By: Alex Miller, Senior Personal Finance Editor, TipsClear.com
Reviewed by: Sarah Chen, CPA
Last Updated: September 5, 2025
What’s new for 2025: The federal student loan system has been fundamentally reshaped by new legislation and major court rulings. The “One Big Beautiful Bill Act” is now law, and the popular SAVE repayment plan is on hold. It is critical for all borrowers to review their repayment strategy now to avoid paying more than necessary and to stay on track for forgiveness.
Navigating federal student loans in 2025 feels more complicated than ever. Sweeping legislative changes and ongoing court battles have left many borrowers confused and anxious about their next steps. This guide cuts through the noise. We will provide a clear, step-by-step plan to help you understand exactly what has changed, what your options are, and what you need to do to take control of your student debt.
TL;DR: 2025 Student Loan Changes at a Glance
- The SAVE Plan is on hold. If you are enrolled in SAVE, your loans are in a special forbearance. Interest will restart on August 1, 2025, and this time will not count toward loan forgiveness. You need to switch to a different plan to keep making progress.
- A new law overhauls repayment. The “One Big Beautiful Bill Act” (OBBB Act) became law on July 4, 2025. It will phase out most existing Income-Driven Repayment (IDR) plans, like PAYE and ICR, over the next few years.
- A new repayment plan is coming. The OBBB Act creates a new primary income-driven plan called the Repayment Assistance Plan (RAP), which will become available by July 1, 2026.
- IBR is now easier to access. The OBBB Act removed the “partial financial hardship” requirement for the Income-Based Repayment (IBR) plan, making it available to more borrowers, including some Parent PLUS borrowers who consolidate their loans.
- The IDR Account Adjustment is complete. The one-time payment count adjustment was finished in late 2024, but the updated counts are temporarily hidden on StudentAid.gov for many borrowers due to the ongoing IDR court cases.
- Default relief has changed. The Fresh Start program has ended. However, the OBBB Act now allows borrowers to use the loan rehabilitation process twice to get out of default, instead of only once.
- Interest rates are up. New federal student loans disbursed for the 2025–2026 academic year have higher fixed interest rates than last year.
- A “tax bomb” is looming. The temporary federal tax exemption for forgiven student loan debt is set to expire on December 31, 2025. This means forgiveness received in 2026 or later could be treated as taxable income.
- PSLF rules are under review. The Department of Education has proposed new rules that could make the definition of a “qualifying employer” for Public Service Loan Forgiveness (PSLF) stricter, creating uncertainty for some public service workers.
What Changed in 2025 and Who It Affects
Your 5-Minute Account Check (Do This Today)
[ ] Log in to StudentAid.gov: Confirm your contact information (email and mailing address) is current.
[ ] Identify Your Loan Servicer: Find their name and contact information on your dashboard.
[ ] Check Your Current Repayment Plan: Is it SAVE, IBR, Standard, or something else?
[ ] Find Your Recertification Date: Look for your “IDR Anniversary Date” on your servicer’s website.
[ ] Review Your Loan Details: Note your total balance, interest rates, and loan types (Direct, FFEL, PLUS, etc.).
The SAVE Plan in 2025: Navigating the Standoff
The Saving on a Valuable Education (SAVE) plan, once the centerpiece of federal student loan repayment, is now in a state of limbo due to legal challenges. This creates an urgent situation for millions of borrowers.
What changed
In February 2025, a federal court injunction blocked the Department of Education (ED) from implementing key parts of the SAVE plan, including its generous interest subsidy and forgiveness provisions. As a result, all borrowers enrolled in SAVE were placed into a special administrative forbearance.
Initially, this forbearance came with a 0% interest rate. However, a later court ruling found the ED did not have the authority to offer this benefit outside of the now-blocked SAVE rules. Consequently, interest will begin accruing again on these loans starting August 1, 2025.
Who it affects
This directly impacts all 7.7 million borrowers who were enrolled in the SAVE plan, as well as anyone with a pending application for the plan.
Why it matters
This is the most critical issue for this group of borrowers. Time spent in this specific administrative forbearance does not count toward forgiveness under either IDR plans or Public Service Loan Forgiveness (PSLF). Starting August 1, 2025, your loan balance will begin to grow again from interest, but you will make zero progress toward forgiveness. You are effectively losing ground.
