A big change is coming to the Parent PLUS loan program this summer: borrowers taking out loans for the 2026–27 school year and beyond will no longer qualify for Income-Contingent Repayment (ICR), the lone safety net program that has been available to parent-borrowers. The new policy, part of Congress’s 2025 reconciliation law, makes the loan program riskier for families’ long-term financial health.
To make matters worse, families thinking about taking out a Parent PLUS loan may not know that their safety net has disappeared. News of the policy change has been overshadowed by a multitude of co-occurring reforms as well as the dismantling of agencies that could have otherwise helped the information reach borrowers.
Now is a crucial period for information delivery, since it is during the summer months that parents take out Parent PLUS loans to fill financing gaps before their children enroll. State governments need to pick up the slack and warn potential borrowers that Parent PLUS loans are no longer a viable option for low-income families, given the newly heightened risk of a decades-long unpayable debt burden.
News of Parent PLUS Repayment Changes Lost Amid a Flurry of Reform
This week, a multitude of laws governing college financial aid will change all at once, when the zone is flooded by a decade’s worth of reform taking effect July 1.
The list of changes is long and complex. The Workforce Pell Grant program will come online, reshaping workforce development. The Grad PLUS loan program will go offline, coinciding with new federal student loan limits that will cap borrowing for graduate students and parent-borrowers, sending many to the private market and narrowing access to fields such as medical education for students from lower-income families. In addition, elimination of some student loan repayment options will cost borrowers an estimated $270 billion over the next ten years starting July 1. This all occurs against the backdrop of borrowers formerly on the SAVE Plan having to opt for a new plan on the heels of a legal settlement ending the plan.
With so many changes taking place, it is easy to miss the major news about Parent PLUS, the federal loan program in which parents borrow for their children’s undergraduate education, through which roughly 600,000 families borrowed loans last year. Last summer’s One Big Beautiful Bill Act (OBBBA) stipulates that, unlike loans borrowed before July 1, 2026, Parent PLUS loans borrowed on or after that date lack eligibility for Income-Contingent Repayment and can only be repaid through the fixed-term standard plan. Going forward, those borrowers will have little recourse if they find that their monthly bills exceed what they can afford to pay.
While it may not be the most well-known aspect of the new law, it is the most critical change for parents who are taking on these loans. If parents are not informed about this major new change, they might take out loans on outdated assumptions about their repayment options—only to struggle to stay afloat in the years to come.
Why Losing ICR Puts Parent PLUS Borrowers in Financial Danger
Parent PLUS borrowers have never enjoyed a strong safety net, having always been ineligible for the most generous repayment plans despite paying the highest interest rates among the federal student loan programs (9.07 percent for the 2026–27 school year).
The only lifeline available to Parent PLUS borrowers was that they could consolidate their loans and then gain access to Income-Contingent Repayment, which caps payments at 20 percent of adjusted gross income (AGI) above the federal poverty line. ICR offered low-income families a significant reduction in their monthly payment: a married couple with two dependent children that earned $45,000 per year in AGI and took out a $35,000 loan at 9 percent interest would pay $200 per month on ICR, compared to $355 on the new tiered standard plan, a 77 percent difference. In 2024, one-tenth of all Parent PLUS borrowers, or 303,000 in total, were on ICR; of those on ICR, one-quarter qualified for a $0 payment, meaning they live under the federal poverty line.
Even though the terms of ICR are less generous than other plans, such as the soon to be eliminated Saving on A Valuable Education (SAVE) plan, a family could use ICR to lower their bills amidst any number of disruptions, such as long-term unemployment, divorce or the death of a spouse, having less time for work as caregiving obligations increase, or the onset of a disability. Indexing monthly payments to a borrower’s income limits how high student loan bills can be. Importantly, the reduction in monthly payments would allow some families to continue paying back their loans, rather than default entirely because they could not afford the original monthly payment amount. After twenty-five years of making payments on ICR, any remaining balance would be forgiven.
