Key Points
- The new Repayment Assistance Plan (RAP) will qualify for Public Service Loan Forgiveness (PSLF).
- Parent PLUS loans appear to be excluded from PSLF eligibility due to limitations in repayment plan access.
- Past qualifying payments will carry forward when borrowers switch plans under the new structure.
The final version of the One Big Beautiful Bill, released on Friday, brings major updates to student loan repayment programs and how they interact with Public Service Loan Forgiveness. Under the bill, the newly created Repayment Assistance Plan (RAP) will be one of two repayment options available to borrowers taking out federal student loans after July 1, 2026. RAP will count toward PSLF, making it the primary pathway to forgiveness for borrowers working in government or nonprofit roles.
RAP replaces many of the current income-driven repayment plans and determines payments based on adjusted gross income, with rates starting at 1% and capped at 10%. Borrowers can qualify for PSLF by making 120 qualifying payments under RAP while working in eligible public service employment.
The bill also allows borrowers to switch between the Standard Plan and RAP at any time. For those on a PSLF track, RAP will become the go-to income-driven option, as the SAVE, PAYE, and ICR plans are being phased out for new borrowers.
Existing borrowers can migrate to amended IBR, which will remain PSLF-eligible as well.
It's important to note that this is separate from the other potential change to PSLF that may limit which employers qualify.
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Parent PLUS Loans Lose Access To PSLF In The Future
The bill includes stricter repayment rules for Parent PLUS loans, which could affect access to PSLF in future years.
Under current rules, Parent PLUS borrowers may access PSLF by consolidating into a Direct Consolidation Loan and repaying under the Income-Contingent Repayment (ICR) plan. However, the current bill eliminates the ICR plan for new borrowers and restricts which loans qualify for RAP and the modified Income-Based Repayment (IBR).
Existing Parent PLUS borrowers who consolidate before that date may still access ICR temporarily and later migrate into the amended version of IBR, but this path closes after June 30, 2028.
For Parent PLUS loans issued on or after July 1, 2026, the only repayment option available will be the Standard Plan, which does not qualify for PSLF. This means, new Parent PLUS loans after July 1, 2026 can not access PSLF at all.
This change may prevent future Parent PLUS borrowers from accessing any PSLF-eligible repayment option, even if their employment qualifies. That exclusion could especially impact parents who took out large balances to help children attend college and now work in public service roles.
Past Payments Count If You Switch Plans
The bill does allow for payment carryover. Borrowers who have been making payments under existing plans (such as SAVE, PAYE, IBR, or ICR) will be allowed to count those payments toward forgiveness if they switch to RAP or the amended version of IBR.
This continuity matters for those working toward PSLF or long-term forgiveness under income-driven repayment. As long as the borrower maintains eligible employment and continues to make qualifying payments under the new plan, their progress will not reset.
The provision reduces concerns among borrowers currently using SAVE or PAYE, who might otherwise fear losing credit for years of repayment when the new plans become mandatory by July 2028. Instead, the law provides a path for transitioning without penalty.
Borrowers should still track their PSLF progress carefully (watch your green banner), as past administrative errors have created confusion over qualifying payments. However, this provision is designed to preserve borrowers’ progress even as the Department of Education phases out existing repayment options.
Future Public Service Borrowers Could Have Less Options
Once the bill takes full effect, new borrowers entering public service will face fewer choices when selecting a repayment plan that qualifies for PSLF. With SAVE, PAYE, and ICR gone, RAP becomes the main income-driven option. Whether RAP is cheaper or more expensive than current income-driven repayment plan programs really depends on the borrower.
Those who qualify for PSLF will still receive forgiveness after 10 years of payments under RAP. However, borrowers must ensure that their loans are eligible and that they meet employment and payment criteria throughout the process.
For families considering Parent PLUS loans in the future, these changes make it more difficult to access PSLF. In fact, for parent borrowers, private loans may be a better options - with lower rates, no origination fees, and basically the same repayment plan options.
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Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.