Deadlines
- August 1, 2025: Interest resumes accruing on your loans.
- Immediately: You should act now to switch to a different repayment plan to avoid this unproductive period.
What to do now
- Switch Your Repayment Plan: The Department of Education and loan servicers explicitly state that SAVE borrowers must switch to an alternative IDR plan (like IBR or ICR) to start making qualifying payments toward forgiveness again.
- Use the Loan Simulator: Go to the official Loan Simulator on StudentAid.gov to compare your estimated monthly payments on the available plans. This tool will help you see which plan is most affordable for you.
- Apply to Switch: You can apply to change your plan directly on StudentAid.gov/idr. The application is back online and servicers are processing requests.
Where to check
Log in to your loan servicer’s website (such as Nelnet, MOHELA, or Aidvantage) to confirm your loan status is listed as “SAVE Administrative Forbearance”. You can also see your official loan status on your StudentAid.gov dashboard.
Other IDR Plans in 2025: Your Best Alternatives
With the SAVE plan off the table, understanding the remaining Income-Driven Repayment (IDR) plans is essential. The OBBB Act has changed the landscape, making the Income-Based Repayment (IBR) plan a key option for many.
What changed
The OBBB Act, effective July 4, 2025, eliminated the “partial financial hardship” requirement for the IBR plan. Previously, your payment on a Standard 10-year plan had to be higher than your calculated IBR payment to qualify. Now, that test is gone, opening the door for more borrowers. The Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans are still available in 2025 but are scheduled to be phased out for new borrowers in the coming years.
Who it affects
The IBR change helps borrowers whose income was previously too high to qualify. It also creates a new pathway for some Parent PLUS borrowers to access an IDR plan for the first time. For the millions of borrowers leaving the SAVE plan, IBR and ICR are now the primary alternatives to consider.
Why it matters
IBR is now the most accessible and often most beneficial IDR plan for borrowers pursuing PSLF or long-term forgiveness. A key feature of IBR is that your monthly payment can never be higher than what you would pay on a 10-year Standard Repayment Plan. This “payment cap” is a crucial protection for high earners that the ICR plan does not offer.
Deadlines
- June 30, 2026: This is a key deadline for borrowers with certain loan types (like commercially-held FFEL loans) to consolidate them into a Direct Consolidation Loan. Doing so will preserve their ability to access ICR and IBR before future restrictions take effect.
What to do now
- Compare Plans: Use the Loan Simulator on StudentAid.gov to compare your estimated payments under IBR and ICR.
- Check Your IBR Terms: Your IBR terms depend on when you first took out federal loans. If you are a “new borrower” (first loan on or after July 1, 2014), you get the better terms: payments are 10% of your discretionary income and forgiveness occurs after 20 years. Older borrowers pay 15% over 25 years.
- Apply to Switch: Submit your application at StudentAid.gov/idr.
Where to check
Log in to your StudentAid.gov account and review your loan details. The “Aid Summary” section will show the disbursement dates of your loans, which will help you determine if you qualify for the more favorable “new borrower” IBR terms.
SAVE vs. IBR vs. ICR (2025)
PSLF Updates for 2025
The Public Service Loan Forgiveness program remains a vital pathway to debt relief for public servants, but it faces potential changes and new rules that borrowers must understand.
What changed
- Proposed Employer Rule: Following a March 2025 Executive Order, the ED published a proposed rule on August 18, 2025, that would change the definition of a “qualifying employer.” It would allow the Secretary of Education to disqualify organizations engaged in activities with a “substantial illegal purpose”. This rule is not yet final, and the definitions are broad, creating uncertainty.
- Consolidation Counting Rule: For any Direct Consolidation Loan made on or after September 1, 2024, the number of qualifying payments toward PSLF will be a weighted average of the payments made on the loans being consolidated. This replaces the temporary rule from the IDR Account Adjustment that gave the new loan the highest payment count of any of the underlying loans.
Who it affects
The proposed employer rule could potentially affect anyone working for a government or nonprofit employer, depending on how the final rule is written and enforced. The new consolidation rule affects any borrower with multiple federal loans that have different repayment histories who is considering consolidating them now.
