U.S. Department of Education

The U.S. Department of Education and U.S. Department of the Treasury launched the Defaulted Loans Support Center for borrowers with defaulted federal student loans. The online portal allows borrowers to apply for loan rehabilitation or consolidation rather than use mail- and fax-based processes.

A revised paper income-driven repayment application with an option to enroll in the Repayment Assistance Plan became available. The Student Loan Borrower Assistance Project reported that the form was released on October 1, 2026.

Some former SAVE borrowers received notices directing them to select a repayment plan within 30 days. The notices were sent after initial SAVE-transition windows for borrowers initially notified around July 1 had expired.

The U.S. Department of Education extended the deadline to enroll in auto pay for the temporary 1-percentage-point interest-rate reduction to December 31, 2026. Borrowers enrolled by that date, or already enrolled, will receive the reduction through June 30, 2028.

Federal Student Aid distributed FY 2023 official cohort default rate notification packages to eligible domestic and foreign schools. Federal Student Aid said the school-specific packages were scheduled for public release on September 30, 2026, with appeals beginning October 6.

State student-loan ombudspersons urged the U.S. Department of Education to delay mandatory repayment-plan transitions. They said the delay should continue until operational failures were resolved.

The U.S. Department of Education requested emergency processing for a revision to an existing information collection. The request concerned the PSLF and TEPSLF Certification and Application.

Inside Higher Ed reported that colleges used different interpretations of the expected-time-to-credential exception for continuing students. Texas Christian University used completed credit hours in one Parent PLUS determination, while Loyola Marymount University said it would use years enrolled pending written Federal Student Aid guidance.

NASFAA advised financial-aid administrators to seek legal counsel over uncertainty in Education Department guidance on the expected-time-to-credential exception. NASFAA said the August 12 webinar used completed credit hours after earlier written guidance directed schools to use time enrolled, while the Department said its clarification was not a policy change.

The department notified the court on August 27 that it would appeal Judge Myong J. Joun's June 30 decision, which granted summary judgment to the plaintiffs and vacated the PSLF employer-eligibility rule, to the U.S. Court of Appeals for the First Circuit. The vacatur stays in effect while the appeal is pending, so the 'substantial illegal purpose' employer test is not being applied.

The U.S. Department of Education and Linda McMahon filed a reply supporting their motion to dismiss the Havens case on August 17, 2026. The reply addressed opposition to their July 14 dismissal motion.

The Education Department filed a notice correcting the supplemental memorandum it had submitted in the Havens case, attaching a corrected brief, a redline and a corrected declaration.

Federal Student Aid instructed schools to calculate continuing borrowers’ expected time to credential using completed credit hours rather than time enrolled. The calculation determines how long grandfathered borrowers may retain access to Grad PLUS after new borrowing closed on July 1, 2026.

AFL-CIO, AFSCME, American Federation of Teachers, and National Nurses United filed a lawsuit challenging the RISE professional-degree definition. The complaint also challenged RISE restrictions on transition protection for some already-enrolled borrowers.

A Massachusetts federal judge denied without prejudice nursing associations' request for preliminary relief from the RISE professional-degree definition. The court found the plaintiffs likely to succeed on their contrary-to-law argument but found no present irreparable harm requiring an injunction.

Four borrowers who sued in March 2026, arguing the department must implement SAVE or, failing that, the REPAYE plan it replaced, filed their response to the government's motion to dismiss and asked the D.C. district court to pause the transfer of roughly seven million borrowers out of the SAVE forbearance. The department argued the Eighth Circuit had already found REPAYE forgiveness had the same legal defect as SAVE and that Congress ends REPAYE on July 1, 2028 regardless.

The U.S. Department of Education and Linda McMahon moved to dismiss the Havens case, including for lack of jurisdiction, on July 14, 2026. The Justice Department also told the court that the lawsuit seeking to stop the SAVE shutdown should be dismissed.

The U.S. Government Accountability Office reported that servicers faced implementation challenges because Education did not consistently provide clear advance instructions for program changes. GAO recommended criteria for early coordination with servicers, and the U.S. Department of Education disagreed with that recommendation.

The U.S. Department of Education began sending 90-day notices to SAVE borrowers on July 1, 2026. The notices were sent in waves, and the earliest required move to a new plan was September 29, 2026.

The law's main provisions took effect. RAP sets payments at 1 to 10 percent of income minus $50 per dependent with a $10 floor, waives unpaid monthly interest for on-time payers and adds up to $50 a month toward principal, with any balance discharged after 360 payments. The Tiered Standard plan runs 10 to 25 years by balance. New graduate borrowers face the $20,500 and $50,000 annual caps, and servicers began the 90-day exit notices to SAVE enrollees. Under Secretary Nicholas Kent said nearly 46,000 borrowers applied for RAP on day one, after a weekend-long StudentAid.gov outage.

