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Student loan debt repayment continues to be a burden for many older families. The U.S. Department of Education (ED) paused student loan payments during the pandemic, but repayments resumed in September 2023. Unfortunately, many borrowers face financial challenges and are unable to make their loan payments. Getting help from loan servicers or the ED has become more difficult as a result of staffing cuts and the cessation of loan servicer performance assessments.
Complicating matters further is that repayment plan changes will soon take effect. Borrowers with federal Parent PLUS loans must act quickly to consolidate their loans if they want to enroll in an income-driven repayment plan that is more affordable than the standard repayment plan. This blog post explains those changes and how borrowers can respond.
Trillion-dollar debt
As of year-end 2025, the Federal Reserve Bank of New York reported that student loans outstanding totaled $1.66 trillion, with borrowers ages 50 and older owing 25 percent ($408.3 billion) of that. Older borrowers’ debt may include loans from their own undergraduate or graduate education, or Parent PLUS loans taken out to finance the education of their children. As of March 2026, the ED reported that 3.6 million borrowers are carrying $114.9 billion of Parent PLUS loans.
For older borrowers, student loan repayment can be a particular burden, as many carry this debt into their retirement years. Seventy percent of Parent PLUS borrowers were ages 50 and older in 2015, the most recent year age data was available. Prior AARP research on student loan debt found that delinquency and default rates increase with age, both for borrowers’ own loans and Parent PLUS loans.
According to the Federal Reserve Bank of New York, nearly 10 percent of loan balances of borrowers across all age groups are delinquent by 90 days or more. The situation is far worse for borrowers ages 50-plus, with 22.4 percent of their loan balances now delinquent for 90 days or more. The one million borrowers who are more than 120 days late are now in default, which sends the loans into collections. When this occurs, the ED can direct employers to garnish wages and can direct the Department of the Treasury to offset Social Security payments and federal income tax refunds to collect the student loan debt. Currently, the ED is not garnishing wages or offsetting Social Security payments, but they may choose to do so at any time.
Two New Repayment Plans Will be Available Going Forward
The ED recently announced changes in student loan repayment options that will reduce the affordability of available repayment plans for borrowers. Beginning in July, new student loan borrowers will be automatically placed into a standard repayment plan. The total amount borrowed determines the maximum repayment period, which ranges from 10 years for balances less than $25,000 to 25 years for balances of $100,000 or more. The standard repayment plan is based only on the amount owed, with no consideration of a borrower’s income or the affordability of the required payment.
In the past, several different income-driven repayment plans were available to borrowers, such as PAYE (Pay as You Earn), ICR (Income-Contingent Repayment), SAVE (Saving on a Valuable Education), and IBR (Income-Based Repayment). Borrowers enrolled in PAYE and ICR can remain on those plans for now, but they will sunset on July 1, 2028. The SAVE Plan has been eliminated and borrowers in that plan must enroll in a new plan by late September 2026. Borrowers currently enrolled in IBR may continue in that plan.
On July 1, there will be one income-driven repayment plan available to new borrowers, entry into which requires a borrower to opt in. The new Repayment Assistance Plan (RAP) bases monthly repayment amounts on adjusted gross income, requires higher minimum payments than previously available plans, and extends the loan repayment term to 30 years.
Existing Parent PLUS loans do not qualify for income-driven repayment plans directly, but borrowers can consolidate them into a single direct loan to gain access. Parent PLUS loans not consolidated before July 1 will permanently lose access to all income-driven repayment plans. Consolidating before July 1 preserves that access, but long processing times at the ED means there is no guarantee of successful consolidation, even if a borrower applies before the deadline.
There is another catch: If a borrower takes out a new Parent PLUS loan after July 1, all Parent PLUS loans, including those previously consolidated, will lose eligibility for the income-driven repayment plan. All loans will then be placed into the new standard repayment plan.
Fewer repayment plan options and a less generous income-driven plan are hitting consumers at a difficult moment. Rising costs for necessities like electricity, gas, and groceries are stretching already tight budgets, particularly those of older borrowers who are retired and live on fixed incomes.
Parent PLUS Borrowers must act quickly
Borrowers should act quickly to learn about their repayment options. Unfortunately for borrowers seeking help with obtaining loan information and navigating their loan repayment options, challenges remain. The Government Accountability Office recently reported that the ED ceased key oversight of student loan servicers. That change, along with cuts in staffing in the Student Loan Ombudsman office, are greatly hindering timely responses to borrower assistance requests.
One source of assistance available to all student loan borrowers is the free Savi Student Loan Repayment Tool offered by AARP. The tool can help borrowers learn about their repayment options, navigate the paperwork required, and connect with Savi staff if they need additional assistance.
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