Why it matters
The proposed employer rule introduces a significant new risk for PSLF participants. Borrowers may worry that their employer could be disqualified in the future, potentially invalidating years of service. The weighted average rule for consolidation is a permanent change that makes the decision to consolidate more complex. It is no longer an automatic way to accelerate your forgiveness timeline and now requires careful calculation.
Deadlines
- September 17, 2025: The public comment period for the proposed PSLF employer rule closes.
- July 1, 2026: The expected date the final PSLF rule will go into effect.
What to do now
- Certify Employment Annually: The best way to protect yourself is to create an official, ongoing record of your progress. Use the PSLF Help Tool on StudentAid.gov to complete and submit your PSLF form every year and whenever you change jobs.
- Calculate Before Consolidating: Do not consolidate loans with different payment histories without first calculating the impact of the weighted average.
- Submit a Public Comment: If you have concerns about the proposed employer rule, you can submit an official comment at Regulations.gov before the September 17 deadline.
PSLF Consolidation Example (Weighted Average)
- Scenario: You have two Direct Loans you want to consolidate in 2025.
- Loan A: $40,000 balance with 60 qualifying PSLF payments.
- Loan B: $20,000 balance with 0 qualifying PSLF payments.
- Calculation:
- Total Loan Balance:
$40,000 + $20,000 = $60,000 - Weighted Average Formula:
(($40,000 * 60) + ($20,000 * 0)) / $60,000 - Result:
2,400,000 / 60,000 = 40qualifying payments.
- Total Loan Balance:
- Your new consolidation loan would start with a credit of 40 payments, not the 60 you had on your older loan.
Where to check
Use the PSLF Employer Search Tool on StudentAid.gov to see if your employer is already in the database of qualifying employers. Track your certified payment count by logging into your StudentAid.gov account and viewing your loan details.
IDR Account Adjustment: Where It Stands in 2025
The one-time IDR Account Adjustment was a massive effort by the Department of Education to correct past errors in payment counting. The review is now complete, but accessing the results has become complicated.
What changed
The ED completed its review of all borrower accounts for the one-time adjustment in late 2024. In January 2025, it began displaying the updated payment counts on borrower dashboards on the StudentAid.gov website. However, due to the court injunctions blocking IDR plans, the ED has since temporarily removed this payment count display for many borrowers to comply with the court order.
Who it affects
This affects all borrowers with Direct or ED-held FFEL loans who were eligible for the adjustment and are waiting to see their final counts toward IDR or PSLF forgiveness.
Why it matters
The adjustment is complete, but its results are hidden for many. This means you may have already reached the 240 or 300 payments required for IDR forgiveness (or 120 for PSLF) but cannot see the final tally or have your loans discharged until the legal issues are resolved. Forgiveness processing under the adjustment is currently paused for all plans except IBR.
Deadlines
The deadline to consolidate non-Direct loans (like commercial FFEL and Perkins) to benefit from the adjustment was June 30, 2024. This deadline has passed.
What to do now
- Check for Hidden Data: While the visual counter is gone from most dashboards, you may be able to see the raw data. First, log in to your StudentAid.gov account. Then, copy and paste this URL into the same browser:
https://studentaid.gov/app/api/nslds/payment-counter/summary. This may display a text file with your data. Look for the “qualifyingpaymentcount” fields. - Review Your Loan History: Manually review your detailed loan status history on StudentAid.gov. Compare it against the adjustment rules: all time in repayment, periods of 12+ consecutive months of forbearance, or 36+ cumulative months of forbearance should have been counted.
- Dispute Errors: If you believe your count is wrong, first contact your loan servicer to request a review. If they cannot resolve it, file a formal complaint with the Federal Student Aid (FSA) Ombudsman Group.
Where to check
Your detailed loan history can be found by logging into StudentAid.gov, navigating to your dashboard, and selecting “View Details” in the “My Aid” section. From there, you can view the loan status history for each of your loans.
Default Relief and Collections in 2025
The temporary Fresh Start program, which offered a one-time opportunity for borrowers to easily exit default, ended on September 30, 2024. In 2025, borrowers in default must use traditional methods to get back in good standing, though a new law has made one of those options more flexible.