But under OBBBA, for those borrowing any amount of Parent PLUS loans after July 1—no matter how small—the entire balance will only be eligible for the tiered standard plan and no others, and they cannot reduce their regular monthly payment. Critically, all pre-existing Parent PLUS loan debt becomes subject to the same restriction if borrowers borrow again on or after July 1. The financial ramifications are significant for those taking out the loans for the 2026–27 year, who will still number in the hundreds of thousands even if borrower totals dip. And as families face more expensive student loan bills, other changes from OBBBA will also strain their resources, such as cuts to Medicaid and SNAP.
It is already well-established that Parent PLUS borrowers can languish in repayment. At the end of 2024, 17 percent of Parent PLUS borrowers were in default, more than half a million in total. In 2022, The Century Foundation found that, three years after entering repayment, Parent PLUS default rates are disproportionately high for the parents of students who did not complete college and for the parents of Pell Grant recipients.
If the financial profile of Parent PLUS borrowers remains the same, these trends could worsen under the new changes to the federal student loan system. Even more than before, it is risky for parents to borrow the loans without strong confidence they can cover their bill every month. If a family cannot reduce their monthly payment (as is the case under the new law), and if they cannot increase their income (as is normally true for parents who are already late in their careers when their children enroll in college), then they will simply be out of options.
Despite the changes, a few things will remain true. The penalties for Parent PLUS default will remain severe, including the garnishment of Social Security benefits; the government will still approve loans even for those who show serious likelihood of default; and many borrowers will still trust the federal government as a lending source, underrating the risk of the loans. Those all will remain true—but now, the safety net is weaker.
Congress’s reforms to Parent PLUS loan repayment may have been intended to further disincentivize low-income families from taking out Parent PLUS loans, perhaps making different enrollment decisions. But families can only respond to the policy changes if they know about them. Whether they know depends on the quality of information they receive.
The Information Ecosystem Isn’t Keeping Pace with the Law
Do families considering Parent PLUS loans know that they are borrowing with almost no safety net? We see reasons for concern.
We reviewed the major websites that families may turn to for information about borrowing Parent PLUS loans. As of early June, a dozen articles from financial institutions and financial advice companies, which are either undated or dated from 2025 or 2026, stated that Parent PLUS borrowers can consolidate and access income-driven payments through ICR. Even the Consumer Financial Protection Bureau (CFPB), a federal agency, has that outdated information on their website at the time of this article’s publication.
While that information was technically accurate for the month of June, it reflects a lame duck policy: for borrowers who would be considering Parent PLUS to support a child enrolled in the 2026–27 school year, only the rules that take effect July 1 matter.
We emailed the authors of the articles with outdated information, encouraging them to update the articles, and four revised the articles by the time of this article’s publication. And, to its credit, the U.S. Department of Education’s website has accurately stated that those who borrow Parent PLUS after July 1, 2026 will have no access to income-driven plans.
Still, borrowers who don’t do thorough research may trust only the first or second site they visit. Moreover, in late May, ChatGPT still provided the “lame duck” information when queried about Parent PLUS.
It is an especially difficult time to communicate these changes because, since the passage of OBBBA, borrowers could still consolidate their Parent PLUS loans and, further, have had strong reasons to. Under OBBBA, a borrower whose Parent PLUS loan is consolidated and a new loan is disbursed before July 1, 2026 (followed by enrollment in an income-driven repayment plan and at least one payment by July 1, 2028) is eligible for more favorable plans. But, since a consolidation application can take weeks to process, the window for seeking such approval realistically has long since closed.
Four Things States Must Do to Inform Potential Parent PLUS Borrowers
Loss of ICR eligibility is not even the only change taking effect on July 1 that Parent PLUS loan borrowers must account for. OBBBA also caps the annual and aggregate parents can borrow through Parent PLUS, a change that is expected to impact mostly higher-income families.
