Student Loan Updates for May 2026

Who’s excited for summer? After a very busy season educating and counseling a record number of borrowers, our team is certainly ready for a vacation! But the work isn’t over yet. We still have many presentations on the books. Consultation registrations are still pouring in. The advisors are working overtime (I love this team!). And the monumental changes we’ve been warning you about since last July are about to go down. We have a lot of important information packed into this update. So please read carefully!

What is going on with IDR Plans and OB3 Changes?

After nearly a year of waiting, we finally have the fine print from the Department of Education covering all the student loan changes related to the One Big Beautiful Bill (OB3). This monster of a document (647 pages) dropped on April 30th, and three weeks later, we’re STILL finding surprises inside it.

Since this legislation was passed back in July 2025, we first provided you with guidance based on the rules set by Congress. But those did not give us the fine print we really needed. The proposed updates to the actual student loan regs were published in February. This painted a clearer picture and caused us to shift our guidance a bit. The finalized regulations were just published at the end of April, and to everyone’s surprise, there were quite a few changes from the proposed rules. Here are the highlights:

1. 1. First, the official name is changing from “The One Big Beautiful Bill Act” to the “Working Families Tax Cuts Act.”
2. 2. Those who have any loan disbursements (including a consolidation disbursement) after June 30th, 2026, will lose all access to existing IDR plans. That part remains abundantly clear.
3. 3. Those who consolidate loans with existing PSLF credit will retain a weighted average of that PSLF credit. That is good news!
4. 4. Legacy borrowers (who have no disbursements after 6/30/26) will retain access to the Original IBR and New IBR plans. The proposed rules made us believe you must be in IBR by 7/1/2028 or lose access to it forever. That is no longer the case.
5. 5. The PAYE plan is being phased out 7/1/2028, and the Department of Education has chosen to make this rather complicated:
   1. Borrowers who are not currently on PAYE, but who meet the normal requirements for it, can still enroll before 7/1/2026. Once enrolled, they can use it until 7/1/2028.
   2. After 7/1/2026, however, only borrowers who were already enrolled in the PAYE plan as of 7/1/2024, and did not switch to a different plan, will be allowed to enroll in PAYE.
   3. All other borrowers lose access to PAYE on 7/1/2026.
   4. All borrowers will be kicked out of PAYE on 7/1/2028.
   5. Generally, only a select few people should be utilizing PAYE as it is on the chopping block.
6. 6. Legacy borrowers will be allowed to utilize the new RAP plan and switch out of it if they would like.
   1. If you start in RAP and switch to IBR, payments made under RAP WILL NOT count towards 20/25-year IBR forgiveness.
   2. Payments made under RAP (and other IDR plans) WILL (cumulatively) count towards Public Service Loan Forgiveness. This is big for borrowers who have dramatic changes in incomes (such as medical residents transitioning to practice) and want to maximize PSLF.

We’ll be updating our original OB3 resource page over the next few days so that you can see the full list of changes and final guidelines.

Latest on the PSLF Buyback

If you’ve been reading our newsletters over the past year, you’re well aware of the massive backlog of PSLF Buyback applications which continue to pile up month after month. Many of you are frustrated right now (and so are we!) because you’re at the PSLF finish line, yet you have no idea how the buyback will be calculated or when it will come.

While the Department of Education has provided very few updates on this, how calculations will be made seems to have shifted a bit. Let’s break this down:

• Originally: Buyback was based off your prior payments and prior income. It was implied that if you were paying $300 monthly when the forbearance started, your buyback months would also be calculated at $300.
• Update a few months ago: With the SAVE plan officially dead, we learned that calculations would be based on a different repayment plan, such as REPAYE. Additionally, buybacks for forbearances greater than one year would be required to submit fresh income documentation. Our understanding was that they would still base your first year of buyback off your previous payment, adjusted for REPAYE.
• Current: There has been much discussion about this in the student loan community. The current consensus is that ALL calculations for PSLF buybacks greater than one year will require you to provide income documentation for each calendar year (but technically the year prior) relative to your SAVE forbearance. In plain English…if you had an ultra-low payment when the forbearance started because you had not recertified your income in years, they are not automatically giving you 12 months credit based on that same low income/payment.

Again, this is the consensus in the community. The very limited guidance we have from the Department of Education is not clear. There are multiple Reddit threads on this. And we haven’t been able to track down anyone who has received buyback credit for periods greater than one year for us to analyze their buyback amount. Many borrowers who are just getting buyback letters right now first applied in 2024 and only requested a few months of credit.

We’re doing our best to collect more information, and we would appreciate your help. If you receive(d) a buyback letter for a period covering more than 12 months, please email us at Help@StudentLoanProfessor.com.

Now for the good news! The latest processing stats show that the Department of Education processed way more buyback applications in April than in any month prior, and they actually processed more applications than came in during April. This means the backlog went down for the first time ever, albeit by a very small amount. Have we finally turned a corner? It’s still too early to say, but we certainly hope so!

Click here to see our full write-up of the PSLF Buyback Program.

Update on PSLF Lawsuit

You may recall that the Trump administration, followed later by the Department of Education, enacted new PSLF restrictions for organizations “engaging in activities which have substantial illegal purpose.” One of the activities singled out was certain types of transgender treatments for minors, which could impact those employed by healthcare companies and hospitals offering these specific services. Of course there were multiple lawsuits filed to block this. While we haven’t reported on this in some time, we’ve been waiting and watching for movement on the cases. And it seems we are about to get some answers on this very soon.

The primary case, National Council of Nonprofits v. McMahon (1:25-cv-13242), has its first hearing before a Federal judge on June 3rd. I’m no attorney, but I still think this new rule has no legs because PSLF is governed by Congress, not the White House or the Department of Education. However, if the judge allows the new rules to proceed, the administration will begin flagging certain employers on July 1st. So, we’re coming down to the wire, and we’ll let you know how it goes.

Click here to get the full story and follow our ongoing coverage.

Update on Borrower Defense Case

This is a case we’ve been covering for years. Honestly, we thought it was over, but not so fast! Back in January, we reported that the Department of Education missed their deadline to review over 100,000 post-class Borrower Defense claims for legitimacy. After missing that deadline, the Department asked the court for an extension. The court’s response? Essentially, “No way!” Even after continued appeals, the court has held its ground. At this point, it appears forgiveness may be imminent for many of these borrowers, including some of our clients from DeVry schools. Get the latest details here.

Free Didactic Sessions and Webinars

We hope you are all enjoying these monthly updates and finding them adequate to say informed. But those of you who have attended our presentations in the past would hopefully agree that laying out the different repayment plans and discussing the legislative changes in relation to your profession-specific debt and income numbers is the best way for borrowers to truly grasp this information and maximize savings.

I want to remind everyone that we provide free presentations (conducted virtually) to any residency program across the country. We also have a webinar coming up on June 23rd which will cover these and other updates in detail. Go to our webinar page to learn more and register.

Are you part of a professional organization which might benefit from one of our talks? Tell us about it at Help@StudentLoanprofessor.com and we’ll let you know if it’s a good fit.

In Closing

These changes are causing borrowers to reassess their loan repayment strategies. While our calendars are filling up with 2026 grads, make sure to register as soon as possible so you can get on the schedule and receive personal guidance as well. If your situation requires urgent attention, email us and let us know. We’ll work you in sooner than later. We have no doubt there will be even more critical updates this summer as these OB3 changes kick in, so stay tuned!