What changed
The Fresh Start program is no longer available. However, the OBBB Act included a provision that now allows borrowers to use loan rehabilitation twice, instead of only once, to cure a default. Collections on most defaulted loans, which were paused during the pandemic, are scheduled to resume in 2025. This includes involuntary collections like wage garnishment and the offset of tax refunds.
Who it affects
This affects any borrower with federal student loans currently in default or who may default in the future.
Why it matters
With involuntary collections restarting, it is more important than ever for defaulted borrowers to take action. Loan rehabilitation removes the record of default from your credit report and restores eligibility for federal student aid. The ability to use it a second time provides an important safety net.
Deadlines
There are no specific program deadlines, but action should be taken as soon as possible to avoid involuntary collections.
What to do now
You have two main options to get out of default:
Option 1: Loan Rehabilitation
- Contact the Default Resolution Group: Call them at 1-800-621-3115 or visit myeddebt.ed.gov.
- Agree to a Payment Plan: You must agree in writing to make nine voluntary, affordable monthly payments over a period of ten consecutive months.
- Provide Income Information: Your payment will be calculated based on your income. You will need to provide a copy of your tax return or fill out an Income and Expense form.
- Complete the Payments: After you make all nine on-time payments, your loan will be rehabilitated.
Option 2: Loan Consolidation
- Apply for a Direct Consolidation Loan: You can do this at StudentAid.gov.
- Choose a Repayment Plan: To consolidate out of default, you must agree to repay the new loan under an IDR plan, like IBR.
- Make Payments (Optional but Recommended): Alternatively, you can make three consecutive, on-time, full monthly payments on the defaulted loan before you consolidate it.
Where to check
Visit your dashboard on StudentAid.gov to confirm your loan status. If you are in default, your loans will be managed by the ED’s Default Resolution Group or a private collection agency.
Interest Rates and Origination Fees for 2025–2026
For new federal student loans disbursed between July 1, 2025, and June 30, 2026, interest rates have increased compared to the previous academic year. All federal student loan interest rates are fixed for the life of the loan.
2025–2026 Federal Loan Rates & Fees
A quick note on refinancing
With federal rates on the rise, private refinancing may seem appealing. Refinancing replaces your federal loans with a new private loan, potentially at a lower interest rate. However, this is a permanent decision. You will lose access to all federal benefits, including IDR plans, PSLF, and deferment or forbearance options. Given the uncertainty in the federal system, carefully weigh this trade-off before giving up these protections.
Income Recertification and Paperwork in 2025
If you are on an IDR plan like IBR or ICR, you must recertify your income and family size every year to stay on the plan and keep your payment amount based on your income.
What changed
Due to the court actions affecting IDR plans, the ED extended recertification deadlines for many borrowers. If your recertification date was scheduled between February 21, 2025, and January 31, 2026, your deadline has been pushed back by one year. Borrowers who were on the SAVE plan will have their first recertification deadline no earlier than February 1, 2026.
Who it affects
All borrowers currently enrolled in an IDR plan (IBR, ICR, PAYE).
Why it matters
Missing your recertification deadline has serious consequences. Your monthly payment will no longer be based on your income and will likely increase significantly to the amount you would owe on a 10-year Standard plan. Any unpaid interest will also be capitalized, meaning it is added to your principal balance, increasing the total amount you owe.
Deadlines
Your recertification deadline is unique to you. It is typically a year after you first entered your IDR plan or last recertified.
What to do now
How to Recertify Your Income:
- Find Your Deadline: Log in to your loan servicer’s website. Your IDR anniversary or recertification date should be clearly displayed in your account details. You can also find it on your StudentAid.gov account.
- Gather Your Documents: The easiest way to recertify is by using the online application at StudentAid.gov/idr and consenting to let the IRS directly transfer your tax information. If your income has decreased since you last filed taxes, you can submit alternative documentation, like recent pay stubs.
- Submit Your Application: Complete the IDR application online at least two weeks before your deadline to allow for processing time. You can also request a paper form from your servicer.
- Consider Auto-Recertification: When you apply, you can provide consent for the ED to automatically access your tax information each year. This will handle future recertifications for you, as long as you have Direct Loans and your servicer participates.
Where to check
Your loan servicer’s website is the best place to find your specific recertification deadline. It will also be listed on the annual renewal notices they send you.