While concern about Parent PLUS loan limits for certain institutions is well-placed, changes to Parent PLUS loan repayment will likely jeopardize financial wellbeing for a greater number of families. Even loan amounts that are less than half of the caps’ amounts could still prove devastating for a family who finds the bills more than they can handle.
A handful of websites correcting their content certainly won’t fill all information gaps. With the federal government unlikely to mobilize to disseminate accurate information in time, states must take action to safeguard parent borrowers by informing of the important policy changes. States should take the four following actions.
1. Conduct audits of their public-facing information.
States should review the information they disseminate about Parent PLUS and ICR and look for opportunities to fill information gaps for families. As positive examples, the Massachusetts Office of the Attorney General and the Michigan Office of the Treasury took proactive action this past winter to inform parents about the Parent PLUS consolidation deadline. Through their websites, states can help families understand the risks of Parent PLUS loans under the new law and, where relevant, provide the contact information of state government staff who can help them understand the new policy environment. As the examples above demonstrate, the exact office who is best suited for this will vary from state to state.
2. Proactively communicate to the staff in their university systems or high schools about the policy change for Parent PLUS.
Beyond published information, people also receive financial recommendations from friends and family, financial advisors, their children’s high school guidance counselors, and the financial aid administrators at their children’s colleges. With so many changes to keep track of, even the most well-informed of these individuals may not know about Parent PLUS repayment changes. States should proactively communicate to the staff in their university systems and high schools about the policy change for Parent PLUS, so that they can help families properly assess risk when discussing financial aid options.
3. Assess whether they and their institutions can cover these families’ financial need through grant aid rather than Parent PLUS loans.
States and universities don’t always make the best choices for their students who need aid. A recent study by New America identifies forty-one universities that distributed Parent PLUS loans to 32,000 low-income families, while those same universities directed $2 of every $5 in their institutional aid to students from high-income families. And The Century Foundation has found that at least $10 billion in state and institutional grants are awarded every year to families who don’t need the aid, representing a large volume of funds that could help low-income families bypass the need for Parent PLUS altogether. Given the economic harms that Parent PLUS loans can cause, it is in states’ interests to allocate grants with affordability as the key goal (rather than tuition revenue at any cost) in order to reduce the burden of Parent PLUS repayment on low-income families.
And for those who have already started borrowing, grant aid can still help. Total loan amount matters for the borrower’s overall burden under the tiered standard plan. Long-term risk multiplies with each semester of borrowing; each new semester is an opportunity for states and colleges to ensure the borrowers understand the terms of the program. If families realize that their loan repayment options are not what they thought they were, colleges should prioritize them for grant aid so that they don’t need to borrow as much for their child’s remaining semesters; states should encourage this at their public institutions.
4. Inform borrowers having difficulty in repayment that they can request a forbearance.
While ICR is gone as an option, borrowers can request a forbearance and pause their repayment. Under OBBBA, those forbearances are capped at nine months within any twenty-four-month period. A key difference between ICR and forbearance is that forbearance does not create any path to cancellation. However, given that Parent PLUS borrowers have no income-driven options moving forward, it is vital that they get whatever relief they can in the event of job loss, disability, or any other disruption to their financial lives. State student loan ombudsmen can help families navigate the forbearance process, and states currently lacking those roles should create them.
Looking Ahead
It is too soon to say exactly how the Parent PLUS repayment changes will play out. Some families may opt for a lower-cost college in order to dodge the loans entirely; others may take out the loans and manage just fine; others may take out the loans and struggle. Some families may, with full knowledge of the limited safety net, borrow anyway, especially if they see the child’s education as a door to a better life. But first, they deserve that full knowledge.
One day, Congress may reduce the need for Parent PLUS loans through stronger grant aid or initiatives to reduce tuition. Until that happens, people need to be fully aware before they sign the dotted line, especially as the stakes for their long-term financial health rise.
Tags: student loans, parent plus loans, IDR
The Parent PLUS Safety Net Is Gone. Will Families Know Before They Borrow?
