Federal Student Loan Overhaul Creates Technical Problems for Borrowers
A major restructuring of the federal student loan system took effect July 1, 2026, following passage of the One Big Beautiful Bill Act. Borrowers reported calculation errors and missing repayment plans as the Department of Education transitioned to the new Repayment Assistance Plan.
A sweeping overhaul of the federal student loan system took effect July 1, 2026, following the passage of the One Big Beautiful Bill Act in 2025. The transition has created technical problems for many borrowers.
Key changes under the new rules include the elimination of the graduate PLUS loan program for new borrowers and new lifetime and annual limits on graduate and parent PLUS loans. The system also moved to a new repayment structure called the Repayment Assistance Plan.
Reports surfaced in July of calculation errors and missing repayment plan options in the Department of Education's online portal. Some borrowers were forced to reapply for their repayment programs after their existing plans were not carried over correctly.
The Department of Education acknowledged the technical issues and said it was working to resolve them. Borrowers affected by errors were advised to contact their loan servicers directly.
One positive change under the new rules: the interest rate reduction for borrowers enrolled in autopay increased from 0.25% to 1% for eligible federal direct loans.
The overhaul represents the most significant restructuring of the federal student loan system in years. Advocacy groups said the changes would reduce borrowing options for graduate students and their families while creating short-term confusion for existing borrowers.