Parent PLUS in 2025
Parent PLUS loans have fewer flexible repayment options than student loans, and the OBBB Act has created new urgency for parents seeking manageable payments.
What changed
The OBBB Act expanded eligibility for the IBR plan, creating a new pathway for Parent PLUS borrowers. However, the process is not straightforward. Parent PLUS loans themselves are not eligible for any IDR plan. To access IBR, a parent must first consolidate their Parent PLUS loans into a Direct Consolidation Loan, enroll that new loan in the ICR plan, make at least one payment, and then they can apply for the IBR plan.
Who it affects
Parents with federal PLUS loans who are struggling with their monthly payments and are not pursuing PSLF.
Why it matters
For many parents, the standard, graduated, or extended repayment plans result in unaffordable payments. The ICR plan is often their only income-based option, but its payment formula (20% of discretionary income) can still be high. The new ability to access IBR (which uses a 10% or 15% formula and has a payment cap) could provide significant relief.
Deadlines
There are no immediate deadlines, but parents who need a lower payment should begin the consolidation process as soon as possible, as it can take several weeks.
What to do now
- Consolidate Your Parent PLUS Loans: If you have Parent PLUS loans, you must first consolidate them into a new Direct Consolidation Loan. You can apply at StudentAid.gov.
- Enroll in ICR: When you consolidate, you must choose the Income-Contingent Repayment (ICR) plan for the new consolidation loan. This is the only IDR plan directly available to a consolidation loan that contains Parent PLUS loans.
- Make One Payment: After your consolidation is complete and you are on ICR, you must make at least one full payment.
- Apply for IBR: Once you have made one ICR payment, you can then apply to switch to the IBR plan through StudentAid.gov/idr.
Where to check
Log in to StudentAid.gov to see your loan types. If they are listed as “Parent PLUS,” they are not eligible for IDR directly. You must go through the consolidation process described above.
Taxes and Forgiveness in 2025
A temporary provision in federal law has made most student loan forgiveness tax-free. However, this critical protection is set to expire, creating a potential “tax bomb” for borrowers.
What changed
The American Rescue Plan Act of 2021 made all student loan forgiveness federally tax-free through December 31, 2025. The OBBB Act did not extend this provision. This means that any loan balance forgiven on or after
January 1, 2026, could be considered taxable income by the IRS.
Who it affects
This primarily affects borrowers who are expecting forgiveness through an IDR plan (like IBR or ICR) in 2026 or beyond. Forgiveness through the PSLF program is, and will remain, federally tax-free by a separate provision of the law.
Why it matters
If your forgiven debt is treated as income, you could face a substantial, unexpected tax bill in the year your loans are discharged. For example, if you have $50,000 forgiven and are in the 22% federal tax bracket, you could owe an additional $11,000 in federal taxes. This could also push you into a higher tax bracket.
Deadlines
- December 31, 2025: The federal tax exemption for student loan forgiveness expires.
What to do now
- Estimate Your Forgiveness Date: Use the Loan Simulator on StudentAid.gov to project when you will reach your 20- or 25-year IDR forgiveness milestone.
- Plan for Potential Taxes: If your forgiveness date is in 2026 or later, start planning for a potential tax liability. You may want to set aside money in a dedicated savings account.
- Check Your State’s Laws: Even before the federal exemption expires, some states may treat forgiven student debt as taxable income. Check with your state’s department of revenue or a tax professional to understand the rules where you live.
- Consult a Professional: If you are expecting a large amount of forgiveness, it is wise to consult with a tax advisor to plan accordingly.
Where to check
Review IRS Publication 970, Tax Benefits for Education, for official guidance. You can also check your state’s department of revenue website for information on how it treats forgiven debt.
Servicer Changes and Account Transfers
The Department of Education uses private companies, known as servicers, to manage billing and customer service for federal student loans. Your servicer can change, and it’s your responsibility to ensure a smooth transition.
What changed
Servicer contracts with the ED can expire, or loan portfolios can be moved for administrative reasons. For example, in 2025, the ED announced it would transfer a portion of MOHELA’s PSLF portfolio to other servicers to improve service delivery. Servicer changes are a routine part of the federal loan system.
