Proposed Student Loan Forgiveness and Repayment Changes Under Discussion (DOE RISE Committee)

At PeopleJoy, our mission has always been to help borrowers achieve financial freedom from student loans. That’s why this update is especially close to home. Our CEO, Emeka Oguh, serves on the U.S. Department of Education’s RISE Committee, where he brings both his personal experience with student debt and his professional commitment to helping others succeed financially. His voice is helping shape the proposed policies currently under review—ensuring any future reforms are truly in the best interests of student loan borrowers and those pursuing higher education.

The RISE Committee recently shared recommendations and discussion points on how repayment, rehabilitation, borrowing limits, and loan forgiveness could evolve in the coming years. These proposed changes are designed to make repayment fairer, reduce defaults, and simplify an often confusing system. While not yet approved or finalized, they offer an important preview of where student loan policy may be headed. Let’s break down what’s being discussed—and what it could mean for borrowers.

Improving Loan Rehabilitation (Proposed)

Right now, many borrowers who finish rehabilitation end up back in default. Studies show 1 in 3 re-default within just two years, and over 40% re-default within three years.

Why? Because after completing rehab, borrowers often aren’t placed into an affordable repayment plan.

Proposed Fix:

• Tie rehab payments to income from the start.
• Automatically transition borrowers into an Income-Driven Repayment (IDR) plan after completion.
• Count payments made during rehab toward loan forgiveness.

👉 Why it matters: If approved, this approach would help borrowers move directly from default into affordable repayment—reducing re-defaults and improving long-term financial outcomes.

Pausing Collections During Rehabilitation (Proposed)

Currently, borrowers making rehab payments may still face wage garnishment or tax refund seizures, leaving them paying twice and feeling stuck.

Proposed Fix:

• Pause all federal collections—wage garnishment, tax refund seizure, and Social Security offsets—once rehab begins.
• Limit payments to a single, manageable monthly amount.
• Lift wage garnishment orders after five on-time payments.

👉 Why it matters: This proposal would give borrowers breathing room and prevent financial hardship while they work toward rehabilitation and forgiveness.

Capping Forbearance Periods (Proposed)

A proposed rule would limit hardship forbearance to 9 months within any 24-month period beginning July 1, 2027, while keeping mandatory forbearances (like military service or bankruptcy) unchanged.

Why the change? The goal is to prevent borrowers from falling into long-term forbearance cycles where interest continues to grow.

👉 Why it matters: This proposal encourages movement toward affordable repayment options instead of long-term pauses that can increase debt over time.

New Borrowing Limits Under OBBB

Starting July 1, 2026, borrowing caps will change under the One Big Beautiful Bill (OBBB).

• Graduate students: $20,500 annual, $100,000 lifetime
• Professional students (law, medicine, etc.): $50,000 annual, $200,000 lifetime
• Parent PLUS borrowers: $20,000 annual, $65,000 lifetime
• Overall cap: $257,500

Students already enrolled before July 2026 can keep borrowing under current rules until graduation.

👉 Why it matters: Unlimited PLUS loans are ending. Future students will face tighter borrowing caps, but current borrowers can finish under old rules.

Repayment Plan Simplification

Student loan repayment plans are famously confusing. The DOE wants to change that.

• Before July 1, 2026: You keep access to all current plans.
• On or after July 1, 2026: Only two options:
  
  • Repayment Assistance Plan (RAP): new income-driven plan.
    Tiered Standard Plan: fixed payments, 10–25 years based on your debt.

👉 Why it matters: Fewer plans, clearer choices. This helps prevent confusion and defaults.

The New Income-Driven Plan: RAP

RAP (Repayment Assistance Plan) is the DOE’s new safety net for future borrowers.

How it works:

• Payments based on income and family size.
• Minimum $10/month, but as low as $0 if income is low.
• No ballooning balances—interest won’t grow faster than your payment.
• After 30 years, any remaining balance is forgiven.

Extra features include dependent deductions ($50 each), spouse income excluded if filing separately, and government matching payments when progress is small.

👉 Why it matters: RAP ensures payments are always manageable and forgiveness is built in.

What These Proposals Could Mean for Borrowers

• Rehab will actually help you stay out of default.
• Collections won’t double up during rehab.
• Forbearance is limited for hardship but still unlimited for mandatory cases.
• Borrowing caps will make graduate and parent loans more predictable.
• Repayment plans will be easier to understand.
• A new income-driven plan (RAP) designed for affordability and stability.

At PeopleJoy, this work is more than just policy—it’s personal. Our CEO brings the perspective of someone who has lived through the challenges of navigating student debt and is committed to making the system work better for others. Serving on the DOE’s RISE Committee allows him to ensure that reforms are not only practical but also centered on borrowers’ real-life struggles and goals.

While some of these recommendations are still under discussion and negotiation, they represent an important step toward a more transparent, manageable, and empowering student loan system. At PeopleJoy, we remain committed to helping borrowers manage debt, stay on track for forgiveness, and achieve true financial freedom.