Financial aid administrators will want to make note that certain provisions of the Budget Reconciliation Bill were effective upon enactment.
While many of the changes through the Budget Reconciliation Bill are not effective until July 1, 2026, and in subsequent years, some provisions were effective immediately upon enactment of the bill. In a July 18 Dear Colleague Letter (DCL), the Department of Education provided more information on the immediate implementation of certain provisions.
The DCL provides detailed information on the following topics:
- Changes to Income Based Repayment – The requirement that borrowers have a partial financial hardship to qualify for enrollment in an income-based repayment (IBR) plan was eliminated.
- Parent PLUS Loan Repayment Options – Borrowers with a consolidation loan that repaid a Parent PLUS Loan can enroll in an IBR plan effective upon enactment.
- Loan Limits for Part-time Students – If a student is enrolled in a program of study on less than a full-time basis during the academic year, the amount of a loan the student may borrow is reduced.
- Public Service Loan Forgiveness – Payments made under the newly created Repayment Assistance Plan (RAP) will count toward Public Service Loan Forgiveness (PSLF).
- Borrower Defense to Repayment Regulations – The implementation of the Biden Administration’s Borrower Defense to Repayment regulations is delayed. The previous regulations that were effective beginning July 1, 2020, will be effective as if the regulations were never amended for any loans originated before July 1, 2035.
- Closed School Loan Discharge Regulations – The implementation of the Biden Administration’s Closed School Loan Discharge regulations is delayed. The previous regulations that were effective beginning July 1, 2020, will be effective as if the regulations were never amended for any loans originated prior to July 1, 2035.
The Department will publish additional information about the Budget Reconciliation Bill in the upcoming weeks and months.
