Borrowers warned of new federal student loan consolidation limits under Trump-era rules

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Summary

Changes to federal student loan rules enacted under the One Big Beautiful Bill Act and new Education Department regulations took effect July 1.
Borrowers who take out new Direct Consolidation Loans are generally limited to the Tiered Standard Repayment Plan or the Repayment Assistance Plan.
The Repayment Assistance Plan requires 30 years of qualifying payments before forgiveness, compared with 20 or 25 years under older plans.
The older Income-Contingent Repayment and Pay As You Earn programs are scheduled to end no later than July 2028.
Parent PLUS borrowers who consolidate are limited to the Tiered Standard Repayment Plan, which does not qualify for Public Service Loan Forgiveness.
New York Attorney General Letitia James has issued an alert warning that consolidating could cost borrowers repayment options and forgiveness progress.

Letitia James warned that consolidation carries significant fiscal implications and urged borrowers to research before consolidating.
James urged New Yorkers to report fraudulent student loan practices to her office and recommended loan rehabilitation for some borrowers in default.
Financial literacy instructor Alex Beene said the limits create challenges for graduate students in fields like medicine, law, and dentistry.
Beene said researchers estimate more than half a million borrowers could need an additional $20,000 annually from other sources.
Kevin Thompson, CEO of 9i Capital Group, said borrowers face massive confusion, shifting policies, and courts packed with appeals.
The Education Department's changes have prompted considerable pushback against President Donald Trump.

Warning issued over student loans as Trump admin policies take effectnewsweek.com· 46h
Newsweek warns federal student loan borrowers to think carefully before consolidating, as Trump administration changes enacted under the One Big Beautiful Bill Act and new Education Department rules took effect July 1, limiting most consolidators to two repayment plans and requiring 30 years of payments for forgiveness under the Repayment Assistance Plan. New York Attorney General Letitia James cautions that consolidating could cost borrowers access to income-driven plans and forgiveness progress, while experts Alex Beene and Kevin Thompson flag challenges for graduate students and widespread borrower confusion, and James urges borrowers to research before consolidating and report fraud to her office.