A big change is coming to the Parent PLUS loan program this summer: borrowers taking out loans for the 2026–27 school year and beyond will no longer qualify for Income-Contingent Repayment (ICR), the lone safety net program that has been available to parent-borrowers. The new policy, part of Congress’s 2025 reconciliation law, makes the loan program riskier for families’ long-term financial health.
To make matters worse, families thinking about taking out a Parent PLUS loan may not know that their safety net has disappeared. News of the policy change has been overshadowed by a multitude of co-occurring reforms as well as the dismantling of agencies that could have otherwise helped the information reach borrowers.
Now is a crucial period for information delivery, since it is during the summer months that parents take out Parent PLUS loans to fill financing gaps before their children enroll. State governments need to pick up the slack and warn potential borrowers that Parent PLUS loans are no longer a viable option for low-income families, given the newly heightened risk of a decades-long unpayable debt burden.
News of Parent PLUS Repayment Changes Lost Amid a Flurry of Reform
This week, a multitude of laws governing college financial aid will change all at once, when the zone is flooded by a decade’s worth of reform taking effect July 1.
The list of changes is long and complex. The Workforce Pell Grant program will come online, reshaping workforce development. The Grad PLUS loan program will go offline, coinciding with new federal student loan limits that will cap borrowing for graduate students and parent-borrowers, sending many to the private market and narrowing access to fields such as medical education for students from lower-income families. In addition, elimination of some student loan repayment options will cost borrowers an estimated $270 billion over the next ten years starting July 1. This all occurs against the backdrop of borrowers formerly on the SAVE Plan having to opt for a new plan on the heels of a legal settlement ending the plan.
With so many changes taking place, it is easy to miss the major news about Parent PLUS, the federal loan program in which parents borrow for their children’s undergraduate education, through which roughly 600,000 families borrowed loans last year.1 Last summer’s One Big Beautiful Bill Act (OBBBA) stipulates that, unlike loans borrowed before July 1, 2026, Parent PLUS loans borrowed on or after that date lack eligibility for Income-Contingent Repayment and can only be repaid through the fixed-term standard plan. Going forward, those borrowers will have little recourse if they find that their monthly bills exceed what they can afford to pay.
While it may not be the most well-known aspect of the new law, it is the most critical change for parents who are taking on these loans. If parents are not informed about this major new change, they might take out loans on outdated assumptions about their repayment options—only to struggle to stay afloat in the years to come.
Why Losing ICR Puts Parent PLUS Borrowers in Financial Danger
Parent PLUS borrowers have never enjoyed a strong safety net, having always been ineligible for the most generous repayment plans despite paying the highest interest rates among the federal student loan programs (9.07 percent for the 2026–27 school year).
The only lifeline available to Parent PLUS borrowers was that they could consolidate their loans and then gain access to Income-Contingent Repayment, which caps payments at 20 percent of adjusted gross income (AGI) above the federal poverty line.2 ICR offered low-income families a significant reduction in their monthly payment: a married couple with two dependent children that earned $45,000 per year in AGI and took out a $35,000 loan at 9 percent interest would pay $200 per month on ICR, compared to $355 on the new tiered standard plan, a 77 percent difference.3 In 2024, one-tenth of all Parent PLUS borrowers, or 303,000 in total, were on ICR; of those on ICR, one-quarter qualified for a $0 payment, meaning they live under the federal poverty line.4
Even though the terms of ICR are less generous than other plans, such as the soon to be eliminated Saving on A Valuable Education (SAVE) plan, a family could use ICR to lower their bills amidst any number of disruptions, such as long-term unemployment, divorce or the death of a spouse, having less time for work as caregiving obligations increase, or the onset of a disability. Indexing monthly payments to a borrower’s income limits how high student loan bills can be. Importantly, the reduction in monthly payments would allow some families to continue paying back their loans, rather than default entirely because they could not afford the original monthly payment amount. After twenty-five years of making payments on ICR, any remaining balance would be forgiven.
