Alert Issued on Student Loan Change Impacting Payments for Millions

A new warning has been issued to federal student loan borrowers over an upcoming change that could significantly affect monthly payments and access to loan forgiveness programs.
Illinois Attorney General Kwame Raoul is urging parents who took out Parent PLUS federal student loans to act quickly ahead of a looming consolidation deadline, warning that failing to do so could sharply limit repayment options and disqualify borrowers from key federal relief programs.
“I encourage Parent PLUS borrowers to learn about your loans and to consider consolidating any unconsolidated Parent PLUS loans by April 1 to have access to an income‑driven repayment plan,” Raoul said in a new release.
“An income‑driven repayment plan can be the most affordable choice for many student loan borrowers, and enrollment is almost always required for Public Service Loan Forgiveness.”
Why It Matters
For many families, Parent PLUS loans carry higher interest rates and fewer built‑in protections than other federal student loans. Missing the consolidation deadline could lock borrowers into higher monthly payments and permanently cut off access to income‑based plans and forgiveness programs designed to provide long‑term relief.
What To Know
Recent federal law changes have altered how Parent PLUS loans are treated under the federal student loan system. According to Raoul’s office, Parent PLUS borrowers who have not consolidated their loans by April 1 will face major restrictions on repayment plans moving forward.
Borrowers with unconsolidated Parent PLUS loans or those who take out new Parent PLUS loans after July 1 will have limited repayment plan options and will be ineligible for income‑driven repayment plans, which are often used to lower monthly payments based on income.
“Most parents think Parent PLUS is just another federal student loan. It’s not anymore. After July 1, the rules change,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek. “And if you haven’t consolidated by then, you lose access to the only thing that makes Parent PLUS manageable for many families: income-based payments.”
In addition, unconsolidated Parent PLUS loans generally do not qualify for Public Service Loan Forgiveness (PSLF), a program that can erase remaining loan balances for borrowers working in eligible public service jobs after making qualifying payments.
This applies specifically to parents who borrowed through the federal Parent PLUS loan program, which allows parents to take out loans in their own names to help pay for a child’s college education.
Only consolidated Parent PLUS loans are eligible for income‑driven repayment. Once consolidated, borrowers may enroll in the Income‑Contingent Repayment (ICR) Plan, which bases payments on income and family size.
While the ICR plan is scheduled to phase out by July 1, 2028, Raoul’s office said that Parent PLUS borrowers who make at least one payment on an income‑driven plan between July 5, 2025, and July 30, 2028, may later become eligible for the Income‑Based Repayment (IBR) Plan, which can offer more favorable terms.
Depending on the repayment plan, income‑driven repayment forgiveness can occur after 20, 25, or 30 years of qualifying payments.
“Consolidation becomes the gateway, but it’s not without tradeoffs. In some cases, it can reset your progress or change your timeline toward forgiveness. You have to be strategic, not reactive,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.
“To me, this is par for the course. Tighten the rules, limit the paths, and push borrowers into a single repayment framework. It simplifies the system on paper but makes the road more difficult for the borrower.”
What People Are Saying
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “Parent PLUS student loans have long been one of the most criticized financial products available to students and their families. They tend to have higher borrowing limits, are more expensive, and have less flexible options for repayment. The warning here is clear: if a borrower fails to consolidate these loans into others they have, they may miss out on future income-driven repayment options that could make repayment easier and less expensive.”
Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: “If they have Parent PLUS loans, they need to log into studentaid.gov right now, check the Loan Breakdown section, and if those Parent PLUS loans still show a balance, they’re unconsolidated. And if they are, April 1 is the line in the sand.”
What Happens Next
The April 1 deadline marks a key cutoff for Parent PLUS borrowers who want to preserve access to income‑driven repayment and potential forgiveness programs.
“If you have yet to consolidate Parent PLUS loans, you need to seriously consider doing so before April 1 to ensure you qualify for future relief opportunities,” Beene said.
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