Who it affects
Any federal student loan borrower can have their loan servicer changed. You do not get to choose your servicer.
Why it matters
While a transfer should not change your loan balance, interest rate, or terms, mistakes can happen. Payment records can be lost, and autopay information may not transfer correctly. This is especially critical for borrowers tracking payments toward forgiveness programs like PSLF or IDR, where every payment counts.
Deadlines
You will typically receive notices via email and mail from both your old and new servicer about two weeks before a transfer is scheduled to occur.
What to do now
- Watch for Notices: Pay close attention to all communications from the Department of Education and your loan servicer.
- Save Your Records: Before the transfer, log in to your current servicer’s website and download your complete payment history and any important documents, like correspondence about forbearance or IDR plan approvals.
- Create Your New Account: Once the transfer is complete, you will need to create a new online account with your new servicer.
- Verify Everything: Log in to the new portal and carefully check that your loan balance, interest rate, repayment plan, and contact information are all correct.
- Re-enroll in Autopay: Your automatic payment setup will not transfer. You must re-enroll with the new servicer to continue getting the 0.25% interest rate discount.
- File a Complaint if Needed: If you encounter problems that your new servicer cannot resolve, you can file a complaint with the FSA Ombudsman or the Consumer Financial Protection Bureau (CFPB).
Where to check
You can always find your current loan servicer by logging into your StudentAid.gov account. Their name and contact information will be displayed on your main dashboard.
Private Refinancing in 2025
Refinancing means taking out a new loan with a private lender to pay off your existing federal student loans. While it can sometimes offer a lower interest rate, it comes with significant risks.
When it may make sense
Refinancing might be considered if you have a high income, excellent credit, a stable job, and are not pursuing any federal forgiveness programs like PSLF or IDR. If you can secure a significantly lower fixed interest rate than your federal loans, you could save money on interest over time and potentially pay off your loans faster.
Risks and what you lose
When you refinance federal loans, they become private loans forever. There is no going back. You permanently lose access to all federal protections and benefits, including :
- Income-Driven Repayment Plans: You will lose the ability to base your payments on your income.
- Loan Forgiveness Programs: You will no longer be eligible for PSLF or IDR forgiveness.
- Generous Deferment and Forbearance: Federal loans offer extensive options to pause payments due to unemployment, economic hardship, or returning to school. Private lenders’ options are far more limited.
- Discharge Options: You lose eligibility for federal discharge programs for death, total and permanent disability, or school closure.
Given the major changes and uncertainty in the federal system, these protections are more valuable than ever. For most borrowers, the potential savings from a lower interest rate do not outweigh the loss of this crucial safety net.
Your 30-Day Action Plan
[ ] Week 1: Assess Your Situation. * Complete the “5-Minute Account Check” from the beginning of this guide. * If you are on the SAVE plan, use the Loan Simulator on StudentAid.gov to identify the best alternative IDR plan (likely IBR). * If you are pursuing PSLF, use the PSLF Help Tool to generate and submit an updated employment certification form.
[ ] Week 2: Take Action on Your Repayment Plan. * If you were on SAVE, submit your application to switch to IBR or another plan at StudentAid.gov/idr. * If you need to recertify your income soon, submit your recertification application online.
[ ] Week 3: Verify and Document. * Check your servicer’s website to confirm your application to switch plans or recertify has been received. * Download and save a complete copy of your payment history and loan details from your servicer’s website and StudentAid.gov.
[ ] Week 4: Plan for the Future. * Set a calendar reminder for your new annual IDR recertification date. * If you expect IDR forgiveness after 2025, begin researching the tax implications in your state. * Explore our other resources on budgeting and to manage your new payment.
Glossary of Key Terms
- Discretionary Income: The amount of your income used to calculate IDR payments. It is typically your Adjusted Gross Income (AGI) minus a percentage of the Federal Poverty Guideline for your family size.
- Forbearance: A temporary pause on your student loan payments. Interest typically accrues during forbearance.
- IDR (Income-Driven Repayment): A set of federal repayment plans that base your monthly payment on your income and family size.
- IBR (Income-Based Repayment): An IDR plan that caps payments at 10% or 15% of discretionary income and offers forgiveness after 20 or 25 years.
- ICR (Income-Contingent Repayment): An IDR plan that is the only option for consolidated Parent PLUS loans.