But under OBBBA, for those borrowing any amount of Parent PLUS loans after July 1—no matter how small—the entire balance will only be eligible for the tiered standard plan and no others, and they cannot reduce their regular monthly payment.5 Critically, all pre-existing Parent PLUS loan debt becomes subject to the same restriction if borrowers borrow again on or after July 1. The financial ramifications are significant for those taking out the loans for the 2026–27 year, who will still number in the hundreds of thousands even if borrower totals dip. And as families face more expensive student loan bills, other changes from OBBBA will also strain their resources, such as cuts to Medicaid and SNAP.
It is already well-established that Parent PLUS borrowers can languish in repayment. At the end of 2024, 17 percent of Parent PLUS borrowers were in default, more than half a million in total. In 2022, The Century Foundation found that, three years after entering repayment, Parent PLUS default rates are disproportionately high for the parents of students who did not complete college and for the parents of Pell Grant recipients.
If the financial profile of Parent PLUS borrowers remains the same, these trends could worsen under the new changes to the federal student loan system. Even more than before, it is risky for parents to borrow the loans without strong confidence they can cover their bill every month. If a family cannot reduce their monthly payment (as is the case under the new law), and if they cannot increase their income (as is normally true for parents who are already late in their careers when their children enroll in college), then they will simply be out of options.
Despite the changes, a few things will remain true. The penalties for Parent PLUS default will remain severe, including the garnishment of Social Security benefits; the government will still approve loans even for those who show serious likelihood of default; and many borrowers will still trust the federal government as a lending source, underrating the risk of the loans. Those all will remain true—but now, the safety net is weaker.
Congress’s reforms to Parent PLUS loan repayment may have been intended to further disincentivize low-income families from taking out Parent PLUS loans, perhaps making different enrollment decisions. But families can only respond to the policy changes if they know about them. Whether they know depends on the quality of information they receive.
The Information Ecosystem Isn’t Keeping Pace with the Law
Do families considering Parent PLUS loans know that they are borrowing with almost no safety net? We see reasons for concern.
We reviewed the major websites that families may turn to for information about borrowing Parent PLUS loans.6 As of early June, a dozen articles from financial institutions and financial advice companies, which are either undated or dated from 2025 or 2026, stated that Parent PLUS borrowers can consolidate and access income-driven payments through ICR. Even the Consumer Financial Protection Bureau (CFPB), a federal agency, has that outdated information on their website at the time of this article’s publication.7
While that information was technically accurate for the month of June, it reflects a lame duck policy: for borrowers who would be considering Parent PLUS to support a child enrolled in the 2026–27 school year, only the rules that take effect July 1 matter.
We emailed the authors of the articles with outdated information, encouraging them to update the articles, and four revised the articles by the time of this article’s publication. And, to its credit, the U.S. Department of Education’s website has accurately stated that those who borrow Parent PLUS after July 1, 2026 will have no access to income-driven plans.
Still, borrowers who don’t do thorough research may trust only the first or second site they visit. Moreover, in late May, ChatGPT still provided the “lame duck” information when queried about Parent PLUS.8
It is an especially difficult time to communicate these changes because, since the passage of OBBBA, borrowers could still consolidate their Parent PLUS loans and, further, have had strong reasons to. Under OBBBA, a borrower whose Parent PLUS loan is consolidated and a new loan is disbursed before July 1, 2026 (followed by enrollment in an income-driven repayment plan and at least one payment by July 1, 2028) is eligible for more favorable plans.9 But, since a consolidation application can take weeks to process, the window for seeking such approval realistically has long since closed.
Four Things States Must Do to Inform Potential Parent PLUS Borrowers
Loss of ICR eligibility is not even the only change taking effect on July 1 that Parent PLUS loan borrowers must account for. OBBBA also caps the annual and aggregate parents can borrow through Parent PLUS, a change that is expected to impact mostly higher-income families.10
While concern about Parent PLUS loan limits for certain institutions is well-placed, changes to Parent PLUS loan repayment will likely jeopardize financial wellbeing for a greater number of families. Even loan amounts that are less than half of the caps’ amounts could still prove devastating for a family who finds the bills more than they can handle.
