More than 42 million Americans carry federal student loan debt — totaling $1.83 trillion. The average student loan debt per borrower is more than $39,000. One in four borrowers is currently behind on payments.
Starting July 1, 2026, as part of legislative changes passed in July 2025, many of the rules surrounding those loans are changing. For HR and benefits leaders, that means a few things. Many employees’ financial lives could be impacted – from increased monthly payments to tax bills for those who achieve forgiveness, to collections or garnishments for past-due loans.
Many will have questions about the changes and what they might want to do next. They have options – but they need answers that are accurate and relevant to their unique situation. The decisions many student loan borrowers make — or don’t— in the next few weeks could stay with them financially for years.
Here’s a closer look at what’s changing, when, and how Brightside can help your employees and other adults they live with navigate it.
Which employees are most likely to be impacted by student loan changes?
Federal student loan debt touches nearly every workforce, regardless of income or industry:
- Borrowers who obtained an associate’s degree as their highest level of education owe an average of $20,340 in federal student loan debt.
- 28% of borrowers took on loans but never completed a degree — and still have student loan debt
- 50% of parents have helped their adult children with student loans
This all translates into financial stress, whether your employees have student loans, or their spouse, partners, or adult children do. The July 1 changes will intensify that pressure.
What’s changing on July 1, 2026?
Several major federal student loan programs are being eliminated or significantly restructured.
The SAVE Plan Is Ending
The SAVE (Saving on a Valuable Education) repayment plan — one of the most affordable income-driven options — is being eliminated.
- Employees currently enrolled in SAVE will need to find and enroll in a new payment plan within 90 days, from July 1.
- If they don’t, they’ll be automatically moved to the Standard or Tiered Standard plan — which typically means significantly higher monthly payments than income-driven options.
- Employees pursuing Public Service Loan Forgiveness (PSLF) need to be especially careful: not all replacement plans qualify, and switching to the wrong one could erase progress toward forgiveness.
A new option: The Repayment Assistance Plan (RAP)
Starting July 1, a new federal repayment option called the Repayment Assistance Plan (RAP) becomes available. For employees leaving SAVE, this may be one of the options worth considering:
- Payments calculated as a percentage of adjusted gross income (AGI)
- $10 minimum monthly payment
- 30-year forgiveness timeline
- Eligible for Public Service Loan Forgiveness
- Includes an interest subsidy that waives interest above the minimum payment
Whether RAP is the right choice depends on each employee’s individual situation — income and other financial obligations, loan type, and forgiveness goals. This is exactly where personalized student loan support that considers the employees’ overall financial picture matters – which is not something a point solution does.
PAYE and ICR plans sunsetting
Employees on the Pay As You Earn (PAYE) or Income-Contingent Repayment (ICR) plans should know that both programs will be sunset entirely by July 1, 2028. Borrowers can remain on these plans until then, but eventually need to transition.
Additionally, any debt forgiven under these plans is expected to be taxable at the federal level beginning in 2026. This could catch employees off guard and leave them with a significant tax bill they haven’t made plans to cover.
Public Service Loan Forgiveness rules are shifting
PSLF remains in effect, but important changes are coming that affect employees at qualifying employers — including hospitals and health systems:
- The definition of a qualifying employer is changing as of July 1, 2026.
- Parent PLUS loans will lose eligibility for income-driven repayment and PSLF after July 1.
- Employees on the SAVE plan pursuing PSLF must switch to a qualifying plan — time spent in SAVE forbearance does not automatically count toward the 120-payment requirement.
Parent PLUS Loan options are narrowing
Employees who took out Parent PLUS loans to help pay for a child’s education face significant changes:
- Annual borrowing is capped at $20,000 per student; lifetime cap of $65,000 per student.
- Current Parent PLUS borrowers can continue for three more years or until their child finishes their program.
- New Parent PLUS loans are restricted to the Standard Repayment Plan only.
- Eligibility for income-driven repayment and PSLF is being eliminated.
Graduate and professional student borrowing limits are tightening
Employees continuing their education or with recent graduate school debt should be aware of new caps:
- The Federal Direct Graduate PLUS Loan program is being eliminated for new graduate and professional borrowers.
- General graduate programs: capped at $20,500 annually, with a $100,000 lifetime aggregate limit.
- Professional programs: capped at $50,000 annually, with a $200,000 lifetime aggregate limit.
- Current borrowers have three more years or until they finish their program.
What happens when employees don’t act
For employees who are already behind on payments — or who miss the window to choose a new repayment plan — the consequences are real and escalating:
- Wage garnishment
- Tax refund offsets
- Delinquency reported to credit bureaus
The most common mistakes that increase financial risk:
- Ignoring the first 90 days of delinquency
- Missing the 270-day default threshold
- Failing to update their repayment plan before the deadline
- Not requesting deferment or forbearance when eligible
Employees often don’t know these thresholds exist until it’s too late. That’s where proactive employer communication — and access to a Brightside Financial Assistant — makes a meaningful difference.
How Brightside helps your employees navigate student loan changes
Student loan decisions are deeply personal. The right repayment plan for one employee may be the wrong one for another — it depends on income, loan type, forgiveness goals, family situation, and more. Generic resources and government websites can explain the rules. They can’t help an employee figure out what to actually do.
A Brightside Financial Assistant can:
- Explain what the July 1 changes mean for that employee’s specific situation
- Walk through repayment plan options and the tradeoffs for their goals
- Help employees understand whether they qualify for PSLF or other forgiveness programs
- Identify the steps to take — and help employees take them, one at a time
- Support employees who are behind on payments and at risk of default
How HR teams can support employees with student loans now
When employees can have an expert they can work with by phone or in a chat conversation who makes it easy to understand what these changes mean for their unique situation, their options, and what next steps make sense for their financial lives – no matter how much or how little they may know about their student loans – it makes all the difference in financial health.
Learn more about how Brightside Financial Care supports employees through all of their important financial needs, moments, questions, and goals.