New IBR Rules Reduce Payments for Parent PLUS Borrowers — But Only If You Act

Under the new rules, Income Based Repayment (IBR) can dramatically reduce payments for Parent PLUS borrowers who consolidate. The difference compared to Income Contingent Repayment (ICR) is significant:

• Example 1: A borrower earning $125,000 with $125,000 in Parent PLUS debt could see their monthly payment drop by about $1,000 under IBR compared to ICR.

• Example 2: A borrower earning $40,000 with $125,000 in debt might see their payment reduced by about $500, potentially leaving them with little to no monthly payment obligation.

Lower monthly payments mean borrowers can free up funds for other expenses — mortgage payments, retirement savings, or other financial priorities — while still progressing toward forgiveness.

But there’s a deadline to act.

• Only Parent PLUS borrowers who consolidate by July 1, 2026 and apply for IBR will be eligible.

• Parent PLUS loans first disbursed on or after July 1, 2026 will have no income-driven repayment options.

• Consolidating after July 1, 2026 will trigger the new restrictive rules, even for older loans.

For many Parent PLUS borrowers, this is the first time a repayment plan has been available that makes long-term debt management—and eventual forgiveness—a realistic goal. The key is understanding the benefits, planning a consolidation strategy, and acting before the eligibility window closes.

How SDS Can Help

Student Debt Solutions takes the guesswork out of repayment planning. The platform analyzes your situation and based on all available laws and rules displays all the options you’re eligible for, compares IBR against your other repayment choices, and projects the long-term impacts. Plus, we connect you with resources and experts who can answer your questions and help you decide whether IBR is the right path for your unique financial situation. With SDS, you don’t have to navigate these decisions alone.