A handful of websites correcting their content certainly won’t fill all information gaps. With the federal government unlikely to mobilize to disseminate accurate information in time, states must take action to safeguard parent borrowers by informing of the important policy changes. States should take the four following actions.
1. Conduct audits of their public-facing information.
States should review the information they disseminate about Parent PLUS and ICR and look for opportunities to fill information gaps for families. As positive examples, the Massachusetts Office of the Attorney General and the Michigan Office of the Treasury took proactive action this past winter to inform parents about the Parent PLUS consolidation deadline. Through their websites, states can help families understand the risks of Parent PLUS loans under the new law and, where relevant, provide the contact information of state government staff who can help them understand the new policy environment. As the examples above demonstrate, the exact office who is best suited for this will vary from state to state.
2. Proactively communicate to the staff in their university systems or high schools about the policy change for Parent PLUS.
Beyond published information, people also receive financial recommendations from friends and family, financial advisors, their children’s high school guidance counselors, and the financial aid administrators at their children’s colleges. With so many changes to keep track of, even the most well-informed of these individuals may not know about Parent PLUS repayment changes. States should proactively communicate to the staff in their university systems and high schools about the policy change for Parent PLUS, so that they can help families properly assess risk when discussing financial aid options.
3. Assess whether they and their institutions can cover these families’ financial need through grant aid rather than Parent PLUS loans.
States and universities don’t always make the best choices for their students who need aid. A recent study by New America identifies forty-one universities that distributed Parent PLUS loans to 32,000 low-income families, while those same universities directed $2 of every $5 in their institutional aid to students from high-income families. And The Century Foundation has found that at least $10 billion in state and institutional grants are awarded every year to families who don’t need the aid, representing a large volume of funds that could help low-income families bypass the need for Parent PLUS altogether. Given the economic harms that Parent PLUS loans can cause, it is in states’ interests to allocate grants with affordability as the key goal (rather than tuition revenue at any cost) in order to reduce the burden of Parent PLUS repayment on low-income families.
And for those who have already started borrowing, grant aid can still help. Total loan amount matters for the borrower’s overall burden under the tiered standard plan. Long-term risk multiplies with each semester of borrowing; each new semester is an opportunity for states and colleges to ensure the borrowers understand the terms of the program. If families realize that their loan repayment options are not what they thought they were, colleges should prioritize them for grant aid so that they don’t need to borrow as much for their child’s remaining semesters; states should encourage this at their public institutions.
4. Inform borrowers having difficulty in repayment that they can request a forbearance.
While ICR is gone as an option, borrowers can request a forbearance and pause their repayment.11 Under OBBBA, those forbearances are capped at nine months within any twenty-four-month period. A key difference between ICR and forbearance is that forbearance does not create any path to cancellation. However, given that Parent PLUS borrowers have no income-driven options moving forward, it is vital that they get whatever relief they can in the event of job loss, disability, or any other disruption to their financial lives. State student loan ombudsmen can help families navigate the forbearance process, and states currently lacking those roles should create them.
Looking Ahead
It is too soon to say exactly how the Parent PLUS repayment changes will play out. Some families may opt for a lower-cost college in order to dodge the loans entirely; others may take out the loans and manage just fine; others may take out the loans and struggle. Some families may, with full knowledge of the limited safety net, borrow anyway, especially if they see the child’s education as a door to a better life. But first, they deserve that full knowledge.
One day, Congress may reduce the need for Parent PLUS loans through stronger grant aid or initiatives to reduce tuition. Until that happens, people need to be fully aware before they sign the dotted line, especially as the stakes for their long-term financial health rise.
Notes
Tags: student loans, parent plus loans, IDR