Judge Myong J. Joun of the U.S. District Court for the District of Massachusetts granted summary judgment to the plaintiffs and vacated the Public Service Loan Forgiveness employer-eligibility rule on June 30, the day before its July 1 effective date. On July 13 Federal Student Aid said it was removing the employer attestation it had just added to the PSLF form to comply with the order.

In consolidated suits led by the American Association of Nurse Practitioners, Judge Beryl Howell of the D.C. district court preliminarily stayed the part of the RISE rule that had limited the $50,000-a-year professional tier to 11 degrees, writing that 'Congress could not have been clearer'. Federal Student Aid responded with an interim list of more than 20 programs, adding nursing, physician associate and speech-language pathology degrees, while saying it would keep defending its definition.

William Boykin, Anna Grunseth, Heather Havens, and Elizabeth Robeson filed a motion for a preliminary injunction on June 23, 2026. The docket identifies their August 7 filing as a reply to opposition to that motion.

Federal Student Aid released portfolio reports containing data through March 31, 2026. The reports showed approximately nine million federally managed loan recipients in default, 8.4 million recipients in forbearance, and approximately 13 million borrowers in IDR plans.

To push borrowers into the new plans and back onto automatic payments, the department offered a 1 percentage point interest reduction from July 1, 2026 through June 30, 2028 for anyone enrolled in auto pay by September 30, 2026, up from the usual 0.25 point discount. It said auto-pay enrollment had fallen from more than 80 percent of borrowers in active repayment before the pandemic to 40 percent.

Borrower-assistance groups told CNBC that the department's online income-driven repayment application was showing wrong plan eligibility and monthly payment estimates, servicers were sending erroneous delinquency notices to borrowers still in forbearance, and some borrowers were being told to consolidate unnecessarily, as nearly seven million SAVE enrollees prepared to change plans with an agency that had lost close to half its staff.

Six professional and education associations filed a lawsuit challenging the RISE professional-degree definition and its July 1 effective date. The complaint alleged that the rule created a narrower eligibility test for higher professional-student borrowing caps.

A multistate coalition sued the U.S. Department of Education over the RISE rule's professional-degree definition. North Carolina Attorney General Jeff Jackson said the definition affected nursing, physician-assistant, therapy, occupational-therapy, and audiology programs.

The department published its final rule (in the Federal Register on May 1) eliminating Grad PLUS, setting the graduate and professional loan limits, creating the Repayment Assistance Plan and Tiered Standard plan and sunsetting the legacy plans. It asserted that Congress's explicit July 1, 2026 effective date overrode the Higher Education Act's master-calendar rule, a position lawyers flagged as a litigation risk.

After the court entered final judgment, the department began sending guidance to every SAVE enrollee. From July 1 servicers would issue notices giving borrowers 90 days to choose a legal plan, including the new Repayment Assistance Plan; anyone who did not act would be placed in the Standard or Tiered Standard plan, typically with higher payments than an income-driven option.

Secretaries McMahon and Scott Bessent announced an interagency agreement moving operational responsibility for the $1.7 trillion portfolio to Treasury in phases, starting with collections on defaulted loans and support for returning borrowers to repayment, with non-defaulted loans and other FSA functions to follow 'to the extent practicable and permitted by law'. The department said fewer than 40 percent of borrowers were in repayment and almost 25 percent were in default.

Federal Student Aid released updated portfolio reports containing data through December 31, 2025. The reports showed 7.7 million federally held loan recipients in default, more than 6.5 million borrowers in SAVE forbearance, and nearly 12.9 million borrowers enrolled in IDR plans.

A three-judge Eighth Circuit panel reversed Judge Ross and directed the district court to enter the final judgment the department and Missouri had jointly requested, vacating nearly all of the SAVE rule. The department said guidance for SAVE borrowers would follow within weeks.

Judge John Ross of the Eastern District of Missouri dismissed the lawsuit and the proposed settlement, finding no live controversy because both sides now wanted SAVE gone and Congress had already scheduled its end for July 1, 2028. The order neither revived nor struck down SAVE, leaving seven million enrollees in limbo and prompting a separate borrower suit demanding the plan be implemented.

Alongside new default-management guidance, the department published updated institution-level nonpayment rates as an early warning for cohort default rates, which can cost a school its access to federal aid at 30 percent for three years or 40 percent in one. Under Secretary Nicholas Kent said institutions 'cannot benefit from taxpayer dollars while ignoring' the numbers.

The department issued its notice of proposed rulemaking to implement the law, with a 30-day comment window. Beyond the statutory caps it proposed letting colleges set program-level loan limits below the statutory maximums, and it carried the RISE committee's narrow professional-degree definition. The department later said it received 80,793 comments.

Having told defaulted borrowers in December that garnishment notices would start the week of January 7, the department reversed course and delayed all involuntary collection, both Administrative Wage Garnishment and the Treasury Offset Program, saying the new law's repayment plan and second-chance rehabilitation should be in place first. The delay ran into tax-refund season and was not given an end date.