- OBBB Act (One Big Beautiful Bill Act): A major piece of legislation signed into law on July 4, 2025, that significantly reforms the federal student loan system.
- PSLF (Public Service Loan Forgiveness): A program that forgives the remaining federal student loan balance for eligible public service workers after 10 years of service and 120 qualifying payments.
Frequently Asked Questions (FAQ)
What is new with the SAVE plan in 2025?
The SAVE plan has been paused by court order. Borrowers enrolled in it are in an administrative forbearance. Interest will restart on these loans on August 1, 2025, and time in this forbearance does not count toward forgiveness. You must switch to another plan like IBR to continue making progress.
When do I need to recertify my income in 2025?
Many borrowers had their deadlines extended. If your recertification date was between February 21, 2025, and January 31, 2026, it has been pushed back one year. Check your loan servicer’s website for your exact “IDR Anniversary Date”.
Is student loan forgiveness taxable in 2025?
Through December 31, 2025, student loan forgiveness is not considered taxable income at the federal level. This tax exemption is set to expire on January 1, 2026. Forgiveness received after that date may be subject to federal income tax. Some states may have different laws.
What if I missed the IDR Account Adjustment consolidation deadline?
The deadline to consolidate non-Direct loans to benefit from the one-time IDR Account Adjustment was June 30, 2024. If you missed this deadline, you can still consolidate, but you will not receive the retroactive credit from the adjustment. Your new consolidation loan will start with a payment count of zero (or a weighted average for PSLF).
How do Parent PLUS loans work in 2025?
Parent PLUS loans have limited repayment options. To access an income-driven plan, you must first consolidate the PLUS loans into a Direct Consolidation Loan, enroll in the ICR plan, make one payment, and then you can apply for the IBR plan.
What are the 2025–2026 federal loan interest rates?
For the 2025–2026 academic year, the fixed interest rate for new undergraduate Direct Loans is 6.39%, for graduate Direct Unsubsidized Loans is 7.94%, and for Direct PLUS Loans is 8.94%.
How do I fix wrong PSLF or IDR counts?
First, contact your loan servicer to request a manual review of your account. If that does not resolve the issue, you can submit a complaint to the Federal Student Aid (FSA) Ombudsman Group or the Consumer Financial Protection Bureau (CFPB).
Conclusion
The student loan landscape in 2025 is defined by major transitions. While the changes can seem overwhelming, they also create clear paths for action. For borrowers on the paused SAVE plan, the most urgent step is to switch to an eligible IDR plan like IBR to ensure your payments continue to count toward forgiveness. For all borrowers, now is the time to be proactive. Use the checklists in this guide to perform a full review of your account, verify your repayment plan, and understand your deadlines. By taking these concrete steps, you can navigate the new rules and build a sustainable strategy for managing your student debt.
Explore our for more tools and guides to help you on your repayment journey.
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Consult with a qualified professional for advice tailored to your specific situation.
Sources
- Federal Student Aid. (2025, August 15). One Big Beautiful Bill Act Updates. StudentAid.gov.
- U.S. Department of Education. (2025, July 18). Federal Student Loan Program Provisions Effective Upon Enactment Under One Big Beautiful Bill Act. FSA Partners.
- Nelnet. (2025). SAVE Plan Forbearance. Nelnet.studentaid.gov.
- Federal Student Aid. (2025). Interest Rates and Fees for Federal Student Loans. StudentAid.gov.
- U.S. Department of Education. (2025, July 9). U.S. Department of Education Continues to Improve Federal Student Loan Repayment Options, Addresses Illegal Biden Administration Actions. ED.gov.
- Federal Student Aid. (2025). IDR Plan Court Actions: Impact on Borrowers. StudentAid.gov.
- Federal Student Aid. (2025). Public Service Loan Forgiveness (PSLF). StudentAid.gov.
- Internal Revenue Service. (2024). Publication 970, Tax Benefits for Education. IRS.gov.
- Newsweek. (2025, September 2). Student Loan Update: Borrowers May Still Owe Thousands After Forgiveness. Newsweek.com.
- Federal Student Aid. (2025). Payment Count Adjustments Toward Income-Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF) Programs. StudentAid.gov.