The department told reporters it would start administrative wage garnishment on defaulted borrowers in early January 2026, with notices to a first group of about 1,000 borrowers and more each month, allowing up to 15 percent of disposable pay to be withheld after a 30-day notice. Borrower advocates called the decision cruel while nearly a million income-driven repayment applications sat unprocessed.

Rather than litigate to judgment, the department and Missouri Attorney General Catherine Hanaway proposed a joint settlement under which the department would enroll no new borrowers in SAVE, deny pending applications and move all enrollees into other plans. The department put SAVE's ten-year cost at more than $342 billion and said more than seven million borrowers were still in the forbearance.

The RISE committee agreed on all 17 regulatory provisions implementing the law's loan changes: eliminating Grad PLUS, capping Parent PLUS, sunsetting the older repayment plans and creating the Repayment Assistance Plan. It also adopted a definition of professional degree drawn from existing regulatory text, the provision that would later be challenged in court.

The department finalized a rule, effective July 1, 2026, amending the definition of a qualifying Public Service Loan Forgiveness employer to exclude organizations it finds engage in illegal activity such as supporting terrorism, aiding illegal immigration or providing gender-transition care to minors. It followed Executive Order 14235 of March 7, 2025, a July negotiated rulemaking and nearly 14,000 public comments.

In a joint status report in AFT v. U.S. Department of Education, the department agreed to keep processing IBR, PAYE and ICR applications and PSLF buyback requests, to stop denying IBR for lack of a partial financial hardship, to refund payments made after a borrower qualified for discharge, and to date discharges to when eligibility was reached so that borrowers delayed into 2026 would not owe federal tax when the American Rescue Plan exemption expired.

Servicers and borrower advocates confirmed to CNBC that discharges under Income-Based Repayment, which the department had paused in July while it 'responded to court orders', had restarted for borrowers who reached 20 or 25 years of payments. IBR is the one income-driven plan whose forgiveness is written into statute, which made the pause especially contentious.

The Office of Postsecondary Education announced negotiated rulemaking to implement the law, with a Reimagining and Improving Student Education (RISE) committee to handle loan provisions in five-day sessions in September and November and a separate AHEAD committee for Workforce Pell and accountability. A public hearing was set for August 7.

Citing the injunction, the department said loans in the SAVE forbearance would begin accruing interest again on August 1, 2025, though payments would still not be due, and that it would start direct outreach the next day urging the nearly 7.7 million enrollees to move to a plan such as IBR. Interest was not charged retroactively for the year the loans had sat at zero percent.

President Trump signed the reconciliation law (P.L. 119-21, later rebranded by the administration as the Working Families Tax Cuts Act). For student loans it created the Repayment Assistance Plan and a Tiered Standard plan, ended Grad PLUS for new borrowers and capped graduate ($20,500 a year, $100,000 total), professional ($50,000, $200,000) and Parent PLUS borrowing from July 1, 2026, sunset SAVE, PAYE and ICR by July 1, 2028, and allowed a second loan rehabilitation. Some provisions, such as dropping IBR's partial-financial-hardship test, took effect immediately.

On the day collections resumed, Treasury started sending 30-day notices to about 195,000 defaulted borrowers that their federal benefits, including Social Security payments and tax refunds, would be offset, with the first offsets hitting June checks. The department said all 5.3 million defaulted borrowers would be told later in the summer that their wages could be garnished, and sent colleges a Dear Colleague letter warning about cohort default rates.

Secretary Linda McMahon announced that Federal Student Aid would resume collecting on the defaulted portfolio on May 5, 2025, through the Treasury Offset Program and later wage garnishment. The department said 42.7 million borrowers owed more than $1.6 trillion, more than five million were in default, four million more were in late-stage delinquency, and only 38 percent of borrowers were current on their loans.

Federal Student Aid put a rewritten income-driven repayment and consolidation application back online about five weeks after taking it down to comply with the Eighth Circuit injunction. Borrowers could again apply for Income-Based Repayment, Pay As You Earn and Income-Contingent Repayment, while SAVE stayed closed and the backlog of pending applications, then near two million, kept growing.

The American Federation of Teachers filed AFT v. U.S. Department of Education in federal court in Washington, arguing that removing the IDR and consolidation forms and telling servicers to stop processing applications unlawfully cut millions of borrowers off from affordable payments and from progress toward Public Service Loan Forgiveness. The case became the vehicle for court-supervised commitments on the application backlog later in the year.

The U.S. Court of Appeals for the Eighth Circuit affirmed the preliminary injunction against SAVE and told the district court to broaden it to the whole rule plus the revived REPAYE forgiveness provisions, holding that the states were likely to prove the Secretary of Education cannot forgive loans at the end of an income-contingent repayment plan. The ruling put the legality of PAYE and ICR forgiveness in doubt too, and the department pulled the online income-driven repayment application a week later.

Republican-led states sued over the Biden administration's Saving on a Valuable Education (SAVE) plan, and in June 2024 federal courts in Kansas and Missouri blocked parts of it. The Education Department responded by putting the roughly eight million SAVE enrollees into an administrative forbearance with no payments due and no interest, a limbo that would last for two years.